by Gary Alexander

January 11, 2022

Don’t let Week 1 of 2022 confuse you. The S&P 500 fell 1.87%, NASDAQ collapsed 4.53%, and Friday’s jobs report came in at a disappointing +199,000 net jobs in December vs. an expected 422,000 job gain.

What happened? Are we in for a down year at last? First, let’s address last week’s stock market decline.

We get myopic measuring markets by the week or month, or even year. At year’s end, Ed Yardeni tallied the performance of the major market regions of the world – in both local currencies and U.S. dollars – since the birth of the last major bull market March 9, 2009 (to the end of 2021) and the U.S. is way ahead:

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

The leading S&P 500 sectors since 2009 are Growth-oriented: Information Technology (+1,430.6%) and Consumer Discretionary (+1,182.2%), while Energy has been the clear laggard, up only 36% in 13 years. During 2021 alone, the clear loser was China (-22.7%), as the CCP has been turning totalitarian lately.

Even the Federal Reserve says the U.S. economy is “really strong” and “consumer demand is very strong,” and “incomes are very strong,” so that brings us to the mystery of last Friday’s weak jobs report.

The Hidden Good News in Last Week’s Jobs Data

Even though the U.S. added fewer than half of the expected jobs in December, there were a couple of far more positive numbers released earlier in the week – better-tended numbers that paint a more complete picture of the job market. The first number came out last Tuesday, and it seemed to fulfill one of my 10 predictions that came out in my column here that morning, January 4: Prediction #3: “Most of those ‘missing’ American workers will get back to work. After basking in overly long and generous stimulus and relief payments, most workers now ‘on strike” will return to work.” How quickly that came to pass.

On Tuesday, January 4, the Labor Department announced that the number of job openings in the United States decreased by nearly half a million, from an upwardly revised 11.033 million on October 31 to 10.562 million on November 30. That is well below the expected GAIN to 11.075 million job openings.

As these charts show, unfilled job openings have been above a record-high 10 million since last June:

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

The second piece of good news came out last Wednesday, when the ADP payroll report said that private payrolls increased by 807,000 in December!  That’s more than four times Friday’s payroll report. One reason for the discrepancy is that ADP has real-time data, and the Friday BLS report is preliminary. In good times, the totals are usually revised upwards. For instance, there were upward revisions of 102,000 jobs for October, pushing the total to 648,000, and November added 39,000 jobs to reach 249,000. Job creation for all of 2021 totaled at least 6.45 million, easily the best year going back to the 1940s war effort.

Here’s a third piece of good news. The unemployment rate only counts those looking for work, but a more encompassing measure of unemployment – which includes discouraged workers and those holding part-time jobs for economic reasons – fell to 7.3% in December, down from 7.7%, a huge positive drop.

As I mentioned last month, much of this return to work is out of necessity. Covid and its consequences brought us a record level of savings, government benefits, and stimulus checks, which have now run dry and so work income is once again necessary. Asset gains in homes, stocks, and bitcoins have also stalled.

A great number of Americans have decided that working from home suits them well. Other millions of older Americans have decided that retirement suits them well. Others have just resigned from the rat race and learned how to open their own business in cooperation with extended family or friends in the deep exurbs. This has resulted in record quits. The same report (last Tuesday) that said unfilled jobs fell nearly 500,000 also said a record 4.5 million people quit their jobs in November, most seeking higher pay.

This brings us to some sobering demographic truths: We are getting older – and more isolated.

We’re Getting Older (and More Isolated)

I’m no Baby Boomer. My wife and I were born during World War II, which technically makes us part of “The Silent Generation” (I know; I can hear you say, “So shut up, already”). Baby Boomers, born between 1946 and 1964 average age 66. Most are retired. I’m still working and have worked since 1959, first on a paper route (by bike, then car), then working my way through college as a night janitor, and then a writer.

My bride and I were married 54 years ago this week (January 14, 1968) on Super Bowl Sunday #2, and I didn’t even know there was a game going on. Times have changed in that regard – and in many others.

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

As this graph shows, we were “normal,” age 23 at marriage. This is not true of our progeny, who marry later and have children way later, if at all. As I showed recently, this has resulted in net-zero population growth in 2021 for the first time since the Civil War, although such records weren’t kept annually then.

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

As a result of having fewer children over the years, our median population is growing older. We’ve gained about a decade in median age since the year we were married, when the median was 28. Now the median is 38. Births have been in a downtrend since 2008, when they peaked at a record 4.33 million.

Even before COVID struck, America’s Total Fertility Rate (TFR), the number of births per woman per lifetime, was 1.71, almost 20% below the replacement rate of 2.1 needed for population stability. The 2010-19 decade was the second-lowest population increase in U.S. history, just slightly above the 1930s.

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

In 2020, America’s TFR slipped to 1.64 and it will be below 1.6 when 2021 is tallied up. That puts us in a league with the 27 nations of the European Union (1.53) and Russia (1.50), but not quite in the slow death rattle we’re seeing in Japan (1.36) and now even China (1.30). The global “Population Bomb” is a dud.

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

We are also having fewer babies because more have chosen to be single and many choose to live single into old age, so we are becoming more isolated, and households are becoming smaller over the years.

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

We basically need to face these demographic and financial realities if we want to fill those 10 million job openings. That probably means accepting qualified immigrants, raising wages, and having more children.

All content above represents the opinion of Gary Alexander of Navellier & Associates, Inc.

Please see important disclosures below.

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Jerome Powell’s Running of the Bulls

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Read Past Issues Here

About The Author

Gary Alexander
SENIOR EDITOR

Gary Alexander has been Senior Writer at Navellier since 2009.  He edits Navellier’s weekly Marketmail and writes a weekly Growth Mail column, in which he uses market history to support the case for growth stocks.  For the previous 20 years before joining Navellier, he was Senior Executive Editor at InvestorPlace Media (formerly Phillips Publishing), where he worked with several leading investment analysts, including Louis Navellier (since 1997), helping launch Louis Navellier’s Blue Chip Growth and Global Growth newsletters.

Prior to that, Gary edited Wealth Magazine and Gold Newsletter and wrote various investment research reports for Jefferson Financial in New Orleans in the 1980s.  He began his financial newsletter career with KCI Communications in 1980, where he served as consulting editor for Personal Finance newsletter while serving as general manager of KCI’s Alexandria House book division.  Before that, he covered the economics beat for news magazines. All content of “Growth Mail” represents the opinion of Gary Alexander

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