🥛 Should we be worried about bad jobs data? 🚨

GM. This is Milk Road Macro, the macro newsletter that's seeing more mixed signals than your ex's text messages.

Here’s what we got for you today:

✍️ Everything you need to know about the U.S. labor market data
🎙️ The Milk Road Macro Show: Why Silver Is Exploding as the Global Debt System Breaks w/ Francis Hunt
🍪 Micron forecast Q2 profit nearly double estimates

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Prices as of 10:00 AM ET.

EVERYTHING YOU NEED TO KNOW ABOUT U.S. LABOR MARKET DATA

We’re still catching up on postponed U.S. economic data following the government shutdown in October and November.

This week we’ve seen quite a lot of data come in - so let’s take a look at what we can learn.

The U.S. labor market continues to be sluggish - there’s no doubt about that.

But there are no signs of a “crisis” or "collapse".

And, in fact, there are some intriguing “early cycle” signs - if you know where to look.

We also see retail spending remaining relatively solid.

So, what’s going on with the labor market?

How is the consumer doing?

And what does it all mean for Fed policy heading into 2026?

Let’s take a look…

What’s going on with the labor market?

Due to the government shutdown, we saw a full jobs report from November, and some data from October, but not all of it.

Payroll growth (job growth) was -105k in October.

This number looks horrible - but it was entirely due to a -157k drop in public sector jobs.

According to reports, this unusually big drop in government jobs was driven by the government shutdown and related effects, not a sudden collapse in public sector jobs.

In November, payroll growth was +64k, above consensus estimates.

Source: Bloomberg

While the big drop in job growth over recent years looks concerning, it’s worth bearing in mind that many experts believe the “breakeven” monthly job growth number (the number the economy needs to keep the unemployment rate flat) is much lower than it once was - and sits between 30k and 70k.

This is largely due to massive changes in immigration policy under the Trump administration.

The 3-month average for job growth currently stands at +22k - so slightly below the “breakeven” zone.

However, looking deeper into the jobs data, it’s the same story that it has been for months.

A large majority of the job gains are coming from just one sector - healthcare.

If we strip out healthcare - the numbers look a lot worse.

Source: BCA Research

The headline unemployment rate (the official jobless rate, measuring people without jobs who are actively looking for work) continued its steady rise, moving up from 4.4% to 4.6% - the highest level since September 2021.

This looks like quite a big 0.2% increase, but these numbers are rounded - so if we want to be pedantic about it, the unemployment rate actually rose by roughly 0.1% (from 4.44% to 4.56%).

While the unemployment rate is rising concerningly - it’s still relatively low compared to historical levels.

Source: TradingView

Initial Jobless Claims (the number of people claiming unemployment benefits for the first time) is really the key barometer of “if things are collapsing”.

Historically, it suddenly spikes higher at the onset of a recession.

It’s been at multi-decade lows for four years.

Source: TradingView

Overall, the general conclusion here is that the labor market is sluggish, but there’s no “collapse” or “crisis” - and no sign of massive lay-offs.

The best description of the current environment is “low fire, low hire”.

Stephen Brown, of Capital Economics, said:

“It continues to be a ‘low fire, low hire’ labor market, with the rise in unemployment driven entirely by new and re-entrants to the labor force, as opposed to temporary or permanent layoffs. That's a big difference compared to the norm during recessions.”

Source: Capital Economics

If you want to get a read on the general direction of the overall economy, headline jobs and unemployment data is not the best thing to look at, because it is significantly lagging in the context of long-term cycles.

If we look at other job market measures - overtime hours and temporary help - there are some intriguing positive “early cycle” signs (this is something I’ve been pointing to for months in the Macro PRO reports).

The ASA Staffing Index - a private weekly measure tracking shifts in temporary and contract work - has historically hinted at where the broader economy may be headed - so it’s a leading indicator.

And it has now posted 14 consecutive weeks of year-on-year growth.

Historically, these are classic “early-cycle” signs: businesses see more activity, so they add hours and temps before committing to costly full-time hires.

Source: Duality Research

The most leading of all labor market indicators is suggesting that the economy is currently recovering from a “recession-like” slump in 2023 and 2024 - not deteriorating further.

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EVERYTHING YOU NEED TO KNOW ABOUT U.S. LABOR MARKET DATA (P2)

How is the consumer doing?

This week, we also got new Retail Sales numbers, giving us a look at consumer spending.

The headline Retail Sales figure for October came in below consensus estimates at 0% MoM.

The weakness was concentrated in auto sales, which appears to be skewed after an electric vehicle tax credit pulled demand forward into September.

Source: Augur Infinity

But the Retail Sales Control Group (a subset of retail sales that economists use to estimate consumer spending in GDP, stripping out the more volatile components) came in very strong at 0.8%.

Source: Augur Infinity

So, what does this divergence mean?

If headline retail sales are soft but the control group is strong, it often means:

Auto sales are down
Gas station sales are down (maybe due to lower prices, not necessarily fewer gallons sold)
Restaurants/bars are weak

But core goods (things like clothing, electronics, home goods, online retail) are doing well.

This means the economy may be stronger than the headline Retail Sales number implies, at least in terms of consumer goods demand.

What about Fed rate cut expectations?

The Fed delivered three consecutive 25bps rate cuts to finish off 2025.

Now, the central bank has finished its “recalibration phase” and is “well-positioned to wait”, according to Fed Chair Jerome Powell last week.

The data we’ve seen this week has barely moved the needle on expectations for an interest rate cut at the next Fed meeting in January.

According to interest rate markets, odds for a 25bps cut next month moved marginally higher - but are still low, sitting at 26.6%.

Source: CME FedWatch

But the unemployment rate continuing to rise will be a worry for the Fed.

It’s now trending above the “predicted path” that FOMC members laid out only last week at the Fed meeting.

Source: Guy Berger

Setting an optimistic forecast for unemployment may lead to more rate cuts eventually occurring in 2026 if unemployment continues to tick higher.

A cynic would say Fed members have “set the table” for further cuts into next year.

Wrapping up

On the face of it - the U.S. labor market looks concerning.

It is “sluggish” - but there’s nothing pointing to an imminent crisis.

And in fact, there are some positive “early cycle” signs hidden in the nerdier data.

Consumer spending also appears to generally be robust.

But it’s the headline unemployment number that the Fed is ultimately concerned about, and if this continues to slowly deteriorate - we may see more rate cuts than expected in 2026 (currently roughly two 25bps cuts expected).

Particularly considering Fed members have set out optimistic unemployment predictions for 2026.

That’s it for this edition - catch you in the next one.

SILVER'S BIG MOVE IS JUST STARTING 💥

In today’s episode, we sat down with Francis Hunt (Market Sniper) to talk about why silver is set to explode as the global debt system unravels.

Take a look at what surprised us:

The case for gold and silver as the new reserve assets replacing sovereign bonds
Why Hunt sees “hyper-stagflation” as the dominant macro regime ahead
The technical setup that could launch silver to $333 and beyond
Three bold predictions for 2026, including a potential AI sector crash

It’s a banger of an episode, don’t miss it. 👇

YouTube | Spotify | Apple Podcasts

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