Private payrolls increased by 175,000 last month (down from December’s 227,000 gain), according to this morning’s ADP Employment Report. That’s in line with the consensus forecasts from economists, although the advance is well below The Capital Spectator’s median econometric projection. (As a side note, today’s ADP number matched one of the forecasts that are used in CS’s median forecast: the triangular distribution prediction. The accuracy here isn’t unusual. I’ll have more to say about the intriguing possibilities for superior forecasting via triangular distributions in the days ahead. For now, let’s focus on the ADP data.)
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The tumble in stock prices lately has been accompanied by a so-far mild retreat in inflation expectations (the spread on the nominal 10-year Treasury yield less its inflation-indexed counterpart). This relationship deserves close attention… again. A weak stock market is one thing. But if the market’s outlook for inflation slides further, that’s another matter entirely and one that comes with bearish implications for the economy if it unfolds with dramatically lower stock prices.
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