Andrew Zatlin: The “Phantom” Economy

Let’s talk construction jobs.

The construction industry is contracting. The number of permit applications recently hit a two-year low, meaning builders are not seeing much growth.

In fact, builders are having to add a lot of incentives just to sell the homes they’ve got out there. And in fact, when we talk about building starts, it’s at an 11-month low. In other words, demand for construction workers isn’t booming. It’s quite the opposite.

But here’s where things get more interesting.

When someone files for a jobless claim, there’s a lot of data that’s picked up. Gender, age, ethnicity, and industry. Where were you working?

We’re seeing fewer jobless claims, but you know where we’re seeing a lot more claims. It’s in this category called no information. That’s right. Not everybody calls out where they were working.

So last year, about 13% of California’s jobless claims came back with no industry indicated, no information. 13%. This year it’s at 30%. One out of every three jobless claims being submitted is blank in terms of where the workers are.

Now, why would somebody not want to call out where they were working?

I’ll tell you, because those three sectors that I called out are dominated not just by Hispanic workers but by undocumented workers.

For example, farm workers, 70% of them are undocumented workers. Similarly, in construction, around 40% are undocumented Hispanic workers and so on and so on.

So rather than run the risk of being deported, many of these workers who are entitled to jobless claims and normally would be filing for those jobless claims are just belt-tightening.

They’re going to withstand not having an income for a while.

~ Andrew Zatlin

P.S. from Addison: That insight from Andrew Zatlin is just a small appetizer for the main event: our discussion on Grey Swan Live! Thursday. The jobs market is the main reason behind the Fed pivot to cutting rates… and ushering in the “most terrifying bull market” we’re likely to see in our lifetimes.

We’ll cover how Andrew views the labor market, why he’s been more accurate than other forecasters – garnering the #1 ranking on Bloomberg – and look at how his views fit in with many of the potential Grey Swan events we see occurring in the months ahead – including the possibility of a “most terrifying bull market.”

It’s another Grey Swan Live! you won’t want to miss – all part of the incredible value our members enjoy week after week.

If you have any questions for us about the market, send them our way now to: Addison@GreySwanFraternity.com.