The Growing Labor Market Gap

Today’s labor market data came in line with expectations. Unemployment held steady at 4.2%.

Economists yawned. Markets – no doubt relieved to have something else to talk about besides the Trump/Musk feud – pushed higher.

But we can’t help but notice a growing gap in the data:

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The government’s employment data looks much stronger than data provided by ADP – the private sector payroll giant. Of course, ADP is basing its data on actual customers, and not making all sorts of seasonal or one-off adjustments.

There may be a case for those adjustments. But with a growing gap that causes the government’s data to look rosier than the private sector – it’s a warning sign.

And with many government job cuts still not showing up in the data – you can’t file unemployment while you’re still on severance – the trend is likely to worsen before it gets better.

Our colleague Andrew Zatlin, the #1 payroll analyst on Bloomberg, has made similar observations – that the trend will start to get worse in the third quarter, and that government revisions will likely start to bring today’s gap down as well.

Until then, mind the gap.

~ Addison

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P.S. There are plenty of moving parts in the economy right now, and we explored several of those trends with Frank Holmes yesterday on Grey Swan Live!

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Today’s labor market data came in line with expectations. Unemployment held steady at 4.2%.

Economists yawned. Markets – no doubt relieved to have something else to talk about besides the Trump/Musk feud – pushed higher.

But we can’t help but notice a growing gap in the data:

Turn Your Images On

There may be a case for those adjustments. But with a growing gap that causes the government’s data to look rosier than the private sector – it’s a warning sign.

And with many government job cuts still not showing up in the data – you can’t file unemployment while you’re still on severance – the trend is likely to worsen before it gets better.

Until then, mind the gap.

~ Addison

Get paid $1,500 to write a two-page story

GET ALL THE DETAILS HERE.

P.S. There are plenty of moving parts in the economy right now, and we explored several of those trends with Frank Holmes yesterday on Grey Swan Live!

As always, if you’re not yet a full-fledged member, you’re missing out on unique, timely, and ultimately critical knowledge about today’s markets.

As always, your reader feedback is welcome: feedback@greyswanfraternity.com (We read all emails. Thanks in advance for your contribution.)

Economists at Goldman Sachs said this morning they expect core inflation to finish the year around 2% even while GDP rises at a “surprisingly strong” 2.5% clip.

In our view, their inflation forecast is optimistic. Their GDP call? Modest.

The last time we pumped this much liquidity into the system — 2020 through 2022—the result was a manic asset bubble, runaway inflation, and an epic hangover at the Fed.

Goldman’s optimism has triggered a fresh round of bullish bets: cyclical stocks are rallying, “dispersion” in the S&P 500 is spiking, and the Fed is expected to cut interest rates twice before Jerome Powell gets kicked out of Washington at the end of his term on May 15.

Anecdotally, we’re hearing stories of warehouses full of GPUs sitting unused for lack of energy to power them. It’s a natural feature of the heavy capital investment in new machines. The grid has to catch up!

While Trump’s great reset rolls on in 2026, keep an eye on modular nuclear reactors and increased demand for uranium, natural gas and related resources.

These PM producers are literally printing the most ‘hard money’ that they ever have at these metals prices and record margins here at the midway point in Q4.

If there ever was a time for this sector to get overheated and frothy, this would be it… only that isn’t what we’ve seen playing out.

PM producers are still insanely profitable at even at current metals prices and should be far more valuable based on their margins, revenue generating potential, and their resources still in the ground.

Who stipulated that politics and money have to be serious?

We do, in fact, write about money, the economy and financial markets. It’s to our own peril if we ignore the “passing parade” and its impact on them.

Populism as practiced by President Trump and the MAGA crowd is equally as pernicious, in our view, as the open worship of collectivism as expressed by Mamdani, AOC, and the progressive snollygosters gaining momentum among younger voters.

The system, as it were, is broken in all kinds of interesting ways. But we still have to live in it. And make decisions about our lives… our money… our families and our future.