2026 is already reminding us that the more things change, the more they stay the same.
Because we’ve got a few of the first major data releases of the year, and the response from investors has been … mixed.
Is the economy thriving? Are businesses hiring? Or are we on the verge of another major inflation surge?
Ask a half-dozen pundits in the mainstream financial media, and you’ll get a dozen different answers. But once you really start to drill down on this new data, you start to find cause for some serious optimism.
Let me tell you why:
Video transcript:
This is Moneyball Economics. I’m Andrew Zatlin, and today we are going to look at the recent economic data that’s coming out. It’s sending out a little bit of a mixed signal, but in and of itself, a mixed signal is a positive signal, and I want to explore that with you today.
Before I do though, let’s go back to last week…
Last week, I was sharing a model that I use for making some of my investment decisions. As a refresher, just to remind you, each month, I’m harvesting hiring data for individual publicly traded companies, like Macy’s or Cisco or whatever.
And I’ve done this for about 15 years. And the reason I do it is, well, at its most basic, companies that are seeing revenue growth are going to add to their employee base. Companies that are slowing down or worse, well, they’re not going to be hiring that many people.
And so at its most simple, I take this data and I look for, for example, companies that have suddenly hit the brakes or suddenly slammed on that gas pedal and they’re pressing down hard. If a company is hiring a lot more, it means that their business is taking off a lot more. And if it’s not priced in, that’s the kind of opportunity I look for.
Back in November, I shared this model with you and talked about how Boeing was an example of a company where, wow, it’s just shooting up their hiring. Didn’t know more than that. Same thing last week, I pointed to Huntington Ingalls (HII). Again, a company I don’t know very much about, but wow, they’re hiring with surging.
Well, guess what? Two months ago, had you bought Boeing, the performance in just the two months, they’re up almost 20%. Not to be outdone, HII, when I pointed to them last week, in one week they’re up 15%.
The reason I wanted to revisit this is just to say, “Hey, this system kind of works. This methodology definitely kind of works. And if you would like me to share more ideas, more nuggets that come out of this, let me know. Drop me a line.” (email Andrew at Moneyball@MoneyandMarkets.com)
So let’s shift gears.
Let’s talk economic data and the signals they’re sending out.
So we’ve got both — labor data, we’ve got inflation data, and it’s not sending out a universal signal of up or down. Let’s take a look at what signals they are sending out.
Let’s start off with JOLTS data, job openings data. This is a big one. It takes a look at what’s going on out there in terms of the number of job openings, firings, employees who are leaving. And then a lot of economic signals are extracted from it.
Be that as it may, the core problem with the Jolts data that got released, it looked at November. That’s the latest. Well, it’s January now, so it’s a little bit old. But more critically, remember, November was peak government shutdown period. And so this data really reflects what’s going on in that period.
And so when you think about the government shutdown versus today, night and day, but you also have to think in terms of what was going on, what should we have seen in that data? And the answer is we should have seen fewer job openings because quite frankly, the economy was uncertain and maybe more layoffs, but that’s not what we saw.
We definitely saw a pullback in job openings, but guess what? Layoffs. No, not that much. And that’s important because the narrative out there is that there’s no firing and no hiring. But guess what?
I’d like to introduce a difference. I’d like to say there’s no firing, but there’s some hiring. And that’s a key inflection…
All right. So the JOLTS data, going back to November, peak government shutdown. It wasn’t that ugly, all things considered. I think when we see the December data, we’re going to see job openings rebound, but we’re not going to see layoffs go up. And in fact, that brings me to the jobless claims data. Jobless claims data is much more near term. It’s the exact opposite end of the spectrum and it looks at January data.
And guess what? The January data is remarkably bullish where the Jolts November data was bearish, but may not have any bearing on the economy today. Jobless claims is very current and it’s very bullish.
In fact, when I say that, let’s drill down a little bit. There are two pieces of data in there. There’s the initial claims. “Hey, last week I did not have a job.” Then there’s continuing claims. “Hey, I haven’t had a job for a couple weeks or more.” Well, obviously with the government shutdown back in November, these two data points were up and they have reversed.
They’ve come down dramatically. What the continuing claim signal though is in order for people to say, “Hey, for two weeks or more, I haven’t had a job.” And for that number to come down, it means, yeah, I got a job. So there is hiring going on. A lot of this is no doubt the reversal of what was going on with the government shutdown, but not all of it.
Meanwhile, when we look at initial claims, which is retention of employees, guess what? Down really hugging that 200,000 line. The 200,000 line in the sand is remarkable because historically it points to very strong economic growth.
I’m not so sure we have very strong economic growth, but we definitely have companies that are so lean right now, they are not interested in letting go of their employees. Strong retention. That’s bullish. That means we are at the bottom or maybe because of that continuing claims number going down, we’re starting to inflect up.
Third data point would be payrolls.
Payrolls for December. Now, again, there’s some nuances here. Payrolls came out. Past couple months, they’ve been hovering around 50K. It’s not that good. Anything above 100 indicates tidy expansion. 50K doesn’t really indicate recession, but it indicates kind of sort of that we’re limping along. And going back to that no firing, no hiring, that payroll signal, 50K indicates there’s not really that much hiring.
However, hard stop. I think last month was a bullshit number. I think the number was actually a lot higher and I want to share with you why. So every year, going back 10 years, every year, Costco, Walmart and BJ’s hire 100,000 seasonal workers October, November and December, 100,000. Lots of times, a lot more.
Last year, I think it was 86,000, but you get the idea, seasonal workers and they need to, right? Well, take a look at Costco and Sam’s Club. They are doing way more business this year than last year. In fact, Costco shared that in November, $2 billion more business versus last year, November. Same thing for December. $2 billion. So if you’re a company and you’re seeing $2 billion more in any given month of business, you got to staff up for that, right? Well, so this is where it gets curious.
I mentioned how every year, every year for 15 years, these companies added 100,000 seasonal workers. Not this year. This year they added about 30,000. And this is according to the government figures.
I’m going to call bullshit on this one. What it means is the difference between 30,000 and 100,000 and 70,000. That means when we see this 50,000 number last month, it was a lot higher than that. Was it the full 50 plus 70, 120? No. But it was a lot closer to 150. And that’s an inflection up. Getting closer to 100 is an inflection up.
So again, I want to say payrolls came out and they were mild, but when you dig into the detail, they were actually a lot stronger than a peers. And so as a result, when I take these three data points together, I got to kick out the Jolts data. I’m not impressed it’s a November figure. I look at the payrolls, which indicates things are starting to go up, inflect up a little bit with hiring when you make that adjustment for Costco, shall we say.
At the same time, we’ve got jobless claims data, which is even more recent, and it’s showing that, hey, continuing claims dropped almost 100,000, meaning 100,000 people found jobs in the last week. Okay? So I believe that at the end of the year, companies, they’re not really hiring, but now that we’ve started the new year, they got to ramp up their hiring.
In any case, slightly mixed signals in the labor market.
Payroll’s soft. Jobless claims hard. What’s the real signal?
Well, let’s look at inflation. Inflation came down. Core inflation at 2.6% year over year, total inflation, 2.7%. We no longer have to worry about inflation. It has been tamed. And it’s likely going to come down even more. Interest rates have come down. That will keep some of these sectors like used car and car sales perking up a little bit, but by and large, the beast has been tamed.
Now, someone might raise their hand and say, “Oh my God, inflation’s going over because we’re actually recessionary. Demand is flatlined.” And there’s certainly a case to be made for that. That demand has slowed down.
But again, we just cut interest rates in December. We’re probably going to cut interest rates again. That’s going to keep the economy moving up.
But we’ve got inflation, neither bullish nor bearish. We’ve got payrolls, looks bearish to me if you didn’t know better. We got jobless claims, bullish. So we have data points all across the spectrum. That’s good. Having mixed signals is good because go back a couple of months, the data was clearly negative, clearly negative.
So shifting from a negative signal pretty uniformly, you get negative to now a little bit more mixed where you got some bullishness entering in. That’s a positive sign. That means we are now starting the early … We’re at the early part of starting an inflection up. And this is the time to definitely consider being long and strong in this market. If we are tilting up, if this economy is poised for growth, the market is going to grow with it.
So with that in mind, let’s get ready to make some money.
We are in it to win it.
Zatlin out.
Andrew Zatlin
Editor, Moneyball Economics