Johnny Paycheck immortalized the phrase "Take This Job and Shove It" in his hit song by the same name in the late 1970's. Today, nearly 40 years later, Nicholas Colas, the chief market strategist at ConvergEx, has taken that legendary line and turned it into an equally unforgettable economic barometer. That's right, the "Take This Job and Shove It Indicator" has just taken an ominous turn that could be the clincher for more Fed easing when they meet next on September 12 and 13.
"What we found is there is a very strong correlation between consumer confidence and the number of people who quit or leave their job voluntarily versus being terminated," Colas explains in the attached video. By studying the level of voluntary separations that are reported in the government's JOLTS data (Job Openings and Labor Turnover Survey), Colas says the well-known weakness in the jobs market can be seen in a new light.
"If people start quitting their jobs at over a 50% rate — meaning one in two jobs is vacated from someone saying, 'I'm out. I quit. I'm done.' — consumer confidence tends to rise in the six months afterwards. If you don't have a lot of confidence, you're not going to willingly walk away from your job," Colas explains.
And right now, he says that that key-confidence indicator just ticked down again for the first time in three months. While that statistical quirk may have gone unnoticed by the masses — who tend to focus on headline hiring and unemployment figures — Colas knows the Fed saw it, and that leads him to believe this "absolutely" means more easing is coming.
Interestingly, in the past two days there have been opposing arguments being made by two different regional reserve bank presidents (neither of whom currently sit on the FOMC). Boston's Fed president Eric Rosengren is arguing for more stimulus while Dallas Fed president Richard Fisher likened more easing to "Monetary Ritalin."
"The big takeaway for the Fed is that the economy is still very sluggish, with threats that we could tip back into deflation if we allow current trends to continue," Colas summarizes, before adding, "that pretty much locks the Fed into doing something at their next meeting in September."