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-Scott

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On the State of Labor Markets

This week’s newsletter again highlighted comments from Dollar Tree and Dollar General. Both companies warned about weakness for low-income consumers.

Dollar General’s CEO spoke at a conference this week and further elaborated on the comments that he made on DG’s earnings call two weeks ago. This week he noted that Dollar General’s customers appear to be having a hard time finding second jobs, which are a critical source of income. He also argued that DG’s customers are the first to feel economic weakness. For this reason, the dollar stores could be a proverbial canary in the coal mine for the economy.

His comments about the market for second jobs is a data point that labor markets are weakening. However, we did pick up two other comments that were counterbalances to this view. One was from Intuit, which said that its small business customers appear to be logging more hours worked. Another data point was from Korn Ferry, which said that they saw more executive search activity.

As far as official data goes, last week BLS reported that the US economy had added 142,000 jobs in August. This seems like a relatively healthy number to me, but was “below expectations” and so was spun as a sign that labor markets have weakened.