Job Market
The Federal Reserve is considering cutting rates for one main reason: a soft labor market. As AI kicks in displacing workers, it's clear that the economy Is undergoing a significant transition.
Perhaps the “canary in the coal mine” example is job losses for small businesses. Small companies tend to give a barometer measure of where the economy is headed and current job losses in the small space are a warning that the economy is not as strong as some hope.
We've continued to maintain a smaller level of small cap exposure because of our concerns about future economic growth. A recent article highlighted recent job losses in the small cap space and should not be overlooked by investors.
See below.
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"Private employers in the United States shed 32,000 jobs in November, payroll processor ADP said Wednesday. Economists surveyed by Dow Jones had been expecting to see an increase of 40,000.
ADP chief economist Nela Richardson described November's jobs data as a "slowdown" that was "broad-based." The drop was "led by a pullback among small businesses," she said.
Small firms with fewer than 50 employees led the contraction by far, shedding 120,000 jobs.
Smaller businesses have less money and fewer resources than larger companies to contend with higher costs from tariffs, rising utility bills and other economic pressures.
The Main Street Alliance, which consists of 30,000 small-business owners, blamed President Donald Trump and his fellow Republicans for the difficult conditions.”
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Source:
https://www.nbcnews.com/business/economy/adp-jobs-november-losses-rcna247137
