Authored by Lance Roberts via RealInvestmentAdvice.com,
Recession Indicators Turned Green. Job Quality Hasn’t.
October’s jobs report pushed the headline recession indicators back to green, but “labor hoarding” explains why the earnings boom still isn’t reaching full-time workers.
Key Takeaways
- S&P 500 earnings are on track to grow 31.4% in the third quarter, yet fewer Americans work full-time today than in September 2025.
- October payrolls beat every forecast at 165,000, but full-time employment, at 49.0% of the working-age population, remains well below its 2019 level of 50.6%.
- Companies are “hoarding” labor: output rose 3.7% last quarter while hours worked rose 0.1%, so productivity, not hiring, is carrying profits.
- Involuntary part-time work jumped 339,000 to 4.8 million in October, and pay growth of 3.1% still trails 3.7% inflation.
- The recession indicators flashing green – claims and layoffs – are the ones labor hoarding suppresses the longest.
Here is the puzzle investors face right now. S&P 500 companies are on track to report 31.4% earnings growth for the third quarter, the eighth straight quarter of double-digit gains. Last Friday, the October jobs report beat every forecast, with payrolls up 165,000 and unemployment back down to 4.1%. On the surface, the recession indicators have turned green. Beneath the surface, the quality of the jobs tells a different story. Such is the question worth answering: is the labor market healing, or are companies still “hoarding” labor while profits do the heavy lifting?
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