WTF Is "The Diffusion Index?"

As you can see in the screenshot above, “The Diffusion Index” refers to where jobs are coming from. I read that with caution, because warehousing and retail seem to almost always be strong — and if they’ve flattened out, I don’t really know where else jobs are coming from. In a later chart I found, it says the biggest growth is in “business services” (what the f*ck is that?) and “education,” which makes sense, as higher Ed especially loves to hire “account managers” and “marketing growth hackers” instead of, I don’t know, professors.

Every time we get a new jobs report, people go nuts trying to analyze it, and then we discuss the Fed and interest rates and all this other stuff. I’d honestly guess maybe 97 people in America truly understand any given jobs report and what it means. I can tell you as someone who experiences infertility that jobs/employment and infertility are both what we call “zero/one” problems: either you are a parent, or you’re not. Either you have a job or you don’t. That’s how most people approach these issues. Very few understand them at the macro level.

However, I did find this, from the Chief Economist of ZipRecruiter, who I weirdly think slept with one of my high school friends years ago:

This note kinda feels weird to me. If a company wants to hire, and needs to hire to deliver better for their customers, who actually would care about interest rates in that sense? I could see not wanting to buy new capital equipment with high interest rates, or take out business loans, but … to hire someone and pay them probably under-market when you know you need people? I don’t know if interest rates need to play into that specific discussion. I might be naive.

We talk about the unemployment rate a lot too. Currently it’s at 3.9%. There’s lots of hand-wringing on gender as well. The female participation rate has flattened. Male rate went from a peak of 86.9% working-age to now 86%, which is not a huge drop but we still like to over-analyze it.

It’s hard to take much from these reports at the micro level. Are you working? Are people in your orbit working? Is it hard for them to find jobs? Do you think the pace of cost escalation for groceries and housing is keeping in line with the pace of salaries? That’s how an average person thinks about this stuff. I like the term “Diffusion Index,” but I also am not a macro egghead — actually, macro was the lowest grade I got in college — and I can tell you anecdotally it seems like the bigger issue isn’t “What industries are hiring?” but “What industries will stop hiring and embrace more automation for key roles?”

I don’t know how much an average person can take from this, although it would seem that a lower-than-expected report (150K jobs) will pause rate increases for December. I suppose that’s good.