SPOILER: People are quitting their jobs at a high rate, meaning they are not afraid about what is happening in the economy.  That is good news — while it lasts.

To create a major stock market crash you need to get a lot of people very frightened all at the same time. Put another way, if nearly everyone is calm, happy, and optimistic about their economic futures it is not likely they are all going to panic any time soon.  So, it is worthwhile finding an economic indicator that tracks the nation’s basic trust in the economic health of the country.

I like to track the number of people who quit their jobs each month.  Inherently people who quit their jobs are optimists. They voluntarily leave a somewhat safe job in order to jump into something else they hope and expect to be better. They are betting their whole future! Quitting a job is a very big deal. Most people will be cautious. If people are really worried about the economy, they probably will hunker down in their current job until times get better.

There are, of course, plenty of job quitters like new retirees and people with health problems who don’t fit the optimist profile. And there are a large number of seasonal quitters like college students giving up their summer jobs.  But, once you discount a baseline, the fact remains that a large, and probably fairly constant share of people who quit their jobs are showing a vital belief in a better future.

The government has been tracking unemployment since April of 1929. (Hmmm… The Great Crash happened in October, 1929.  Were economists already getting worried much earlier?) But, for stock market prognostication unemployment data is not all that helpful — it lags rather than leads stock market activity.  Businesses have tended to hold off on laying people off until absolutely necessary.

In 2000 the Bureau of Labor Statistics started tracking job quits on a monthly basis in their Job Openings and Labor Turnover Survey (JOLTS).  The data is available for free at the Federal Reserve Economic Data (FRED) website.  https://fred.stlouisfed.org

The monthly data has a great deal of repeating seasonality. Most quits are always in August. Least job quits occur in November, December, February, and March. (These graphs are interective.  Run your cursor over them and monthly values will be displayed.)

FRED also provides a seasonally adjusted version of the data.  It still shows a lot of apparently seasonal variation, but it is smoother than the unadjusted data.

This is a fairly new data series, so it is important not to jump to conclusions all that fast.

That said, Job Quits began to level off in 2005, well before the 2007-2009 stock market crash and well before the subsequent recession.

Current job quits are at a high level.  That is encouraging.  Should the rate of quits level off or decrease, it will probably make sense to worry a bit more.  (Also, don’t read too much into the data for February and March when job quits are seasonally very low.)