Wells Fargo's Acting Chief Economist on what to expect from the April jobs report

Jay Bryson, Wells Fargo's Acting Chief Economist, joined Yahoo Finance's Jen Rogers, Myles Udland, Dan Roberts, and Melody Hahm to discuss what he's expecting out of the April jobs report on Friday.

Video Transcript

MYLES UDLAND: We are joined now by Jay Bryson. He is the acting chief economist at Wells Fargo. So Jay, we all saw the terrible ADP number this morning. We're expecting a pretty grisly jobs report on Friday morning. Let's just start with what your expectations are for Friday and whether April's report is likely to be the worst of the batch or if we could still have a dragging out of these terrible rolling job losses into even May's report.

JAY BRYSON: Yeah, so in terms of the report on Friday, we think that we're looking at roughly 20 million lost jobs in the month of April that's what the ADP would suggest today.

I don't think all the bad news is over me. So this survey was done during the week of April 12th. And we've known that since then initial jobless claims still remain very, very elevated. So I think you're probably going to see another negative number in May, but it's not probably going to be anywhere close to 20 million. It's going to be a few million because what's going to start to happen is some businesses are going to start to reopen. They're going to start to bring some people back, while other businesses are still in the process of shutting down perhaps permanently.

Those things will probably play out through May. But once we get through May, we should start to see some more positive growth numbers later this summer.

MYLES UDLAND: And then Jay, just thinking through how one goes about forming a view on the economy right now-- I mean, the data we're getting in is, in many cases, telling us what we can tell by looking outside the window. Nothing is happening. Everything is closed.

We all know people who have been laid off, have gotten sick. What data are you looking at, or indicators, are you guys looking at to try to figure out if we might be inflicting, if we're bottoming, and where we can start to look for signs of a pickup in activity, even if they're feeble?

JAY BRYSON: Well, so in some sense, we are starting to see that in terms of at least the initial jobless claims. Those things are starting to come down. So they're still going down or going up but at a decreasing rate. So there has been some inflection there.

Part of it, too, is just it's a story, I guess, in general. There is support that has been put in place through all the fiscal programs that have been there. We know that this virus is-- this is a public health problem. And that's starting to flatten out. We know that states are starting to slowly reopen here.

So the idea here is there's enough support in this system to get us through the next few months. that, once the lock downs end, the economy can start to return to some semblance of normal. We're not going back to normal. But it's going to be already moving back to towards some semblance of normal.

JEN ROGERS: So past jobs report, we'd be talking about, oh, how many hours of people work and lots of different numbers in there, that we've peeled back the onions on. Now we've got a big headline number coming out. What are the other parts, though, that you think we need to be looking at, especially-- because you point out in your note-- not everybody is going to be out there looking for a job right now, which actually impacts the number.

JAY BRYSON: Yeah, so what's actually going to really be interesting on Friday, something that usually gets a little attention-- and that's average hourly earnings. So that typically goes up 0.3%, 0.4% on the month. We're actually looking for a number that's going to be over 5%.

I mean, so sounds great. But what's happening is most of the jobs that we've lost have been at the lower end. So if you throw out millions of lower end jobs, the whole average comes up.

And so I think, when that number prints, that's going to be eye popping. It's like, oh my gosh, what's going on. People are getting raises? No, it's just a compositional shift that's kind of going on.

And then once restaurants start to reopen and things of that nature, hotels-- these are where some of those lower paying jobs are-- once those things start to reopen again, we should just see that average hourly earnings number start to come back down again.

MYLES UDLAND: Jay Bryson is the acting chief economist at Wells Fargo. Always good to get your thoughts, and we'll talk soon.

JAY BRYSON: Thank you.