Palanor: Labor Heat

Overview

Palanor: Labor Heat is a single 0–100 read of how taut the labor market is — how much demand for workers is outrunning supply, and how that imbalance is showing up in early-cycle signals before it shows up in the unemployment rate. The unemployment rate is famously lagging; this index is built so it does not have to be.

Why these components

JOLTS job openings and temporary-help employment carry the highest weights because they lead the cycle. Initial jobless claims are sign-flipped so rising claims cool the index. The unemployment rate is recentered against a working NAIRU anchor near 4% so the contribution reads tightness rather than absolute level. The Atlanta Fed Wage Growth Tracker is the wage-pressure pulse — sticky in both directions. The two Google Trends terms (hiring positive, layoff negative) are the public-anxiety proxy: a fast read on what people are seeing in their own networks.

Methodology

Each component is transformed (z-score over 24 months, 12-month % change, or level recentered to NAIRU 4%) and sign-flipped where negative. The weighted sum is mapped through a logistic to 0–100. Missing components renormalize.

Interpretation

Readings above 70 mark a labor market that is running hot — talent acquisition is expensive and slow, wage pressure compounds, services-sector inflation tends to follow. Readings below 30 mark a cooling labor market — temp help is being released, openings are evaporating, and the unemployment rate is about to follow. The most useful early signal is sharp divergence between JOLTS openings and temp help: it tends to lead the headline narrative by quarters.

Caveats

Wage growth in particular is monthly and slow; sharp turns will not show up here for weeks. The hiring/layoff search terms can become contaminated during major news events. The 4% NAIRU anchor is a working assumption; some estimates run higher post-pandemic.

Components & Weights

Every component, every weight. The 30-day spark shows how the underlying series has moved; the transform column shows how it converts to a comparable scale before weighting. Direction indicates whether rising values raise or lower the index.

Historical

24-month history of this index. The composite is recomputed daily; values are stored with timestamps.

References

• FRED — Federal Reserve Economic Data, St. Louis Fed. https://fred.stlouisfed.org/
• Atlanta Fed — Wage Growth Tracker and Sticky-Price CPI. https://www.atlantafed.org/research
• Cleveland Fed — Model-based inflation expectations. https://www.clevelandfed.org/our-research/indicators-and-data
• OECD — Composite Consumer Confidence Indicator. https://data.oecd.org/leadind/consumer-confidence-index-cci.htm
• CNN Business — Fear & Greed Index. https://www.cnn.com/markets/fear-and-greed
• Google Trends — interest over time. https://trends.google.com/