Nonfarm Payrolls vs S&P 500
Nonfarm Payrolls (FRED PAYEMS) measures total US nonfarm employment. SPY tracks S&P 500.
Also known as: Nonfarm Payrolls (NFP, payrolls, jobs report) · S&P 500 ETF (SPY) (ETF_SPY, S&P 500, SPX, SP500)
Why This Comparison Matters
Nonfarm Payrolls (FRED PAYEMS) measures total US nonfarm employment. SPY tracks S&P 500. April 2026: payrolls approximately 159M total, growing +25K avg/month (down from 200K+ pre-pandemic). SPY approximately $712, S&P 500 approximately 7,126 record territory. Payrolls slowing sharply + equities at record. Goldilocks reading: labor market normalization + Fed easing room sustaining equity rally. Forward P/E 22x. Magnificent 7 + AI capex driving earnings. Reading: equity rally outpacing labor market growth via productivity gains + AI-era earnings dynamics.
The April 2026 Configuration
Nonfarm payrolls: ~159M total (April 2026). January 2025-March 2026 growth: +369K total or ~25K avg/month. Sharp slowdown from pre-pandemic 200K+ monthly.
SPY: ~$712 (April 2026, S&P 500 ~7,126 record territory; YTD +4.34% through end-March; total return past year +34.87%). AI-related stocks ~45% of S&P 500 weight.
Payroll growth/SPY ratio: payrolls +0.2% YoY (approx) vs SPY +35% past 12 months. Massive divergence. Equities outpacing labor market 175x.
Forward P/E: 22x (above historical 16-18x). ERP compressed ~50bp (vs 200-300bp historical).
April 2026 reading: classic late-cycle goldilocks. Slowing payrolls = Fed easing room (1-2 cuts H2 2026 priced) supportive of equity multiples. AI capex 0B+ annual sustaining earnings. Equity rally on AI-era earnings dynamics independent of labor market growth.
Key question: can equities sustain rally if payrolls turn negative? Historically no (recession + layoffs trigger SPY drawdowns).
Long-Term Range and Recent Trajectory
Payrolls history: peaked 152.5M February 2020 (pre-COVID). Trough 130.4M April 2020 (-22M in 2 months, sudden COVID shock). Recovery to 152.5M peak by mid-2022. Continued growth to 159M April 2026.
2022-2026 growth: 152.5M (mid-2022) to 159M (April 2026). +6.5M jobs over 4 years (~135K/month average). Below pre-pandemic 200K+ pace.
Monthly trajectory: 2022 average 380K (post-COVID rebound). 2023 average 250K. 2024 average 150K. 2025 average 50K. 2026 YTD average 25K. Sharp deceleration.
SPY trajectory: October 2022 trough $348 (peak-to-trough -25%). October 2025 ATH ~$700+ region. April 2026 ~$712 record. Three-year doubling.
During payrolls deceleration period (2024-2026): SPY +60%. Magnificent 7 + AI capex drove returns.
SPY/Payrolls ratio (rough $/job): $712/159M ~$4.48 per job (April 2026). Compares to $348/154M ~$2.26 per job (October 2022). Doubling reflects multiple expansion + earnings growth.
AI era: equity rally outpacing labor market growth dramatically. Productivity-driven earnings model.
Historical Precedents: Past Episodes
90-Day Statistics
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Frequently Asked Questions
What is the April 2026 payrolls vs SPY configuration?+
Nonfarm payrolls ~159M total, growing +25K avg/month (down from 200K+ pre-pandemic; 2022 avg 380K, 2023 avg 250K, 2024 avg 150K, 2025 avg 50K, 2026 YTD 25K, sharp deceleration). SPY ~$712 (S&P 500 ~7,126 record territory; YTD +4.34%; total return past year +34.87%). AI-related stocks ~45% of S&P 500 weight. Forward P/E 22x. ERP compressed ~50bp.
How have past cycles progressed in payrolls and SPY?+
2008-09 GFC: payrolls peaked 138.4M Jan 2008 + SPY peaked Oct 2007 $157. Trough payrolls 130.4M Feb 2010 (-8.0M) + SPY $73 March 2009 (-54%). 2020 COVID: payrolls -22M in 2 months + SPY -34%. 2001 dot-com: payrolls 132.7M Feb 2001 + SPY $151 Aug 2000 declined to 130.0M + $77 (-49%). 1990-91: payrolls 109.8M + SPY peaked July 1990 declined to 108.3M + -20%. SPY typically peaks 0-6 months before payrolls.
Why is the equity rally outpacing labor market growth?+
AI-era productivity-driven earnings model. AI capex ~0B+ annual flows to capital goods (data centers, GPUs) not headcount. Productivity gains enabling earnings growth with fewer hires. S&P 500 EPS 2026 +12% YoY estimate while payrolls only +0.2% YoY. Magnificent 7 ~32% of SPY drive index returns concentrated in capex-heavy tech. Broader market underperforming. SPY/Payrolls ratio doubled 2022-2026 reflecting multiple expansion + earnings growth.
What is the trading framework for April 2026?+
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Data sourced from FRED, CoinGecko, CBOE, and other providers. This page is for informational purposes only and does not constitute financial advice. Past performance does not guarantee future results.