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Ooops, the Labor Statistics Mirages Comes to a Crashing Halt

By November 3, 2023Commentary

Well, here I am minding my own business, working on a boring venture capital post, when here comes the Bureau of Labor Statistics announcement of October jobs data.  The BLS has been working toward a Nobel prize for fiction writing all year, but you can only carry that so far.  Maybe they figured that everyone is distracted by Ukraine and Israel or just the latest TikTok videos, but their house of cards can only be towered upward so far, and today’s announcement begins the downfall to reality.  “Expectations” were for 180,000 new jobs, according to the survey of businesses.  Reality was 150,000 and September was revised down by 39,000 jobs and August by 62,000; so 100,000 total fewer.  Funny how every month this year has been revised down from initial releases.  you might think the BLS would ask itself if there is something wrong with its methods for initial estimates.

Meanwhile the household survey, which gets less attention but may be more accurate, and which this year has shown the widest divergence ever from the survey of business, showed a drop of 348,000 in the number of employed people.  The unemployment rate rose to 3.9% and large numbers of people are working multiple jobs to keep up.  The BLS did use one of its usual tricks to keep the report from looking even worse.  The sketchy model used to estimate how many jobs were added by new businesses versus lost by businesses going bust (the “birth/death” model) added 412,000 jobs, the second highest ever.

Where were jobs added?  Why in government of course, and in education, which is largely government supported, and in health care, which is hard to avoid for most people.  Wage growth was modest, but enough to keep inflation pressure up, while not really keeping up with inflation.  The only good thing from my perspective is that the rottenness of the economy will be revealed by next spring and recession, ongoing inflation, job losses, and high interest rates will be fully in voters’ minds as they decide whether to sign up for four more years of Bidementia and whacked pro(re)gressive policies.

The stock market, in its own bizarre way, reacted positively, think this means that the Fed is less likely to raise rates.  When they figure out it also means less growth and profits for companies they won’t be so positive.  And on interest rates, I think we have entered a new world where fed policy and even GDP numbers aren’t going to drive rates; the unending new supply of federal debt issuance will.  Buyers aren’t going to accept lower rates, so any dip you see now in the ten year note won’t last and won’t continue the downtrend. You can read a good summary of the report here at Zero Hedge (ZH Post)   And you can see the original data here.  (BLS Data)

Join the discussion 3 Comments

  • Jake says:

    I have to say, the subterfuge is endemic across the federal gov’t. I had to deal with this two years ago when HUD magically changed their calculation on Section 8 rent and income limits. Hard to accurately track trends over a long time series when underlying standards are constantly changing.

    That said, I enjoy reading ZH about economics though I don’t understand much of what is stated so I can’t tell what is legit. Just stay away from the comments, especially on Israel. It becomes indistinguishable from Hamas PR.

  • Jersey JoePa says:

    The Fed knows that they overshot the mark with rate hikes. They waited too long and overreacted. The conversation has now turned to when they will begin to cut and how much will they need to cut. Oh, and there is an election next year. Can’t have a full blown recession fresh on voters minds at election time. All of these revisions downward are the canary in the coal mine. Look for cuts shortly after the holiday which will not show that type of robust spending that the Fed is holding out for. If holiday spending is low, expect a quick rate cut after the first meeting in 2024. Then it becomes a matter of how much. Too much too soon spooks the stock market. Bad for Dems. Too little protracts the recession into the voting cycle. Bad again for Dems. But they control the media who will do their best spin work to pin this on the Republicans and in particular Trump.

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