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REMINDER: All investment, economics, and finance related material now appears at the new IaconoResearch.com. For the time being at least, this has become a personal blog covering a variety of mostly unrelated topics.
I don’t know about you, but I’m not looking forward to the political discourse that we’re likely to hear over the next six months, particularly if the U.S. economy continues to weaken and the finger-pointing increases leading up to the November elections. So, it might be a good idea to only look on the lighter side of the political debate as it relates to voters’ number one issue – the economy – a good example of which is shown below.
From the Nate Beeler archive at the Washington Times.
The Labor Department reported that nonfarm payrolls in the U.S. rose by 227,000 in February, paced by big gains in the professional and businesses services sector as well as in health care, and the unemployment rate was unchanged at 8.3 percent.
There were also some big upward revisions to previously reported payrolls data as the December job gain total of 203,000 was raised to 223,000 and January’s total of 243,000 now stands at 284,000.
The number of Americans the Labor Department counts as unemployed held steady at 12.8 million, though a broader measure of underemployment that includes discouraged workers and those settling for part-time work now stands at 23.5 million as the U-6 measure of underutilization fell from 15.1 percent to 14.9 percent.
In this story at the New York Post, economic/financial market skeptic John Crudele suggests that you lower your expectations for tomorrow’s labor report for the following reasons:
As I’ve reported before, the 2.689 million job loss turned into a gain of 243,000 only because Labor’s seasonal adjustment programs expected the job losses to be bigger. The warm winter weather probably kept some people from being put out of work, and this threw off Washington’s calculations.
Will that same thing happen with tomorrow’s number?
That isn’t likely. Yes, the weather has remained warm. But Labor’s computers are expecting undoctored, not seasonally adjusted growth of more than 800,000 jobs in February.
So there’s less chance that the seasonal adjustments will be pleasantly surprising.
And February isn’t one of those months in which Washington includes a huge guesstimate for jobs added by companies it thinks, but can’t prove, were just started. This so-called Birth/Death Model has been the biggest contributor to job growth — bogus job growth — over the past few years.
Also, John has spotted a link between Tuesday’s stock market dive and Wednesday’s story about the Fed’s latest thinking on the next round of money printing:
Even though one Fed official last week told investors to stop depending on “morphine” from the central bank, the cry for another version of quantitative easing went out less than 24 hours after the Dow Jones industrial average fell 203 points on Tuesday.
Why not give Wall Street what it wants?
Because the Fed’s money-printing operation is leading to higher commodities prices. And as thrilled as I would be to bail Wall Street out again, can’t we at least wait until it really needs our help?
That’s a good question (the second one, that is).
Well, next Friday’s labor report should be interesting as more signs emerge that the U.S. economy is not as healthy as it looks due to an unusually warm winter and odd seasonal adjustment factors resulting from the 2008-2009 recession. The latest evidence comes in this Gallup unemployment survey that shows the jobless rate going back up in February.
The differences between the adjusted/unadjusted and Gallup/BLS data are all rather complicated, but, one thing seems certain – the jobless rate as reported by the Labor Department is not going to go down again from its level of 8.3 percent in January. It could jump just a few tenths of a percentage point or to as high as 9 percent.
As it turns out, that “giant sucking sound” ended up coming from China, not so much Mexico, and it’s almost quaint to think about Ross Perot’s concern over the national debt back when he ran for the nation’s highest office in 1992 and we only owed about $4 trillion.
From the Mike Thomson archive at the Detroit Free Press.
Caroline Baum takes a look at the many widely varying interpretations of last week’s labor report in this commentary at Bloomberg, breaking those interpretations down into just a few groups – Democrats, Republicans, and conspiracy theorists, reserving the harshest criticism for the black helicopter crowd.
At the far end of the politicization spectrum are those who believe the government cooks up the numbers in some dark corner of the Labor Department basement. It’s as if these folks decreed, “There shalt be no good news as long as Obama is president, the federal government is expanding and the Federal Reserve is printing money and debasing the dollar.”
I have a message for them. It’s not the data that are politicized. It’s the interpretation.
Friday’s report inspired an outpouring of accusations of “fraudulent employment statistics” and long screeds on updated population estimates from bloggers (ZeroHedge and the Economic Collapse) and editorial writers (the Washington Times) alike.
The household survey for January incorporated new information from Census 2010. Previous months were unrevised. Simply put, there is a December/January break in all the series that rely on the new estimates.
If the December data had been updated for the population- control effect, the civilian non-institutional population would have increased 175,000 in January, a typical month-to-month change, not the 1.7 million without the adjustment.
The composition of the population changed, as well. Conspiracy theorists seized on the 1.2 million increase in those “not in the labor force.” Adjusted for an apples-to-apples comparison, the number fell by 75,000 in January. That’s because the population increase was concentrated in persons 55 and over and in the 16-24 year-old age bracket: a population less likely to be in the labor force than the general population. (Tables B and C on Page 7 of the Employment Report outline these effects.)
My impression has always been that the conspiracy theorists are somewhat apolitical – or at least apolitical when compared to the many political types that only dabble in economics and finance. Of course, I could be wrong.
By Tim Iacono, Since 2005
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