Just like the proverbial glass filled to the halfway mark with water, the American jobs market seems to be often described based more upon the political views of the reporter than the actual reality. I was reminded of this again this morning when I saw a big headline on the top of the first page of the New York Times proclaiming yesterday's jobs report as indicating a return to optimism about the economy. Think about that. The private economy created 273,000 jobs in April according to the Bureau of Labor Statistics. About 220,000 of those jobs, however, were not actually found by the government; they are just added on the basis that new businesses were created and that those new businesses hired employees. That may be, or it may be incorrect. Maybe Obamacare and related costs prevented all those new businesses from opening. Maybe bad weather delayed some businesses from getting started earlier in the year. Maybe there was a mad rush to open businesses and the correct number is actually 440,000 rather than 220,000 new jobs. It does not matter. The point here is that all but 50,000 of the supposed new jobs reported by BLS come as a result of a statistical adjustment. That adjustment may be many things; one thing the statistical adjustment is not, however, is an indication of the return of optimism in the economy. Remember, whether or not there is a major cloud of gloom hanging over the American economy, the BLS was going to add those 220,000 jobs to the number. Indeed, because the BLS assumes so many businesses are started in the Spring, the April jobs number always has a special bounce to it.
Meanwhile, the latest figures on the GDP show that after the next refinement in the first quarter results, the economy most likely contracted during January to March of this year. One large financial institution just lowered its view as to the final GDP number for the quarter to a contraction at a rate of 0.4%. During those three months of contraction, however, the BLS reported that the economy created roughly 600,000 jobs. Simply put, that makes no sense. One has to wonder how many of those 600,000 jobs were the result of statistical adjustments for a reality that never took place.
The truth is that yesterday's jobs report indicates nothing, either positive or negative. In that respect, it is more and more like the weekly report of new unemployment claims. The reports are numbers, nothing more. They may indicate a trend, but then again, they may not. Only once most of the data points one way or the other will we know if we are in the midst of the fourth straight year of "optimism" in the Spring followed by dismay in the Summer and Fall.
Meanwhile, the latest figures on the GDP show that after the next refinement in the first quarter results, the economy most likely contracted during January to March of this year. One large financial institution just lowered its view as to the final GDP number for the quarter to a contraction at a rate of 0.4%. During those three months of contraction, however, the BLS reported that the economy created roughly 600,000 jobs. Simply put, that makes no sense. One has to wonder how many of those 600,000 jobs were the result of statistical adjustments for a reality that never took place.
The truth is that yesterday's jobs report indicates nothing, either positive or negative. In that respect, it is more and more like the weekly report of new unemployment claims. The reports are numbers, nothing more. They may indicate a trend, but then again, they may not. Only once most of the data points one way or the other will we know if we are in the midst of the fourth straight year of "optimism" in the Spring followed by dismay in the Summer and Fall.
No comments:
Post a Comment