The Truth About US Jobs Numbers

We learned last month that the U.S. of A. added 353,000 jobs in January compared to December 2023.

Sounds good.

That number certainly made the mainstream media giddy.

My old employer, the Wall Street Journal, shouted that jobs growth “blasts past expectations.”

NPR called it “extraordinary.”

The New York Times called it a “surge” and claimed it was “a sign that economic growth remains vigorous.”

Then again, that’s the media.

They have an agenda, and, well, they aren’t always the best analyzers of underlying data… nor are they very good/useful at connecting dots… nor are they good at critical thinking on deadline.

Data comes out, and you gotta be the first to dispense it to your readers—otherwise you’ve lost the news cycle.

“Does this really seem logical, based on everything else going on?” is not a question most writers are thinking about on deadline.

And, so, we, the public, are left with incomplete, inaccurate, misinterpreted information.

So here’s some data to think about related to that January job surge…

First, that was a seasonally adjusted number. “Seasonally adjusted” means taking account of the fact that, statistically, more people are laid off during certain months of the year than others…

Frankly, it’s just a way of fiddling with the figures.

“Seasonally adjusted” is just a newspeak way of saying it’s a “governmentally manipulated” number.

I don’t know about you, but when I was out of a job, I never considered that my joblessness was “seasonally adjusted.”

I was unemployed. Period.

On a non-seasonally adjusted basis, employment in America actually fell in January… by more than 2.6 million people.

I am betting that those who lost jobs are not thinking, “Well, at least it’s a seasonally adjusted job loss.”

They’re thinking, “Damn—no money. What do I do now? Where do I find a job?”

Second, the media act as though the monthly jobs data is everything you need to know about the health of America’s economy.

Not so, Joe.

Jobs data is backward looking. A trailing indicator. You’re looking in the rearview mirror at where you’ve been. It says precisely nothing about where you’re going.

Here’s a very good example of what I mean: November and December 2007 saw seasonally adjusted growth of 116,000 and 105,000 jobs, respectively. When the December report arrived, the White House crowed that the gains marked a “Record 52nd Consecutive Month of Job Growth.”

And then January 2008 arrived. The country added a measly 1,000 jobs, and then went on to see 25 consecutive months of job losses; more than a million jobs vanished during the Great Recession.

That excitement about what was in the rearview mirror was pointless…

Those November/December jobs numbers meant absolutely nothing.

Same today.

Surging job growth blasting past expectations in the past offers not even the slightest hint of what tomorrow could bring.

There are, however, forward-looking indicators that give us a better view of where we go from here.

For instance…

The Philly Fed Manufacturing Index is already in recession. That index is a survey of manufacturing companies and it speaks to how business is aligning its operations for the future it sees approaching.

The index has given us a negative reading for 16 of the last 20 months—not an encouraging sign, and it certainly doesn’t match with the jobs data… seasonally adjusted, of course.

The Richmond Fed reported similar sentiment in its region along the Mid-Atlantic.

Nationally, net savings are in retreat as Americans burn through their cash in this post-inflation world.

Once again, the media is missing a trick when it comes to inflation.

Sure, reported inflation is down, but that’s just a rate of ongoing price growth. Prices have shot sharply higher over the last few years, and the inflation we’re still seeing is growth on top of that much higher base…

American pocketbooks are getting screwed by that. So, bye-bye savings as everyone tries to make ends meet.

We also saw business bankruptcies surging across 2023.

And we have the so-called “yield curve” (which measures interest rates across various bond maturities) in negative territory every month since November 2022. A negative yield curve has presaged every recession since 1970.

Now, toss all of those numbers into the Jeff-o-Matic Econocaster (patent pending) and what you come up with is a big bag of dookie.

Sure, the rearview mirror is looking bright and sunny.

But the car is in drive, not reverse.

And up ahead, the storm clouds are dark and foreboding.

Of course, as we all know, dark clouds have silver linings.

In this case, that lining is the Federal Reserve cutting interest rates, despite new commentary from lots of the media that hot jobs growth means the Fed won’t cut anytime soon.

Poppycock and horse hockey.

The cuts, they are a comin’.

And that’s gonna be grand news for stocks, bonds, and crypto across the rest of 2024 and into 2025.