Last Friday was an important day for many government “workers” across America. First, it was Friday, which meant that the effort expended towards the pretense of doing something useful was allowed to fade considerably. Second, it was also the monthly procession colloquially known as the jobs report — the time when the U.S. Department of Labor publicly discloses its unique brand of data. They call it statistics. I call it crap.
The most recent jobs report covering the month of October was a particularly laughable iteration. According to ABCNews, the job market “boomed,” with companies adding 271,000 jobs to the economy — far higher than was previously forecasted by Wall Street analysts. In addition, nationwide unemployment fell to 5%, hitting a seven-year record low. In theory, this gives Janet Yellen and the Federal Reserve a significant margin of safety when it comes to raising interest rates. And they would be wrong.
The October jobs report is crap. Ever since the Bureau of Labor Statistics began fuddling with key metrics that define previously logical terms like “employed” or “unemployed,” the jobs report became a sort of government endorsed pornography. To borrow a popular sociological adage, I may not know how to define porn, but I know it when I see it.
Let’s take the much-ballyhooed 2.5% increase in hourly earnings in October as compared to a year earlier. For quite some time, inflation — using the government’s ridiculous consumer price index methodology — would average 2% or 3% easily. Thus, in real terms, there’s been little to no practical increase in standard of living. Who cares about a meager salary increase when that benefit is eaten up by higher costs and taxes?
Digging deeper into the numbers, we find that clothing stores contributed 19,500 jobs, accounting for nearly half of the retail sector’s employment growth. The mainstream media naturally views this as an optimistic sign of buoyed consumer sentiment. Talk to me when jewelry stores account for a sizable chunk of retail hiring! Within the broad retail category, products such as clothing are secular — people have to buy clothes regardless of their financial status. As such, clothing store are a bad barometer for judging economic health.
Overall, three sectors contributed to nearly 53% of the newly created jobs last month — health care, retail, and the restaurant sector. Health care is unfortunately spiraling out of control with exponentially skyrocketing costs and the growing demands of an aging population — neither factor is encouraging from an economic growth perspective.
While jobs added in retail and the restaurants could signal improved consumer confidence, it could also mean that the average worker is increasingly growing desperate. It also is a statistically misleading time to put too much optimism towards their performance. Hiring will naturally pick up in the third to fourth quarters because this is the time when consumer foot traffic is at an all-time high for the year. Again, talk to me when something profound has occurred.
Predictably, the October jobs report has produced more of the same and none of the change that was promised.