Here we go again with the optimists at Bloomberg painting an employment picture that appears to be rosier than reality.
Before I go any farther with my analysis, I just want to point out that the employment report, like the CPI inflation report, is a report of the past. I am not saying that it has no impact on markets, but likely only in the confirmation of bets that have already been placed. The whole point of playing markets is to be out in front, not a week or a month behind; and so it is doubtful to me that any of these reports are the market drivers that the media outlets make them out to be. If markets rise or fall when these reports come out, it is probably only a coincidence or the people who are behind the pack finally figure out what the movers and shakers already knew.
At any rate, the number of jobless claims for the week, 355,000, was below what a survey of economists predicted by 7,000. The 4-week average is at a five year low. And again, I point out that March 2008 was not a fun time to be looking for a job considering that the recession began in December 2007. In fact, much of 2007 and 2008 were terrible for job hunting, at least from my perspective. Remember that video of Cramer flipping out in August of 2007? And it probably is still very difficult to be job hunting.
The article in Bloomberg also states that the employment report due out tomorrow will probably show that net 166,000 jobs were added with the unemployment rate unchanged. Filtering out all of the other nonsensical commentary noise that is padded around the presentation of the numbers, my thoughts are that it’s just more of the same. It is not a report to be cheered. The only exception is that we’re stable at some degree of awful.
Bernanke may have been able to pull the whole plan of open-ended QE out of the ditch with his testimony to Congress last week. But if it were me with a commitment to make significant progress on unemployment, I would be very disappointed in this report, thinking that more needs to be done to achieve that goal. Bernanke and the rest of the FOMC need to get the monetary bazooka dusted off and raise NGDP expectations much higher. Remember the graph by Marcus Nunes that I keep waving around? The red line needs to rise farther and faster toward the zero mark in order to see more improvement in the employment picture. For some reason the Fed has been very timid about it, even wavering at times, which is inexplicable when we should be able to suppose that some natural adjustments in the employment market are helping to push the numbers up somewhat. In other words, the Fed is still very much behind the ball with its do something, and then wait and see kind of approach.
Bernanke needs to get out in front of this. He’s already proven that what he says matters more than what the idiot inflation nutters and bubble fear-mongers on the FOMC have to say. And I think it’s high time for him to come out and speak longer and louder than they. He can’t be practically absent while these bozos flap their gums, tighten policy, and leave him to clean up the mess.
I’ve given Bernanke kudos for limiting the damage these people have already done, but he really needs to appear to be a leader on this one, and stop hiding behind his marble desk.
Marcus Nunes has a post up today about what the employment report that was released today means and I tend to agree. Between the two surveys, the household survey and the establishment survey, there isn’t any agreement. If employment was starting to take off, we wouldn’t be peering through murky, muddy water in the underlying data trying to find where those extra 70k jobs came from. It doesn’t make sense that the labor force and participation rate continued to decrease while these employers supposedly had a really good month.