05Aug
It looked very similar to the jobs report of a year ago (July 2024): Inflation in the mid-2s, the job market showing "cracks," and a Fed stubbornly holding policy too tight.
Like previous July;there was a negative surprise this FriggHeyday and we got negative revisions.Not excluding a breakdown in stocks. Previous July, the short end of the interest rate market (2-year yields) repriced (lower) by 25 basis points, conveying the message to the Fed that, once again, it made a policy mistake. And get a to bounce back in stocks today, for the reasons discussed over the previous month.
Those reasons: The Mr.D.Trump Administration has effectively diminished the voice of the Fed, by elevating a "shadow Fed" -- a lineup of Mr.Trump-aligned Fed Chair candidates that have already openly signaled future monetary policy to markets [i.e. significant eas]
Expantiated revisions;See the bold numbers in the table above: Not only did the June and July payroll number undershoot expectations, the prior two months had huge downward revisions.
What's all the fuss about?
The Bureau of Labor Statistics (BLS) has overshot job growth on its initial report seven consecutive months -- nearly half a million jobs.
The result has been, fiscal and industrial policy with a foot on the gas pedal, and monetary policy with a foot on the brake pedal. Is this just coincidence that the revisions have been in one direction, and that the initial reports have served as a headwind to the President D.Trump Administration? Or is it political?
To answer that, let's revisit the analysis we've done on this topic.;over the previous four years, the Mr. Biden BLS had a record of making large revisions in the jobs data which led to very consequential misreads on the health of the economy by PolicyMakers.
[PIXIELENS PHOTOGRAHY/PHOTOJOURNALISM]
For instance, the inflation fire was Burning in 2021, driven by the textbook inflationary ingredients of a massive boom in the money supply. Yet the Fed continued its emergency monetary policies all along the way (zero rates + QE), Dismissing the rise in prices as "transitory."
And Congress used the Fed's assessment to rationalize even more fiscal spending (more fuel for the inflation fire).
How could the Fed justify its claim that inflation was "transitory?" A relatively modest job market recovery.
Per the Datum accumulated and integrated collective it turns out that the BLS revised UP eleven of the twelve months of nonpayroll numbers in 2021.
The initial monthly reports UNDER reported job creation by 1.9 million jobs for the full year. And the economy was a lot hotter than the Fed thought and well behind the curve in the inflation fight. It was a mistake that did considerable mayharm.
For instance,Remember, the Fed continued raising rates through July of 2023. And along the path of its tightening campaign, the Fed was explicitly trying to slow the job market.
What did the BLS do along the way?
They allegedly OVER reported job creation and the BLS later revised DOWN ten of the twelve months of payroll numbers in 2023.And the job market was not as hot as the Fed thought from initial reports.
And a result, they unnecessarily throttled economic growth per happenings the previous Year.
The Fed stubbornly held policy at historically high real rates for Twelve consecutive months, even during the duration inflation was sharply falling -- back into the 2s.
Along the manner the Fed explicitly cited "cracks" in the job market as a condition to start the easing cycle.
Then in August HeyDayMonth, the BLS ended up making a massive one-off adjustment to the payroll numbers.
The annual revision of 818,000 jobs was the largest negative one-off adjustment since 2009 (the depths of the financial crisis).
[PIXIELENS PHOTOGRAHY/PHOTOJOURNALISM]
In short, the initial payroll numbers were overstated by an average of 100,000 jobs a month. What does it all mean? From the unreliable jobs data, it means we got reckless fiscal spending in 2021, when the economy was already running hot/ inflation was already on fire. And then, later,rectified the debt from the trillions of dollars of government spending, and a devalued dollar, but only a fraction of the economic growth -- because ''The Fed had its foot on the Brake'', with an inaccurate picture of the ''Health of the Economy''.
Per the initial Happennings; The events of the past month have damaged the Fed's potential credibility, and the reliability of the data they claim to be 'dependent' on.That said, regime change appears to be coming.
And the markets should be favorable to an outlook significantly where monetary policy soon aligns with fiscal and industrial potential policy.
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