Stupidity of analysts is ‘back with a bang’
T HE
nation’s job market recorded solid growth last month, which now gives economists, politicians and the Federal Reserve ample opportunity to say and do stupid things — again.
As I predicted would happen in my Thursday column, the job market showed good improvement in April. The Labor Department said there were 211,000 new jobs and the unemployment rate fell to 4.4 percent — a 10year low.
The experts were predict- ing a bounce-back in job creation to about 185,000, so the actual 211,000 number had some people giddy.
“The labor market is back with a bang!” gushed one Wall Street economist whom I won’t name because he doesn’t know what he is talking about.
True, the 211,000 jobs were much better than the 98,000 new jobs first announced for March, which on Friday was revised down to just 79,000.
But as I explained on Thursday, the Labor Department has its thumb on the scale in April because it uses a model to guess the number of jobs being created by newly “born” companies that the government somehow doesn’t know about.
Using this murky model, it guessed that 255,000 of these invisible jobs were created in April.
Why the Labor Department thinks there are companies being created that it hasn’t yet officially identified in this day and age of instant communication, immediate tax filings and digital snooping is beyond me. But that’s what happens — the Labor Department makes a guess each month.
After yesterday’s announcement by Labor,
President Trump said . . . nothing. At least not on Twitter, where he is prone to make unfiltered, foolish statements.
Nice restraint, Mr. President!
The May number that’ll come out the first week of June will also be affected by this thumb-on-the-scale phenomenon. The Labor Department makes generous assumptions for that month as well, so don’t be surprised if May’s job growth is also strong when it’s announced next month.
Then the generous assumptions basically stop for the summer. That’s when the conditions of the job market may start to more accurately reflect the other weak economic data.
So expect to hear the Republicans crowing about Trump’s job creation for another two months and then crickets when things slow down this summer.
The Democrats? They’ll probably continue to show off their childishness by coming up with some ridiculous chant.
What’s the Federal Reserve going to do?
The April employment number was exactly what the Fed needed, coming as it did after a long series of horrible economic reports.
The Fed has selective memory. Fed governors — who have the right to say anything they want, no matter how stupid — will spend the next month making the case for at least two more interestrate hikes this year.
The Fed will never men- tion the March number being revised down to 79,000. But the Fed will probably skip a hike at its June meeting and wait until later in the year. And that could be a mistake. If I turn out to be correct, since the Labor Department’s thumb will be lighter on the scale by summer, the economy might not look strong enough for a rate hike. If you think I’m harsh on the politicians, economists and members of the Fed, you are probably right. Seriously — they’ve had 10 years to figure this stuff out!