Investors Beware: Don’t Let “BIG” Government Data Distract You from Your Goals

May 12, 2023

 

Many investors who follow the markets love to discuss economic theory and the virtually nonstop government data releases.  I’m here to tell you you’re wasting your time. The vast majority of these topics, discussions, and data, while intellectually interesting, will not improve your investment returns. 99. %+ of this data that is released is a complete waste of your time and energy. It’s noise.

I’m Chris Perras, Chief Investment Officer with Oak Harvest Financial Group and this is our investment team’s mid-week release when we examine a news item, headline, or story making the rounds from publicly available sources and ask, “Is it News or Noise?” for your money. This week we give our thoughts on government data releases.

A Frustrating Topic

Investors, this is a horribly frustrating topic for our investment team  whose job and responsibility is to manage real money in the markets for our clients.  This is against the backdrop of the TV networks trying to generate headlines and emotions to keep you engaged and watching or the hundreds and thousands of economists and PHD’s on staff at the Fed or employed in DC and NYC who churn out reems of statistics.

Every week and every month we are bombarded with “data” compiled and released by our government funded by taxpayers.  The goal of this data?  I really don’t know. To keep citizens abreast of how well our country is doing? I’m not sure.  Why do I say that? Because for data to be relevant it needs to be both precise and accurate and the government data that is released 2 to 6 weeks after the fact is almost always revised later on in major ways.

Here’s a table showing the US employment data released by our government of non-farm payrolls including April’s widely pubilcized 253,000 vs 180,000 esitmates.

And here’s a bit of the rest of the data released at the same time.

  • Unemployment rate 3.4% vs 3.6% estimate
  • Prior unemployment rate 3.5%
  • Participation rate 62.6% vs 62.6% prior
  • U6 underemployment rate 6.6% vs 6.7% prior
  • Average hourly earnings +0.5% m/m vs +0.3% estimate
  • Average hourly earnings +4.4% y/y vs +4.2% estimate
  • Average weekly hours 34.4 vs 34.4 estimate
  • Change in private payrolls +230K vs +160K estimate
  • Change in manufacturing payrolls +11K vs -5K estimate
  • Household survey +139K vs +577K prior
  • Birth-death adjustment+378K vs -29K prior

The Economy Is Growing

The good news is we are still growing our economy.  The other good news is the rate of job growth is slowing so the Fed is doing their job.  What isn’t mentioned in all those headline stories is that the March initial figure, that was supposedly better than expected at 236k jobs, was revised down -71k job to 165k jobs.  That’s a mere -30% revision down! Quite the miss.  That’s accurate?  Going back to February, the block buster 326k release for February was revised down by -78k jobs to 248k. That’s a -24% revision for the month.  That’s accuracy?  Between these 2-months the accountants and economists in our federal government overstated the prior 2-months’ jobs by 36%.  The actual job creation was -26.5% lower than they estimated only 4 to 12 weeks ago?  That is horrible accuracy based on any statistics class one took in school and why spending time on this government data is an academic exercise at best and a waste of time in my opinion when it comes to managing your money.

Front page stories about government data are almost always noise for your investments and for you and your family because they are almost always inaccurate and revised in major ways over the subsequent weeks and months.

Are you trying to meet your needs or your greed’s in retirement? Give us a call here at Oak Harvest and schedule an initial consultation with an Oak Harvest Advisor. We will sit down with you and help you and your family do the math to figure out if you will be able to meet your retirement goals and needs.