Stock Market News, Government BLS Jobs Data: Bullish or just B–LS–t?
We are hunkering down for upcoming 4th quarter 2023 earnings reports, so the investment team at OHFG is super busy. I’m keeping this week’s video short and sweet and I’m going to try to help investors and my subscribers regain something more valuable than money, what’s that? Your Time.
Many retail investors I run into want to spend a lot of time with me discussing economic data and forecasts. Maybe it’s because I have been managing money for 30 years, or because I’ve taken all those econ and finance classes, or because I have a CFA, or maybe it’s because I went to a prestigious Ivy league school in Boston for my MBA, or maybe these investors themselves studied finance or econ in school. I don’t know,
But what I do know, after doing this job for decades, that relying on, waiting for, or spending much time discussing and putting any weight on the weekly and monthly government data releases, outside of academic discourse, is a near complete waste of time for an investor.
This week’s video, Government data, and more specifically Bureau of Labor Statistics, better known as the BLS Jobs data: Bullish or just B—LS—t?.
Last Friday, with much fanfare from the White House as well as the politically biased news media, The Bureau of Labor Statistics (BLS) unit of the United States Department of Labor released it much anticipated by some, monthly jobs and unemployment rate reports. Here are a few of the promotional headlines by the press and the White House:
The Hill: US added 216,000 jobs in December, blowing past expectations.
CNBC: Payrolls increased by 216,000 in December, much better than expected.
Reuters: Economy cranks out jobs at brisk clip in December.
LA Times: Employers add a surprisingly strong 216,000 jobs in a sign of continued economic strength.
White House: Touts U.S. Economy’s Strength as Election Year Begins
If you were watching CNBC. Bberg news, or most other financial news outlets, you probably got an Initial rush of adrenaline listening to these stories. More jobs than expected? That’s a good thing, yes? Usually, yes, it is. But the premise starts off as faulty from the get-go. Why? Because the data and numbers the BLS releases, even with over 2000 employees and near $1 billion annual budget, while fictionally precise, are near 100% in- accurate and essentially fake.
I mean no BLS employee ill will by this statement. However, the BLS charter, funded by taxpayers is to be the principal fact-finding agency for the U.S. government in the area of labor economics and statistics. So functionally, the BLS collects, processes, analyzes, and disseminates data to the American public, The problem for investors relying on this data to make any kind of investment decision is the data is virtually always inaccurate when first released. And we are not talking by a few hundred or thousand jobs, we are talking by 10’s if not 100’s of thousands of jobs monthly and annually.
Case in point, the month of December. The release stated the economy created 216k jobs. Of those, the majority were government employees, education, healthcare workers and hospitality and leisure those areas hit hardest by Covid whose sectors recovered last.
The issue is don’t believe that number. Why? Because the revisions to already slowing economic growth in October and November numbers came out and guess what? Those bad numbers were revised to much worse than originally thought. Out of the roughly 350k jobs that the BLS reported that were created in the combined October and November period? We lost about 70k of them, or 20%. Yes, the BLS numbers, of only 4 to 8 weeks ago, were revised down by 20%. Only in economics could someone hand wave that level of error away.
More precisely, October was revised from 150k jobs added to only 105k and November from 199k to 173k. This means all but one of 2023 jobs reports have been revised sharply lower over the next 1 or 2 months from being reported. Ten of the past 11 jobs reports have been revised substantially lower. Here’s the monthly data and revisions compiled by ZeroHedge.
And investors, year to date, our taxpayer funded, federal government data gathers, very quietly, have vaporized almost 440k jobs that were initially reported by the BLS through Thanksgiving. Moreover, according the Daivid Rosenberg, throughout 2023, “in excess 0f 40% of BLS payroll growth over 2022 came from “the fairy tale ‘Birth-Death’ model” the BLS uses to “guesstimate” its jobs report”.
Folks these are the takeaways from the December jobs BLS release and the prior JOLTs job openings releases. The takeaway is NOT economic strength, rather its 1- the economy is slowing quite rapidly; and 2- quit wasting your valuable time listening to strategists, academics, economists, and worst of all politicians quoting government economic data series.
The economy is NOT nearly as strong as those in politics and on financial TV are alluding. In fact, according to the BLS, the economy actually lost -33k temporary workers in December at the height of the seasonal shopping period? Does that sound like a strong economy folks? The first industry I covered as a buy side analyst out of B-school was the temp and consulting service industry. The first rule of hiring and firing at almost every major corporation in America is hire 1- temps first, 2- consultants second and 3- full time employees and fire 1 – temps first, 2- consultants, and 3- fulltime last. Why because that’s how American business keeps fixed costs low and economic leverage high when things improve high, and when things slow, how you can downsize rapidly and economically without destroying your culture or business.
Another point I have discussed over the last 2 years when pressed by those wanting to discuss government data, and I have to emphasize once again, is the headline number from the BLS does not quantify the quality of each job created. These numbers double and triple count workers holding one or more jobs, temporary jobs or part time work. In B-L-S— data land, 1 AI computer programmer making $500k a year at MSFT, AMZN or GOOGL is “worth less” to the economy than a struggling to offset inflation worker, holding 3 new part-time jobs. In fact, according to the same ZeroHedge data analyst we follow, looking behind Friday’s headline numbers, the number of “full-time jobs actually plunged by 1.5 million in December to the lowest since Feb 2023”. At the same time, the number of seasonally held, part-time jobs jumped by well over 750K to the highest on record. The number of multiple jobholders, most likely struggling to offset inflationary forces, also jumped to a significant new ATH.
The bad news, while we are technologically closer to sending humans to Mars, it seems we are no closer to getting both timely and accurate government data. The good news, hopefully the OHFG investment team has helped educate you into why you should spend very little time worried about weekly or monthly government data releases that are hyped on financial news networks usually as the most important data of the week, or the “key to your money” today, or this week, or this month. Pass on those stories and go read a good Tom Clancy thriller, they are better fiction than the BLS jobs reports and most other government data releases.
Our in-house investment team has just released a tool that is structured to help investors and other RIAs better navigate through more uncertain times that may require more tactical decisions in ones investments. If you are interested in learning more, go to OakHarvestFunds.com where you can find out more about this new investment tool.
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CFA®, CLU®, ChFC®
Chief Investment Officer, Financial Advisor
Chris is a seasoned investment professional with over 25 years of experience working with some of the most successful money management firms in the world. Chris has made it a point in his career to adapt as the market landscape changes, seeking to utilize the appropriate investment strategy for a given market environment. His transition from managing billions of dollars at the institutional level to helping individuals and families retire is guided by a desire to see first-hand the impact he is making in the lives of clients at Oak Harvest.