For those of you who in the US who continue to use the recession crutch as a pulput against President
Bush, the Job Report will come out tomorrow for this quarter and might deal a blow to the same ol story
about 'ALL these people out of work'. The following text was acquired today from FTN Financial and gives
some insight to the current market and some things going on. I am also posting a trend graph for the last 20
years. The job market is getting better and is in a factual upswing and has been for 2 years.
Quote:THINGS YOU SHOULD KNOW ABOUT TOMORROWâS JOBS REPORT
No one in the world of fixed-income needs to be reminded how important the employment report is. In the past four
months, it has accounted for all of the biggest daily changes in yields. This monthâs report has a few twists that made
the analysis even more challenging than usual, and could lead to some confusion after the release. The following is
offered in the interest of averting some of that confusion. The estimate
The consensus estimate for payrolls is 120k, according
to a Bloomberg survey of 71 economists. But some of
these estimates allow for returning supermarket strikers
and some do not (see below). Further clouding the
picture, some economists are said to have posted low
âofficialâ estimates while promoting higher whisper
numbers. Itâs not clear what this is meant to accomplish,
but it has lead to some estimates that the true consensus
is 175k. The strike
A grocery workers strike against Kroger and Safeway
ended in March, and approximately 75k workers returned
to their jobs (and to payrolls). Itâs not clear how many of
the 25k replacement workers hired during the strike were
let go, but the general consensus is that the end of the
strike will boost payrolls by 50k. Other labor market data
Given the size of nonfarm payrolls â approximately 103
million in January â a change of 100k amounts to about
0.1% of the total. That means that a forecast with
precision within 25-50k is a very precise forecast indeed.
But that is the kind of precision investors expect.
Economists turn to other data, including unemployment
claims, jobs-hard-to-get and jobs-plentiful indices from
the consumer confidence report, the ISM indices and
surveys by groups like Manpower and Challenger Grey &
Christmas for guidance. This month, the early release
date, April 2, means that much of these data were not
available in time for forecasting.
What was available were claims â stuck at about 340k
for the past three months â and the Manpower survey,
which calls for a big rise in hiring in the second quarter
of this year.
As for the ISM employment indices, Chicago was sharply
lower, but the ISM manufacturing index was up. The nonmanufacturing
index wonât be released until next week. Relevance
As we have written in the past, some of these indicators
correlate well with payroll growth, while others are only
marginally informative. The best indicator is the nonmanufacturing
employment index, with an R2 of 0.54 since
1998. The second best is the manufacturing ISM
employment index, with an R2 of 0.38. The R2 can be
boosted considerably by using multiple variables, but the
best regressions tend to miss by fairly substantial margins
in any given month. (Substantial, that is, to investors who
demand accuracy of 0.05%, or 50k.)
To the best of our knowledge, there are no effective
leading indicators of employment. Even the manpower
survey appears to lag about a quarter behind the data, as
if CEOs are forecasting a pickup or decline in hiring next
quarter because they saw a pickup or decline this quarter.
This does not mean these data are useless, however,
because most are released in time to forecast the latest
report on a coincident basis. Even the Manpower survey,
which points to a big rise in second quarter hiring is useful
despite its lagging-indicator status, because it suggests
a pickup in hiring in the first quarter, presumably in
Fridayâs report on the March employment situation. Trends vs. pinpoint forecasts
Several Fed officials, including Greenspan, have
suggested that nonfarm payrolls will pop higher at some
point this year, but all insist they canât say when this will
occur. Private sector economists are in a similar bind. As
the ancillary data suggest that payrolls should have
been rising 200k per month or more since the fourth
quarter, something has obviously not happened.
At some point, though, payrolls will almost certainly
strengthen. We say this with confidence for two reasons.
First, because the ancillary data measure the same thing
as the payroll survey, but from a different angle. The
reason thereâs a high historical correlation is the same
as the reason thereâs a high historical correlation between
measurements of something with a ruler marked in
inches and another marked in centimeters.
The second reason is that anecdotal reports suggest the
payroll survey is out of synch with reality. The latest such
story comes from a Market News Service piece on temp
employment services. According to a source, who had
recently attended an industry conference in Chicago, the
mood was upbeat, everyone agreed that hiring was strong
and everyone was perplexed that their sector in particular
(temp hiring) has been weak in recent payroll reports.
The unfortunate truth is that this evidence, both measured
and anecdotal, is a terrific guide to the strength of the
trend in payrolls, but its effectiveness fades significantly
when it comes to pinpoint forecasts of payrolls in any given
month. This is the most likely explanation of both the
persistent over-estimation of payrolls in the past four
months and the persistent whispers that payrolls will be
even stronger than forecast. One day, they will be.
- Chris Low, Chief Economist
FTN Financial [email protected]
Gain of 308,000 jobs far better than Wall Street's forecasts; unemployment rate up to 5.7 percent.
April 2, 2004: 8:56 AM EST
NEW YORK (CNN/Money) - U.S. payrolls grew at the fastest pace in nearly four years in March, the government said Friday, in a report that soared past Wall Street's expectations and could play a pivotal role in Fed policy and the presidential election.
Payrolls outside the farm sector grew by 308,000 jobs in March, the Labor Department reported, compared with a revised gain of 46,000 in February. The unemployment rate rose to 5.7 from 5.6 percent.
Economists, on average, had expected 123,000 new jobs and unemployment at 5.6 percent, according to Briefing.com.
It was the strongest gain in payrolls since a matching gain of 308,000 in April 2000.
The surprisingly strong number should ease some of the political pressure on President Bush, who has seen little job growth during his administration.
It should also raise speculation that the Federal Reserve is closer than ever to raising its target for the fed funds rate, an overnight bank lending rate it manipulates to steer the economy.
Despite some signs of incipient inflation, most economists have believed that the Fed was waiting for a string of strong payrolls reports to raise rates, and Friday's report could be the first in that string.
"This definitely sets the Fed on the track for the hike they've been talking about for several months," Bill Cheney, chief economist at John Hancock Financial Services, told CNNfn. "But the Fed does require that there be a sustained trend -- it requires more months like this -- not necessarily at 300,000, but at 200,000 or better."
On Wall Street, stock futures jumped, and prices plunged in the bond market, pushing the yield on the 10-year Treasury as high as 4.15 percent, the highest since February. Bond prices and yields move in opposite directions.
The report comes after months of weakness in the jobs market and could be the boost that the Bush administration has been waiting for.
The inflation isn't imaginary, Bush is spending money that doesn't exist. Not much, but enough to drive the US dollar down. It isn't apparent because currencies are measured agaisnt the US dollar, meaning they see their currency increase in value, and assume something is happening to them. I don't know how long that spending will last, but it's sure making the EU happy: as soon as Bush got in office, the Euro began climbing. Just for perspective, in June, it was 80 cents US to the Euro or so, and now it's around $1.20. All because of the US dollar plunge.
It may turn around yet, but issues like that don't seem to be of a very high priority with post-war Iraq going sour. Time will tell I suppose.
04-02-2004, 05:45 PM (This post was last modified: 04-02-2004, 05:47 PM by g-boy.)
Ah... although Bush has not given realistic deadlines and budget to NASA for the want to push space exploration, realize that this should actually help the economy more than anything else you could debate here. Like it or not, inflation happens, and it always will. The Apollo missions drove increases in technology creation, especially in terms of computing... the robotics and computing power necessary for future missions, as well as finding materials that are resistant enough to create a base on the Moon OR Mars will vastly improve practical technology back here on Earth. The positives on economy will be enormous.
Then again, this time we're not the only ones who could do it, as Europe has aspirations to put people on Mars by 2033 and China is the new Russia to compete with (though they are very far behind the US and Europe, they are actually concentrating on it while we sit around like losers and say "let's fix the Earth instead of leaving it! it's too expensive!"). This last statement is off topic, but I wish people would finally be honest with themselves and realize that we need to leave this planet, we will overpopulate and use up all resources, we need other places... and trying to fix it now will do nothing unless you restrict population growth somehow and tell everyone to stop drinking water, using fossil fuels, and stop using pollutant technology (which is a necessity for how advanced we are). Then again, even all of that will do nothing to reverse the problems, just slow the inevitable. Bush is not just some fool wanting to boost popularity (although that's no doubt a part of it)... he's on the right track, as misaligned his views of how to go about it are. Anyway, no need to respond to that stuff unless you want a new topic, just pointing it out and not to forget there are other factors to economy than recessions and inflations and deflations and currency values and so forth.
By your chart, it looks as tho job growth was falling towards the end of every presidency then pick up in middle then dropped again. Wonder if elections bring about uncertainty
It might now seem like an important issue but if you listen to every sound bite from Kerry...its about the poor job market. Today, he was a bit choked up
in an interview about the job report and i KNOW it's killing him to see jobs increasing.
Notice the sharp climb of the upward trend around the DOT COM boom. Very interesting to see how technology soared during those years. Notice the steep downward slope
right after 9/11 also. With the transportation industry in shambles and the markets predicting slumps at that time...it's interesting to see the fallout.
Anon...if you were to extend the graph to the left for many more decades...you would see the upswing and downswing trends as they went though regular cycles. The
govenment isn't spending any more money now then they have in the past. It's just not taxing the people as much to cover the use. Now we have 2 choices: cut spending or
give the govenment back more of our working money. I know MY choice in this matter. I like keeping more of my money with each paycheck each week. I can buy more things and put
more money back into the economy. We could cut spending but that would have to be across the board. That includes subsidies for welfare, medicare, public housing..etc. They won't
have any of that. They do spend an extravagant amount of money on space exploration. I personally don't care if they find water on Mars or get us better pictures of the rings of Saturn.
I don't believe in extraterrestial life so they can stop sending out billion dollar calling cards. I wouldn't mind them giving the money from a sattelite program to rehab programs or homeless
shelters...people who truly need the money.
Just because you don't believe in extraterrestrial life (religious view I presume) doesn't mean it isn't out there. But that's not even the point... doesn't seem NASA is really looking for life (they cut funding to SETI so now it's private) and they care more about terraforming than searching for life. You may have the same view as my Republican friend who thinks the future (that is, after he is dead) is not worth doing anything for, and is more worried about things that happen in his lifetime.
By the way, I don't mean it as a facetious remark that I presume it's a religious view. I just mean that if you look at it from a straight logical standpoint, it's close to impossible that we're the only planet with life. There are more and more other solar systems with planets being discovered every year... little water, little carbon, little oxygen, boom, you got life. But obviously I realize that some religious people feel that life was created on Earth and Earth alone, humans modeled after God, Adam and Eve, etc.... and I can respect that if you believe it. But scientifically it don't work that way. I'll say it again though... PIX, the computer is a decent part of your life, as it is many people on this forum... think they'd be as advanced and as prevalent without the technology created for space exploration?
I never actually thought about the technoligical push that NASA causes. I also attribute vidoe games to that as well. I belive gaming is bigger in the dollar sense then nasa.
Not at all. Gaming doesn't require much of a forward push, whereas space tech has very specific needs that have to be met. That translates to many multi-million dollar development contracts which get bid on. Gamers only need a slight improvement every six months to be happy. IE. Who here spends more than a million dollars a year on a computer with architecture and parts that don't exist yet?
The reason thinking in the here and now doesn't work is because the methods of achieving goals are chosen by the lowest bidder (best choice when there's no future to consider), and they have cutting corners down to an art. Since it costs a lot of money to campaign for, and sustain a political career, grass-roots just doesn't cut the mustard. You have to have money, and the easiest way to do that and have time for politics is to be born into it: family business already established, reputable name appended to yours, brought up with a corporate mentality. That's where the problem lies, not in party affiliations or theological standings. That 'so-what-if-60,000-people-have-to-eat-their-own-excrement-to-live-so-long-as-I-make-an-extra-buck' attitude that makes changing the public's opinion a better option than doing what they want, or military action a simple quick-fix over respecting another nation's sovereingty.
Space exploration is something that takes time to pay off. Even if it will yeild things like viable alternative fuel sources, it's not going to get attention over things like finding more crude oil (dealing with OPEC is a pain) for immediate consumption. If the ultimate plan is to screw everybody's kids over, you go with the oil, since it's plentiful now and provides everyone with comfortable living. To be nice to those kids, you'd find some way to make the current living standard sustainable, or at least find enough basics out to give them a better crack at it. Unfortunately, you can't take a brighter tomorrow to the bank, so basking in today's crapulence is going to continue until the party runs out of booze and the liquor stores are closed. "We will overcome this, we always have" sounds a lot better when it's not an epitaph.
::PostScript::
Yes, this is about job growth being 0.1% higher than last year, but without saying something about how modern politicians think, it's just going to be political mad libs.
_____________ was in office during a ___ percent _________ over __________.
...<president>.......................................<#>.............<rise/drop>........<time period>
__________ are obviously the __________ party. Take that ____________!
<political affiliation>..................<adjective>.........<derrogatory nickname for the other side>
I love nasa, they invented visco foam to soak the g-force on the astronauts butts, now I sell mattresses made out of the same stuff for 2000 dollars. God love America. That is technology at its finest.
