January's 'too good to be true' jobs report was based on 'adjustments'
Bloomberg, which exists to serve active traders on Wall Street, is throwing shade on the January jobs report that “surprised” a lot of people with its positive numbers. Before addressing the technical factors used to produce the rosy numbers, consider the buried lede hundreds of words into the piece. Stripped of all the technical jargon is this stark reality:
On an unadjusted basis, payrolls actually fell by 2.5 million last month.
Molly Smith writes:
Employers added 517,000 jobs in January — nearly double the prior month’s advance and above all estimates in a Bloomberg survey. The unemployment rate also unexpectedly retreated to 3.4%, the lowest since 1969, according to Labor Department data released Friday.
Those are the numbers that grabbed headlines and enabled Team Biden to claim credit for what they want to bamboozle the public into thinking we have a great economy. But it turns out that there were changes in the way the data were gathered and reported that made things look rosier:
“Seasonal adjustment factors appear to have flattered the headline as smaller-than-usual post-holiday layoffs bolstered the payrolls numbers,” Wells Fargo & Co. economists Sarah House and Michael Pugliese said in a note.
“We suspect members of the FOMC will take January’s blowout employment report with somewhat of a grain of salt,” they said, referring to the Federal Open Market Committee that sets monetary policy.
What Bloomberg Economics Says...
“If it seems too good to be true, that’s because it is too good to be true — the gain is mostly due to seasonal factors and revisions to past data. Still, it can’t be denied that the labor
market remains tight. The Fed won’t place too much weight on this headline jobs number when formulating policy.”
— Anna Wong and Eliza Winger, economists
Hat tip: Ed Lasky.
Image credit: Free SVG (public domain).