Business

Job report a hands-on proposition for Fed

You have to hand it to the Fed.

On the one hand, the central bank would have liked last Friday’s job report to have been mediocre. That would have taken pressure off interest rates until the Fed decided they should go up.

On the other hand, the stronger-than-expected number that was reported for June makes it look like the Fed’s orgy of money printing is finally starting to help the economy.

On the third hand, the Fed long ago figured out that any jobs report — weak or strong — that doesn’t conform to its needs of the moment could be explained away with a carefully orchestrated internal research report.

With so many hands working on excuses for the economy, it’s no wonder that the Fed has such a strong hold on public opinion.

Today, I’m going to loosen the Fed’s grip a bit.

Last Friday, the Labor Department announced that the US economy created 195,000 jobs in June, which was larger than the 175,000 expected by those referred to as “experts.”

As I mentioned before the report was released, the March, April, May and June employment figures are always biased upward by statistical razzmatazz.

And, as I also reported, the June report wasn’t nearly as healthy as it may have looked.

Apparently, Ben Bernanke and his cohorts don’t read my column because they seem to have been preparing for the worst. And a report done by the Chicago branch of the Fed — and circulated in the media in mid-June — gave the central bank cover in case the jobs numbers continued to be poor.

A little background is required first. The conventional wisdom is that 150,000 new jobs are needed each month just to absorb people entering the economy for the first time.

But job growth has been pathetic for years. While 400,000 to 500,000 new jobs would be considered good coming out of a recession, we’ve been getting an average of around 180,000 — and that’s when we are on a roll.

There are, of course, two choices if you are a policy maker like the Fed and need to protect your reputation. You either have to create more jobs or try to persuade people that the number of jobs being created is really better than it looks.

The Chicago Fed recently took the latter approach. In a mid-June report , it argued that 80,000 — not 150,000 — is the real number of new jobs needed each month to absorb newbies into the labor force. It also said that the figure needed each month will probably come down in the years ahead.

Why does the Chicago Fed think this? Because of demographics. Baby Boomers — those 76 million workers who were born from 1946 to 1964 — will one day wake up and decide to stop working, it believes.

That’s a very convenient point of view. I’m sure someone at the Chicago Fed got an “attaboy” for having the nerve to put their name and stake their professional reputation on a report that could piss off the 12 million-plus Americans, including boomers, who have been chronically out of work during the recent economic recovery.

In better times the Chicago Fed might be right. If retirement accounts hadn’t taken such a big hit in 2007-08; if real estate had held its value; if health-care and education costs weren’t rising so rapidly; if Social Security and Medicare were solid; if there wasn’t abject fear of the unknown future, then Baby Boomers might be voluntarily quitting the work force in huge numbers.

The Fed’s assessment of the current Baby Boomer situation doesn’t even bring up the obvious: these 76 million lucky men and women grew up at a time when there were huge advances in medical science. Despite what the folks in the Windy City say, they are going to live longer and work longer — if they can find jobs.

What really amused me about the Fed’s opinion is this: at the same time people are trying to stretch Social Security’s budget by pushing up the retirement age, the dolts in Chicago are making the case that people don’t want to work and don’t need to.

The Fed wouldn’t have to finesse its outlook for the economy if things were really going well.

As I’ve mentioned several times in the past week — and thousands of times over the years — the Labor Department boosts its springtime employment numbers by using assumptions about new jobs that should be created, even though these positions might not really exist.

Friday’s 195,000 improvement in the job market, for instance, probably included about 20,000 to 30,000 of these phantom jobs after seasonal adjustments.

And while the unemployment rate that gets the most attention remained unchanged at a lofty 7.6 percent, the broader measure of underemployment jumped a whopping 0.5 percentage points to 14.3 percent.

That’s because part-time employment rose by 360,000 in the month, while full-time jobs declined 240,000. Part-time employment was 557,000 higher than it was the year before, while full-time jobs have risen only 130,000 from June 2013.

ObamaCare, the start of which has now been pushed back, could be keeping employers from hiring full-time workers who would be required to receive benefits. Or the economy could still be so weak that nobody with a job to fill is in any hurry to do so.

The stock market is in its own little trance. But the bond market, where interest rates are controlled, is just looking for excuses to boost borrowing costs.

And that’s exactly what it has been doing. Friday’s figures give the Fed a handy — OK, that’s last time I’ll play with those words — reason to slow down an economy that never really picked up speed.

It’ll regret doing so when the labor numbers get weaker starting next month.

jcrudele@nypost.com