I hate to sound happy over the fact that the July employment numbers came in well below Wall Street expectations because, well, just because I predicted that would happen.
Gloating would be something a thumb-sucking child would do, no?
But I’ve been documenting for a long time in this column that the monthly employment figures are flawed and contaminated by adjustments and guesses.
And that point was confirmed recently in this column by Keith Hall, who headed the Bureau of Labor Statistics from 2008 until last year. The BLS produces the employment numbers.
Hall — now a senior research fellow at the Mercatus Center — told me yesterday that 70 percent of the jobs added so far in 2013 are part-time.
That is not what the Labor Department has reported, but Hall is on record as saying some of the department’s methodologies are screwy.
That’s called getting the information from the horse’s mouth. Now I want to talk about horses’ asses — the ones on Wall Street.
The experts in the financial community had been predicting 175,000 new jobs would be created in July.
The actual number? Labor reported yesterday that only 162,000 new jobs were created. But, wait: It also had to reduce by 26,000 the number of jobs it originally thought were created in May and June.
Labor also announced yesterday that the unemployment rate fell to 7.4 percent, from 7.6 percent, in July.
Great news, right?
Well, not really. The rate is only declining because people are giving up looking for a job and are no longer counted among the unemployed.
There were 988,000 workers too discouraged to look for a job in July, an increase of 16 percent from last July.
Wall Street, of course, plays very close attention to the labor numbers — warts and all. When the actual figure was announced at 8:30 a.m. yesterday, the stock market rallied nicely — for a few minutes.
That’s insane, of course, because a bad labor market means the economy isn’t doing well and that corporate profits are likely to continue to be weak.
But topsy-turvy Wall Street sees things differently — at least at first glance. After the rally, Wall Street sobered up and brought stocks back down. At first the feeling was that the lousy employment number would tie the Federal Reserve’s hands if it even thought about printing money, which the Fed has hinted it will stop doing.
But on second thought the geniuses on Wall Street realized that interest rates are rising even without the Fed’s help. And before yesterday’s announcement they witnessed just how quickly rates can climb — up 10 basis points on the 10-year Treasury — just on the anticipation of good economic news.
The stock market bubble survived yesterday’s announcement. But as I’ve been saying, be careful where you step if you venture into the financial markets. Wall Street is full of it.