Having written that Powell’s Peril Lies in the Lanquishing Labor Market and that we are Fed up and Under-Fed All at the Same Time because Everyone Sings the “Strong Labor Market” Tune in Unison … and They’re All DEAD Wrong, I finally get some VINDICATION! Major vindication!
Until now, I’ve read no one agreeing with my views about Powell’s labor blindspot being a source of peril for all of us, which could prove to be the biggest Fed error in history.
I’ve pointed out in past years how badly cooked the government’s jobs numbers are and how the Bureau of Lying Statistics, as I call it, revises its numbers down by hundreds of thousands in an annual audit just about every year, but mostly by applying the corrections to months so far back in the year that no one cares anymore about what happened back then. That makes for a convenient way to bury the truth about a weak labor market. I’ve also noted how I’ve seen the BLS revise December’s raw job numbers up by 300k or more due to unusually bad weather in one year, only to revise the next December up again by the same amount due to unusually good weather.
Moreover, since September, I’ve been saying the labor market is the worst blind spot the Fed has ever exhibited. Its misbelief that the labor market is strong is causing it (and everyone who parrots whatever the Fed says as gospel truth) to be blind to the recession we are already in (on the basis that our negative GDP numbers this year just HAD to be wrong, given how tight and hot the labor market is).
More importantly, I noted in my last article how the Fed said more clearly than ever that it will not stop tightening the nation’s financial system until it sees the labor market loosen up with a rise in unemployment. That affirmed what I’ve said since September is the most important thing for you to keep your eye on if you want to understand what’s about to befall us — that the Fed will over tighten during a recession it does not see because of its gross minundertanding of the labor market, which is far weaker than the Fed admits.
Yesterday we got the biggest mea culpa of all time regarding the government snow-job world of job estimating and Fed complicity in the falsehood. Zero Hedge reported, “Here Comes The Job Shock: Philadelphia Fed Admits US Jobs “Overstated” By At Least 1.1 Million“:
Just a little over a million? I’m sure that’s a Fed rounding error. ZH started by noting the two government labor reports put out by the BLS have spread in greater and greater disagreement with each other since last March.
It was only a matter of time before we would see which would catch up or down to the other, and ZH had been putting its money where I would, which is that the lower number in these recessionary times is clearly right, while the higher number is the one with the past of being grossly overestimated then revised down.
However, that was their old chart. The divergence in the monthly continued to accumulate until it looked like this:
Apparently, with the election past, someone is now allowed to come clean.
Oh, those seasonal adjustments! How much room they have for packaging up lies. They must be lies because you just cannot make stuff up like this, AND you just cannot miss noticing that something’s clearly wrong with your statistics with a gap big enough to drive an ocean liner into. If you were a bank or something accountable for its accounting, you would quickly have your comptroller chase down to the last penny where the error is occurring because a single penny can be a million-dollar error one way offset by a $999,999.99 error the other, and you want to find out why things are not adding up because it could be the sum of multiple problems.
At least, so a friend of mine who was a comptroller for a major bank once told me. He said the department he led would spend days chasing “a single penny” to find out what was wrong when their numbers didn’t reconcile, not because they couldn’t write off the penny but because they needed to know what was wrong. A penny that couldn’t be reconciled could be evidence of something far worse. A drip of water who cares? However, if you’re in charge of managing the dikes of the Netherlands, you better find out why the dike is dripping.
