By the time you read this, the big news is likely to be jobs. It hasn’t been a hot topic since the election, and most of what was said during that strange period wasn’t exactly true. The big job gains for February, along with a large round-up for January, make it impossible to ignore.
The economy has definitely turned around.
It’s all over but the shouting, of which there will be a lot. There is little doubt that Republicans will claim credit for a big turnaround in 2017, which will be utter crap. This has been a long time in the making and things have not been actually bad for a long time. Nevermind. Positive news will feed on itself and everyone will be happier.
But there is one final twist to the very good news – it’s really in the adjustment.
Construction Jobs are always a good thing. There’s stuff to build.
What we have is the ADP Employment Report, a decent enough predictor of the official jobs report that comes out on Friday. A gain of 298k was posted for February, along with an upward revision for January to 246k. That puts this year nearly 150k ahead of where we were in 2016, which is not a bad increase.
Has the economy finally turned towards genuine growth?
The short answer is no, the long answer is yes. What’s happening is primarily an artifact of good weather, which is to say that the seasonal adjustment is making things look better than they are. Typically, there is a mini-recession every January as seasonal retail workers are let go and construction grinds to a halt. The latter has not happened this year, with new buildings going up all over the country. That puts us ahead of where we’d normally be.
That doesn’t mean that the bump isn’t real, at least in a sense. More money going into worker’s pockets is always a good thing, with effects carried through the whole economy. It is good news no matter what in that sense.
It is easier to blame a cartoon than to blame ourselves, generally.
What it will all come down to is who takes credit for the increase. There is a general belief among all politicians that we live in something like a socialist economy, where all improvements in jobs come from government policy. This is even true of Republicans, and it’s even true when no significant policy changes have taken place yet. Nevermind. The clock is re-started on January 1 and the credit or blame flows naturally to whoever is in charge.
That it’s all nonsense will get past otherwise serious reporters. It makes a good story.
Has the economy really turned around? Without any doubt, an increase in the Fed Funds Rate is highly justified and will signal a start in a long march towards something like normal interest rates. Bonds are falling, meaning that money is leaving safe investments. It will have to find another place to go. With higher rates there will be more appetite for risk, meaning that much of this money will be invested in things which actually help the economy.
ADP net change in job growth over the last year. It’s encouraging.
Rising rates are likely to be a good thing, up to a point.
The good numbers are always buried.
It also means that large-cap stocks are not going to be a good investment. It seems like forever since the last time the stock market was at or near a top and rates were rising, which is to say it’s been nearly 20 years. It’s not a good time for stocks. Smaller companies will remain the engine of this economy turning over into something new, meaning that the big returns will come away from the Dow Jones Industrial Average. That will become obvious in a few months, meaning even more money will seek risk.
How are we doing? Very well. More people are working and interest rates will rise. Both are good. It’s not at all about anyone getting credit no matter how hard they try. What matters is a more positive attitude, which is very likely to be the biggest net result.
Barataria - The work of Erik Hare 
I am happy that people have work! But those people taking credit for it makes me angry. We all know they will.
It will be sad, but predictable.
It’s just good weather? That’s a big effect for good weather. Are you sure?
The seasonal adjustment for ADP is not known, but it is probably the same as the BLS. Here is a graph of their adjustment. It’s 1,600 thousand in February, meaning a blip of 100 thousand is 1/16th of the seasonal affect. Yes, I think that’s all there is.
https://fred.stlouisfed.org/graph/fredgraph.png?g=cYJE
Reblogged this on Filosofa's Word and commented:
This morning’s news is all about the February job report, which is favourable. In under an hour after the release of the report, Sean Spicer broke the Office of Management and Budget’s Statistical Policy Directive No. 3, which states that “employees of the Executive Branch shall not comment publicly on the data until at least one hour after the official release time.” But of course, the Trump administration could hardly wait to take credit, even though the credit is not truly theirs to take. Fellow-blogger Erik Hare, writing as Barataria, is my ‘go-to’ person for economic insight, and as always, he is one step ahead of the game with his analysis of this morning’s news, so I am sharing his post with you today. Thank you Erik, as always, for your valuable insight!
This blog probably means something to stock market investors, and middle class Americans. Sounds like they should be happy.
This blog is also for Obama’s followers (not meaning the Donald as the man following Trump) as it would have been his policies that created the favourable numbers in this report, though the former President will probably get none of the credit.
The blog is also favourable for the Donald and his followers, because they were the leaders of America when the report did come out.
But what about the majority of lower middle class and lower class Americans? What can they take out of this report? If they were not working under the Obama regime and suddenly become employed under the Trump regime, will they be any better off today than they were the last 8 years?
To me, an average Canadian, the report is about as readable as the Preamble to the rights and freedoms of communist China. Our economics gurus MIGHT be able to make sense of it, but since it doesn’t explain to us why Americans are feeling it necessary trudge through blizzard conditions to claim refuge in Canada, with no end in sight of even more refugees crossing our border illegally (according to Canadian law; I say come on up, we’ll find a place for you to call home), it is totally meaningless. The great United States of America is looking more like a third world country, losing its citizens to nations with some heart, at least, I hear a long blast of “so long, and thanks for all the fish” echoing back across the border.
Reports can mean just about anything someone wants for them to sound like they mean, and it sounds like this is exactly what this report is full of, It is not what we Canadians want to hear about, we really do want to know if these refugees are coming on their own, or are they being threatened by the Donald if they don’t leave the greatest country in the world, at least so the Americans tell us.But don’t worry, I hear our ruling “Liberal” government is going to pay you to take them all back in a while. After all, most of us are just Americans dressed up to look like Canadians.
Hi ho, Jay Silverheels, away….
Thank you.
I’ve never before read an economic analysis that was easy to follow or made sense
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