US December job report is meaningless

by omouggos

The various US stock market indices have had a rough start to the new year. Since January 4 the Dow Jones Industrial Average has declined by 6%, its worst performance for the first week of the year in history. Now most of the financial experts–I use that term very loosely–are rather flummoxed, because in their eyes, the US economy is doing fine. After all the US federal reserve just raised rates by 0.25 percentage points supposedly because the economy is strong enough to bear the increase and for the month of December 292,000 jobs were added to the US economy according to the latest job report compiled by the Bureau of Labor Statistics (BLS).

Unfortunately the latter statistic is not all it is cracked up to be, as shown in an article by David Stockman, which is well worth reading. The gist of Stockman’s analysis is that 281,000 of the reported jobs are based on an arbitrary seasonal adjustment factor that has no bearing to reality and what jobs that are being created are low paying part time ones in the service economy (bartenders, waiters, bellhops, maids, etc.) as opposed to well paying bread winner job. So in other words the US economy is not doing well–the financial experts have their heads in the clouds and the official economic statistics are nothing but obfuscations intended to trick you into believing the economy is doing fine. It is this weakness of the US economy that is partly causing (their are other factors involved as well) the shaky start of the stock market in 2016. Be prepared for further and continued weakness in the stock market and economy, this is only the beginning.

O Mouggos

Advertisements