What will the Fed do now?
Posted: Fri Sep 06, 2024 9:02 am
Notes below are from HFI Research
Unemployment was released this morning. I was interested in it purely because the numbers have been so seemingly manipulated. Interestingly, Brian Wesbury opined sort of tongue and cheek with the way futures were acting this morning, it seems like someone got the number before the release.
Here is a link to the report: https://www.bls.gov/news.release/empsit.nr0.htm?utm_source=substack&utm_medium=email
Non-farm payroll was expected to be 161,000, came in at 142,000. 11.8% miss.
This report is the first employment report that people are paying very close attention to in the coming election. Despite the media’s onslaught every day for the last, I don’t know how many years, most people can put political stuff on the backburner until it matters, Labor Day until Election Day.
Inside this report, what I was really curious about was this:
The change in total nonfarm payroll employment for June was revised down by 61,000, from
+179,000 to +118,000, and the change for July was revised down by 25,000, from +114,000 to
+89,000. With these revisions, employment in June and July combined is 86,000 lower than
previously reported. (Monthly revisions result from additional reports received from businesses
and government agencies since the last published estimates and from the recalculation of seasonal
factors.)
We never see upward revisions. Even the language they used in the release was unclear to mask the changes.
June was revised down 34.1%; 179k to 118k.
July was revised down 21.92%; 114k to 89k
If one takes the average of just those two revisions, it’s 28%. Assuming this month’s number is off by at least the average of the last two. That means it is probably 116k, or less.
Here is another maxim that seems to be true all the time. The Fed is always behind the curve. They were behind the curve in raising rates, and they will be behind the curve in lowering them.
The Fed can’t raise. The economy is way too weak. But, the Fed can’t lower aggressively due to the inflation numbers.
Inflation is a money creation problem, not a private market supply/demand problem. If the government cut spending, inflation would go away. See Argentina.
-------------------------
MY TAKE: We have a broken Federal Government. Wasteful spending is out of control. Our energy plan ("just build more windmills and solar panels") is dumb and dumber. We are going deeper in debt to fund foreign wars. We have a chance to fix it in November.
Unemployment was released this morning. I was interested in it purely because the numbers have been so seemingly manipulated. Interestingly, Brian Wesbury opined sort of tongue and cheek with the way futures were acting this morning, it seems like someone got the number before the release.
Here is a link to the report: https://www.bls.gov/news.release/empsit.nr0.htm?utm_source=substack&utm_medium=email
Non-farm payroll was expected to be 161,000, came in at 142,000. 11.8% miss.
This report is the first employment report that people are paying very close attention to in the coming election. Despite the media’s onslaught every day for the last, I don’t know how many years, most people can put political stuff on the backburner until it matters, Labor Day until Election Day.
Inside this report, what I was really curious about was this:
The change in total nonfarm payroll employment for June was revised down by 61,000, from
+179,000 to +118,000, and the change for July was revised down by 25,000, from +114,000 to
+89,000. With these revisions, employment in June and July combined is 86,000 lower than
previously reported. (Monthly revisions result from additional reports received from businesses
and government agencies since the last published estimates and from the recalculation of seasonal
factors.)
We never see upward revisions. Even the language they used in the release was unclear to mask the changes.
June was revised down 34.1%; 179k to 118k.
July was revised down 21.92%; 114k to 89k
If one takes the average of just those two revisions, it’s 28%. Assuming this month’s number is off by at least the average of the last two. That means it is probably 116k, or less.
Here is another maxim that seems to be true all the time. The Fed is always behind the curve. They were behind the curve in raising rates, and they will be behind the curve in lowering them.
The Fed can’t raise. The economy is way too weak. But, the Fed can’t lower aggressively due to the inflation numbers.
Inflation is a money creation problem, not a private market supply/demand problem. If the government cut spending, inflation would go away. See Argentina.
-------------------------
MY TAKE: We have a broken Federal Government. Wasteful spending is out of control. Our energy plan ("just build more windmills and solar panels") is dumb and dumber. We are going deeper in debt to fund foreign wars. We have a chance to fix it in November.