I am writing this blog on Thursday, March 7, 2024, because I will be skiing tomorrow (Friday, March 8th).
As a sidebar: the Sierra Nevada mountains received 8 to 11 feet of snow over the last 7 days (which is why I have to ski) – and one of the resorts near me has received over 33 feet of snow this season (which, in case you wondered, is a lot).
I always wonder if the Donner Party might have enjoyed their stay more if they had skis or at least a snowboard or two.
Anyway – tomorrow is the biggest day of the month when it comes to economic reports: the BLS Jobs Report will come out – and it will be utter and total bullsh*t.
The report is so important because the Fed focuses on it so much – so the results heavily influence interest rates.
- If the report comes in stronger than expected, rates will shoot through the roof – like we’ve seen multiple times over the last 13 months.
- If it comes in as expected, rates will mostly hold.
- And – if it comes in much weaker than expected (like the entire mortgage industry is hoping), rates will fall.
No matter what happens tomorrow, my primary point is that the impact won’t last.
Over the last year, we’ve repeatedly seen screaming hot jobs reports surface – and many have pushed rates through the roof.
But 10 of the last 12 reports were revised significantly downward in the following months.
Why BLS Jobs Data Is So Inaccurate
On this recent Thoughtful Money podcast, Professor and consultant Neely Tamminga explained why the BLS data is so inaccurate.
First and foremost, there are now way too few survey respondents – so it does not accurately reflect the economy.
There are also all kinds of statistical adjustments that make the data far too subjective. And the data itself is just unreliable.
Jeff Snider weighed in too yesterday in this short podcast. His primary point is that yes, many employers are still clinging to employees (despite the layoff news that is surfacing more and more) in anticipation of an economic resurgence, but employers in general are not hiring. So the jobs market is much softer than authorities might want us to think.
The proof is in the continuing jobless claims. Job seekers are having enormous difficulty finding new jobs, and current employees are no longer quitting in search of better jobs, fearing they don’t exist.
In addition, hiring rates are back to 2018 levels, per Snider, when the economy was slow and our population was a lot smaller. Hours worked continues to decline as well.
TLDR: Hot jobs reports can push rates way up, but they should not be trusted. The actual data surfaces sooner or later, and rates adjust back downward. Sometimes it takes a day or two, and sometimes, unfortunately, it can take a few weeks or even months. Soft jobs reports from the BLS should also not be trusted, even though the mortgage industry desperately wants to believe them because we desperately need lower rates…
