Wow! The jobs report was rigged – beyond anything anyone could have ever imagined.
This ZeroHedge column explains it all. Friday’s blockbuster jobs report was propped up entirely by the biggest surge in government hiring in history.
Rates shot through the roof on Friday and again today because the jobs report was so strong.
So yes, we saw over 100,000 more job creations in September than anyone expected, but job creations would have been far under expectations if we had not seen 785,000 new government hires – anywhere from 3 to 10 times more than normal (depending on the source).
Private sector job growth remains very lackluster.
Unemployment Fell to 4.1% Instead of Rising to 4.5%!
Per ZeroHedge, the unemployment rate would have increased to 4.5% instead of falling to 4.1% (from 4.2%).
In other words, but for a record government hiring surge, rates would have PLUMMETED on Friday – instead of skyrocketing.
For those of you who are screaming…”those-rassin’-frassin’-numbers-cooking-Democrats!” I might remind you that I am still looking for Mr. Bush’s weapons of mass destruction, affordable housing programs that didn’t make housing way less affordable, and all those children Mr. Bush didn’t leave behind (and oh yeah…the subprime mortgage crisis was “nothing to worry about” … in 2007). In other words, governments have always misled us, but I will admit the brazenness of these jobs numbers do take us to a new level.
My favorite macro analyst, Brent Johnson, said yesterday that he expects rates to continue rising for the next three weeks – almost until the election – much like I predicted on Friday.
Frozen Housing Market
I often blog about how “frozen” the housing market is, with purchases at levels we have not seen since the mid-1990s.
Both buyers and sellers are not moving. Sellers don’t want to sell and give up their 3% mortgage rates, and buyers are nervous about high rates, high prices, affordability, potential job losses, and concerns about a market correction. I have blogged about this many times.
How Low Do Rates Need to Go to Bring Buyers Surging Back into Market?
This Kobeissi Letter post on X answers that question.
Today’s average rate is over 6.6%, per Mortgage News Daily, up from as low as 6.11% only a few weeks ago.
At even 6.2%, only 21% of potential buyers surveyed would be willing to buy, per the Kobeissi post.
Only 13% are willing to buy at today’s rates.
If rates fall below 5.5% though, 47% of buyers would be willing to buy.
Below 5%, a whopping 57% of potential buyers surveyed would be willing to come back to the market.
In Other Words, if the Government Had Not Rigged Our Jobs Numbers, We’d Likely Be Buried in Business Right Now
This is just another reminder that politicians are happy to sacrifice industries and people to get re-elected. Both sides of course do it too (see Mr. Bush above).
Rates should be much lower, as the inflation dragon has been largely tamed per Steve Hanke, Raoul Pal, and many other analysts; much of the private economy is clearly struggling; and the Fed Funds Rate is way above the Two-Year-Treasury Rate and the CPI Inflation Rate – which is highly unusual.
Rates will fall at some point, and we’ll all be buried in business – as this beach ball (real economic news) can’t be held underwater forever. So…hang in there.
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