What the Heck… Let’s Start a Conspiracy

I want to thank Barry Habib for this topic inspiration, although I’m putting my own spin on it. There has been a lot of talk lately about why rates are so high. Inflation has been to blame, and The Fed has also been talking about how the employment rate has been so strong – so it’s hard to assume that the economy is going down.

One thing that Barry Habib talked about this morning is that they are looking at the business birth/death calculation that goes into the unemployment calculations. This number evaluates the number of new businesses as well as businesses that have closed their doors. Then, they apply a weird calculation of how many employees were at those companies.

Two Things That Have Been Happening

The first Friday of every month, this number is shared publicly. Then, the next month, they put out the latest numbers and they also do revisions to the previous month. The weird part about that is how 17 out of the last 18 months have been adjusted down, reflecting a drop in the number of job creations. So, the data has actually been worse on almost every revision. That smells weird!

The other point to consider is another report that came out today, which takes a look at the birth/date rate. This latest report shows that in Q4 last year was overstated by about 87,000 jobs per month, which brings it down even further.

The problem is that the market only reacts to the headline that comes out each month. All of these revisions aren’t considered. Why are we getting data that is consistently overstated on first look, until it is brought down the next month, and then lowered even more when they take another look at it months later? Everything is grossly overstated.

It Begs the Question: What is Going On?

I don’t want to start any conspiracies. But it begs the question: what’s going on? To be fair, I recognize that these numbers are hard to dial in when you consider the size of the workforce here in the United States. But it’s odd to me that we are on such a long streak of the numbers being overstated and adjusted so often.

I think we are getting to the position where The Fed will start seeing these numbers for what they really are. The prediction is that we aren’t going to see any big changes from next week’s meeting. But in September, it’s assumed that there will be a reduction in rates from The Fed.

We’ll see what happens! I have to say that I hate all the conspiracy theories out there. But with the consistency of this one is hard to ignore. At some point, it starts to look a little suspect.