Posts filed under “Employment”
I keep telling investors to ignore the monthly frenzy surrounding the monthly jobs report (see this, this and this). It isn’t significant for their holdings, at least not in any actionable way. By the time we know for sure that the economy has accelerated or slowed, stocks will have long since reflected this in earnings and then prices. It is only partially a joke to note that economists are often the last to know.
Why should investors ignore the nonfarm payrolls numbers? Consider what must be done in order to either profit or avoid a loss based on changes in the employment situation. Investors would have to:
• Predict what the nonfarm payrolls will be;
• Guess if this will be above or below consensus (which changes often);
• Conjecture how much of this is already reflected in stock prices;
• Arrange your portfolio in light of all of the above.
To win this game, you must get each of those four steps right. And, each one is dependent upon your getting the prior step correct, then pyramiding that prior lucky guess with another. Someone usually gets this correct, but I would suggest this is a function of random luck, not skill. That isn’t an attractive basis for putting risk capital to work.
Rather than play a no-win game, let me suggest something else:
“All of the job growth from 2007 to today can easily be attributed to the shale oil fracking situation and the oil Renaissance. If you take Texas and North Dakota out of the data series for job employment, what you see is that we haven’t added any jobs in the United States other than…Read More
Source: The Upshot
click for interactive chart Source: WSJ Great set of interactive charts at the WSJ showing differing views of American employment. Maps include Jobless Rate Change, 2013-14; Labor Force Percentage Change, and the map above of Jobless Rate Change Since the Great Recession Began. The cartograms are sized not by their physical acreage, but rather…Read More
Over the years, I have spilled a lot of pixels on why the monthly obsession on NonFarm Payrolls is misplaced (See e.g., this, this and this). What matters is not any single data point, but the overall trend. And as we have seen since the trend reversed in 2010, that trend has become positive….Read More