I mocked yesterday’s NFP report, and a sizably stunning percentage of readers didn’t get the humor (and on a day off, too). My assumption is that these are people who are unfamiliar with my slightly skewed sense of humor.
To contextualize that, a few more words are in order, and then a nod to another voice on NFP worth hearing.
Let’s begin with a quick word on cognitive bias. Humans are guilty of this — selectively perceiving and recalling what agrees with their world view. We are all guilty of this, and while we cannot escape it, being aware of it at least allows some measure of recognition, and perhaps, adaptation to the phenomena.
Let’s use the NFP data as an example: Consider another bias, the Human tendency to overemphasize more recent data versus the totality of information and the overall trend. This is a cognitive bias known as the recency effect. Despite the overwhelming evidence showing this to be a generally weak jobs recovery (the worst since WWII), our primate brains interpret a single good data point as proof of something better. Perhaps this helped our ancestors recognize the coming of seasonal changes; those with the bias mated in the spring and passed on their genes, and those without didn’t (hence no progeny). Alex, I’ll take Pop-Evolutionary theories for $100, please.
Regardless, we also see some of the soft prejudice of low expectations in yesterday’s data: 180k is hardly a rockin’ strong number, relative to population growth,. Put that into the context of recent expansions such as the 1990s. Oh, and in that more recent period, there was no BLS Birth/Death adjustment, responsible for nearly a million fictitious jobs in 2006.
For those of you who may have missed my sarcasm, consider the Liscio Reports’ irony-free take on yesterday’s NFP. Here’s an excerpt via Barron’s:
"As our keen-eyed friends at the Liscio Report, Philippa Dunne and Doug Henwood, observe, this was a "good employment report but not the blowout some are taking it for." For openers, the perceptive pair surmise that just as February’s stingy job additions were partially the result of cruddy weather, March’s upside surprise got "a compensatory meteorological lift."
The rise, however, was concentrated in a relatively few sectors. Once again, they note, health care and bars and restaurants were major sources of fresh hiring (and once again, we might interject, these are typically not big-bucks jobs). Retail did pick up nicely, to be sure, but manufacturing, alas, couldn’t kick the habit of shedding jobs.
Ominously, too, Philippa and Doug point out, professional and business services, "the heart of the post-industrial economy" was a loser, its first decline since November ’04. And temp employment made it two months in a row on the minus side, indicating "not a lot of pent-up hiring demand for future months."
And they add that the household total, in which desperate bulls invariably seek solace when the payroll numbers are soft, was up 420,000, but only after an extraordinarily depressed February, which suffered a loss of 278,000 slots. That works out to a pretty feeble average over the past two months of 71,000, hardly suggestive of "underlying strength that the establishment survey is missing."
As we intimated, at first blush investors are likely to find the apparent strength of the job market as discouraging any thought the Fed might have entertained to cut rates in order to shore up the economy. But we suspect that, to judge by the abundant evidence that the economy is slowing and will continue to do so as the collapse in housing plays out and the consumer’s urge and ability to spend fade, there’ll be more than one disappointing employment report in the months to come." (emphasis added)
That sounds about right, and — dare I say it? — fair and balanced . . .
Little Bit of Blow
Barron’s, April 9, 2007
graphic courtesy WSJ:
March Jobs Data Show Vigor
Broad-Based Hiring, Rising Wages Dash Rate-Cut Predictions
WSJ, April 7, 2007; Page A3
Stax 50th Anniversary Celebration: Last year, Concord Music purchased Fantasy Records, and as a bonus, they landed the "bulging Stax
For those of you not fans of 1960s/70s Soul music, Stax was one of the richest sources of R&B, Soul and Blues. They were home to such artists as Otis Redding, Isaac Hayes, William Bell, and Booker T.
For some reason, they were overshadowed somewhat by Gordy Berry and Motown. This double CD features 50 hit singles from Stax (and Stax-Atlantic) from the labels’ 1960s and ’70s heyday, and attempts to make up some of that ground.
The WSJ had a glowing review of the set:
"Stax, the music label responsible for superior soul,
R&B and an occasional slice of the blues in the ’60s and early
’70s, is observing its 1957 founding in everything but name by
releasing "Stax 50th Anniversary Celebration," featuring 50 of the best
tracks from its vaults. It could have released twice as many, or more,
without a dip in quality. In fact, it did release twice as many in 2000
under the title "Stax Story" and almost 2½ times as many in 1991 in the
superb boxed set "The Complete Stax-Volt Singles 1959-1968." Two
subsequent collections from the archives of Stax and its Volt
subsidiary raised the number of tracks issued in the past 15 years to
652, more than 13 times what’s in the 50th anniversary box.
A joy from the first cut to the last, "Stax 50th
Anniversary Celebration" is a reminder of the glory days of R&B,
when singer, song and band came together with fervor to spark body and
soul. The music all but sweats with the musicians’ passion: There are
no drum machines and no vocal bent to pitch by software. The punchy
horns are real brass and reeds, not lines played on synthesizers. Now
and then, a musician flubs a note or misses a cue, but an absolute
reliance on musicians’ creativity can deliver brilliant pop music
that’s timeless. Especially if the vocalists are the likes of Eddie
Floyd, Otis Redding, Sam & Dave and the Staple Singers."
The Journal eds were kind enough to move the full article over to the free site for the linkfest, so you guys get an early viewing pre-weekend.
click for CNET media player
Several videos are after the jump:
Golden Oldies: Stax Releases A 50th-Anniversary Boxed Set
WSJ, April 4, 2007; Page D9