The first week of the month is normally "Jobs Week." This is the week that we normally receive the ADP jobs report and the monthly Federal Employment Situation Report, or "Jobs Report." The problem is that the December Jobs Report is that the authors of the report were having President Trump and Former President Obama playing a game of economic golf with phony handicaps, also known as greatly different seasonal adjustments to the data.
(Jan. 1) The week started with a review of 2017. The first review was the Top Ten Articles of December 2017. The readers of this column must come here for their Saturday Morning news as five of the top ten articles were "Week in Review" articles. The other articles pertained to the ADP jobs report, the weekly unemployment claims data where "Apples and Pomegranates" were being compared, and an article from 2016 where it was detailed that President Obama's Job Streak either ended during January 2015 or May of 2016.
(Jan. 1) The end of the year also brings a Top Ten Articles of the Year article. Some months this column is "on a roll." Sometimes one article captures your attention during the course of a month. The "Top Ten Articles of 2017" includes the top articles of the year and the top articles of each month. The most read article of 2017 was written over Thanksgiving Weekend: "Federal Budget: When Off-Budget isn't Off-Budget." Jobs data, Weekly Unemployment Claims Data, Real Estate Sales data, and ADP data rounded out the top ten. A similar pattern is seen in the top articles of the individual months.
(Jan. 2) The Monday or Tuesday before the release of the ADP jobs report and the Monthly Employment Situation report this column writes articles projecting what to expect from the individual reports. The first article was "Dec. Jobs Forecast: Up is Really Up." It was projected that we could see real, non-seasonally adjusted Current Employment Statistics (CES) Private Sector Worker growth (we normally see worker numbers drop during December and January.) It also projected that non-seasonally adjusted (NSA) Current Population Survey (CPS) jobs losses would be converted to seasonally adjusted (SA) Jobs gains. Further, it projected that unemployment could increase slightly and that all of this would combine for an increase in the reported SA workforce participation rate. As "always," this article implored the reader to watch the growth rate, the seasonal adjustments, and the revisions to the data previously released. It was projected that the range of growth would be 162,000 to 249,000 and to expect a number that could be as high as 300,000. It was thought that the growth rate would be 0.01% and the seasonal factor would be 0.9953. This will be important.
(Jan. 2) The ADP Jobs report normally gives us a glimpse to what to expect from the Employment Situation Report. The weakness in this report is that it is all seasonally adjusted data. Where the Employment Situation report provides seasonally adjusted data and non-seasonally adjusted data the ADP report only reports the SA data. The ADP Forecast article projected increases in seven of the ten private sectors and a potentially an increase of over 2.00% from last December which would yield a "jobs number" between 246,000 and 267,000. This confirmed the Employment Situation forecast.
(Jan. 3) When analyzing the data there are a number of ways to examined trends. The Rolling Year data examines what has happened to a certain data set during the past twelve months, December to December or May to May. When jobs grow the economy grows. The question at the beginning of 2017 was "Is there a 2.0% tipping Point" in non-seasonally adjusted worker growth?" "Worker Growth Rate Going Under-reported" discussed the rolling year growth rate.
(Jan. 4) Thursday was a big day with the release of the ADP jobs Report at 8:15 AM EST and the Weekly Unemployment Claims Report at 8:30 AM EST. Both reports required a little data analysis. "Dec. ADP Jumps 250,000" was the first article of the day. The annual growth rate was 2.23% and nine out of ten sectors added seasonally adjusted jobs.
(Jan. 4) The weekly unemployment claims report was the lead story at the bottom of the 8:00 news hour for years. They still produce the weekly report. The data is seriously good. Where the authors of the report created FACTs (False Assertions Considered to be True) by comparing seasonally adjusted data from different seasons with massively different seasonal factors this column has written hundreds of articles on the non-seasonally adjusted data. "Seriously Low Continuing Unemployment Claims Data" detailed how the SA Continuing Claims data could have been reported at 1.7 Million instead of 1.9 million claims and how the SA First-time Unemployment Claims data could have been reported at 218,000. Remember under 2 million is good for the Continuing Claims data and under 300,000 is good for first-time claims.
(Jan. 5) The December Jobs Report was within the range of expectations. The seasonal factors used to convert the NSA data to the Reported SA data were significantly lower than they were during December 2016. While the seasonal factor was also within the range of expectations, it skewed the data so low that it is remarkable. This column "knew" that the authors of the report would not use the 2016 seasonal factor. Here's the thing: The upward revisions to the November Seasonally Adjusted data "borrowed" some of the gains during December and the seasonal Factor handicapped the data lower by 110,000 than they would have been reported if they used the 2016 seasonal factor. "Dec. Jobs Report: 146,000 workers added or 256,000" goes into detail regarding the CPS and the CES data.
We do not live in a seasonally adjusted world. I would like to seasonally adjust the 1F temperature outside my door to 70F. I would like to be a multi-millionaire. Neither one is going to happen today. The economy was in decline during the third quarter of 2017 and the fourth quarter of 2017. Something happened that turned that decline into stability and expansion. Something happened last November. Something. We added more private sector workers during 2017 than we did during 2016. President Trump added more private sector workers during his first eleven months in office than Presidents Reagan, Clinton, George W Bush or Clinton. We had a comparable level of continuing unemployment claims during the fourth week of December 2017 as we had during 1988 when we had tens of millions fewer workers who were covered by unemployment benefits.
It's the economy.