"You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time," Abraham Lincoln allegedly said. If he were in the White House today, I wonder if he might be thinking that the Labor Department just fooled all of the people with its statistical stew.
Given the celebratory reception to the January payroll report, one could assume that the jobs market is thriving. Despite the fact that the 157,000 headline number was weaker than economists expected and the unemployment rate ticked up a notch to 7.9.%, huge revisions in the data from two and three months ago have not only taken the sting out of the report, but given investors the green light that everything's going to be alright.
"These are decent numbers compared to recently, but again, we always go back to where they should be," says Dan North, chief economist at Euler Hermes in the attached video. "We're in a recovery, they should be at least 250,000, if not more to really get the economy growing."
In fact, compared to last year, when payroll data came screaming out of the box in the first quarter, today's data mark almost a 50% decline from the headline and private payroll figures released in January 2012. Specifically, we were at 311k and 323k respectively, and are now at 157k and 166k.
Instead of focusing on that comparison, or the fact that there's been little improvement in total unemployment, which still stands at 14.4%, investors instead seem to be taking their cues elsewhere. If I had to guess, much of the optimism from today's report, coming on the heels of yesterday's disastrous GDP data, is due to the fact that it all but ensures the budget cutting debate in Washington will be more of a pillow fight than a prize fight. That lawmakers will see waning confidence and do everything in their power to keep this whale of an economy chugging along.
To be fair, as Miller Tabak's chief economic strategist Andrew Wilkinson points out in a note to clients, this mixed report does mark "a net improvement of 127,000 (jobs) which delivers a serious change to the jobs picture." It's also a lot cleaner analysis than slogging through three different layers of revisions, including tweaks to annual benchmarks, seasonality and census bureau population adjustments.
The big picture remains in tact, as we grind on with a subpar recovery where too many people are out of work, under-employed and discouraged, to use the parlance of the Labor Department. It reminds me of another quote from Abe Lincoln, in which he said, "wanting to work is so rare a merit, that it should be encouraged."