The recent data series from the Bureau of Labor Statistics (BLS) and US Bureau of Economic Analysis (BEA) reads like a paperback romance novel with Joe Biden as the ice cream slurping hero sniffing his way into rescuing the damsel in distress.
Or Jim Cramer’s portfolio.
Regardless of what one thinks was reported in the past three months, remember the massive annualized revisions of over 800,000 that happened without warning in the dead of summer. That story along created doubt in the viability of US government data and with good reason.
The politicization of the bureaucracy for data reporting began under President George H.W. Bush in the early 1990’s, but was perfected into a science by President Clinton.
Thus a review of the charts to indicate what has happened during key Presidential election years for the U-6 Unemployment Rate is probably in order.
I. The 2000 Election
Before the start of the Apprentice TV show, MAGA, and everything else of the current era, the most contested election since the Civil War was that of the year 2000.
A trend towards 7% plus gross unemployment suddenly shifts south the month before the election takes place.
II. The 2008 Election
It can be summed up in one chart:
By the time the Bush administration realized all of the errors of Bernanke, Paulson, Bair, and the Congress the game was up. The United States was within weeks, not months, of a Great Depression type of banking crash.
No one was hiring, everyone was firing starting in the spring but the litter couldn’t cover up the cat turd that was exposed by August of 2008.
III. 2016 Election
President Obama, who was no huge fan of the Clinton administration, did everything he can from a bureaucratic angle to assist Hillary in her failing campaign against a reality TV star.
Despite the efforts to help, Hillary lost in a shocking upset to Donald Trump and an angry, more frustrated electorate. Unfortunately for the American people and investors globally, President Trump’s first term was marred by mismanagement, poor personnel decisions, and no real direction to repair and re-instill confidence in the data being provided by the US government.
IV. 2020 Election
President Trump did everything in the Pandemic Year except brag about the massive recovery thanks to the flood of money printing at the US Treasury. In fact, there was an almost 50% recovery in the U-6 employment measure:
The reality of the numbers in all of these elections were grossly underestimated as the methodology changes introduced in the late 1980s gave way too much leeway to bureaucrats with political alliances to determine data proclamations. This remains true to this day.
V. 2024 Election
The charts, the trends, and the suddenly shocking data variations do not lie:
Based on basic math and the trends of hiring, the number should have registered a rate of 8.0-8.2% U-6 unemployment levels.
But it’s an election year and the primary candidate was replaced so the great imperial bureaucracy could not have that, right?
This is why forecasting future unemployment rates gets quite tricky.
VI. October Non-Farms Payroll Predictions
Halloween Night, Benzinga summed it up best with this headline(subscription required):
Of course it can defy that, it’s the B freaking S, er, BLS for Pete’s sake.
The Financial Times highlighted Goldman Sach’s prediction in their non-farm payroll preview tonight:
(excerpted)
David Mericle, chief US economist at Goldman Sachs, believes the strikes will have an impact on 41,000 jobs, with the storms impacting up to 50,000. Once those temporary losses are added back to the 95,000 jobs he expects for the month, he said the “underlying trend is a respectable number”.
The median prediction per Bloomberg is for an increase of 105,000 jobs in October, although Anna Wong, one of their best staff economists, predicted a potential negative number on Bloomberg Surveillance the other morning of minus 10,000 jobs for October due to the hurricanes.
This brings yours truly up front based on the election year shenanigans, my personal experiences being in the hurricane zone, and the following justification for my somewhat “bullish” report that I project for November 1st at 8:30 a.m. ET.
Non-farm Payrolls: +89,000
Participation Rate: 62.6%
U-3 Unemployment Rate: 4.3%
U-6 Unemployment Rate: 7.8%
Average Weekly Hours: 34.0
Average Hourly Earnings (YoY): 3.8%
Now the reasons behind the guesstimates for MacroEdge readers first:
–Non-farm Payrolls can be masked by temporary hiring to recover from Hurricane Helene and the lack of layoffs which would occur in the impacted areas of Hurricane Milton after the survey period.
–Participation Rate: Slight decrease due to storm impacts and measurement responses from North Carolina and North Florida due to storms.
–U3 Employment Rate: Purely a guesstimate based on the lack of ability for those impacted by Helene to find work. That will mildly increase unemployment due to Florida, Georgia, and the Carolinas but negligible in the big picture.
–U6 Employment Rate: A much broader guesstimate but based on the same loss of jobs and interference with data collection and US mail services from impacted regions.
–Average Weekly Hours: A decline due to the Boeing strike, Stellantis layoffs plus the hurricanes
–Average Hourly Earnings: Down for the same reasons stated above plus the lack of government temporary hiring impacts in regions hit by the multiple hurricanes.
There is no telling if this author is correct but the reality is the numbers are far worse as the hospitality, retail, and construction industries took major hits in our region due to the storms. The delay in getting businesses open until November is obvious along with much of Western North Carolina losing their autumn peak tourism season altogether.
Stay tuned as commentary on X and Patreon will happen as the numbers will be released in the morning by the BLS.
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