Friday Non-Farm Payroll Prediction With a Dash of History

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Personal Note: I’ll be in and out over the next week due to my mother’s terminal illness. So if the world ends, I’m sorry but I will not be able to report on it right away. Family first.

There is one key piece of economic data coming out from the BLS tomorrow which will set the tone for the financial markets for at least one day. Needless to say, this author says that tongue in cheek as the bond market has already put its bid in for a disaster tomorrow.

But before this author produces his prediction for tomorrow morning, a bit of history is in order. After the recent 818,000 job benchmark revision by the government, one has to ask, what has happened in the past?

From 2000 to 2023 the U-6 Unemployment level has been the only semi-reliable measure of unemployment since the data became a politicized short term measure. The revisions have turned into a running joke and the questions about the reliability of initial data reports is truly weighing on the financial world as statistical anomalies are now the norm, not the exception.

The chart below reflects the level for U-6 on a non-seasonally adjusted basis in August from 2000-2023 only, to provide perspective to the varying levels.

The one thing that is of note, it always seems to be at a much higher level than U-3 and unfortunately for the current economic regime, the increase from 2022 to 2023, albeit only 0.2% year over year, does reflect a risk that higher levels are in the offing.

A better perspective that might throw some doubt into this author’s forecast below is the rate of change from the benchmark revision month into the next month (July to August) and what happens to U-6 during that period over the same time span from 2000 to 2023(also non-seasonally adjusted).

Odds are a decline in U-3 and U-6 should and could happen. However last year, it increased, the first anomaly in the 23 year history of this data after revisions. If the current supporting private services data available is supported, odds are the increase will be more substantial this time, north of 0.5%, contingent of course on the number not being diluted for political reasons.

The revisions, set aside for this projection, means that the forecast being presented is purely based on data available outside of the normal government reporting. ISM and PMI data, Federal Reserve Regional reports, and other sources like those from MacroEdge.net provide a new method of giving an educated guess as to where tomorrow morning’s numbers will land; which is no worse than the BLS and their statistical dartboard.