More Jobs Friday Follies

One of these days the Jobs Friday nonsense might even awaken the boys and girls frolicking down in the canyons of Wall Street. After all, today’s “very strong” jobs report caught all of their go-to economic prognosticators way off base, even is it caused stock prices to plunge owing to the implication that the Fed may see fit to delay the next round of rate cuts.

That’s right. In Fed World, strong jobs growth mean weak stock prices because the printing presses stay on idle.

Then again, the jobs report actually was not remotely “strong” at all. Moreover, after the tsunami of central bank credit issued during 2020 to 2022 the Fed’s shouldn’t be pumping-out any new money anyway. Period.

Likewise, in an honest casino Wall Street would be valuing earnings based on rational and sustainable PE multiples and demonstrated net income growth trends. Alas, what we actually have is double-digit multiples of next year’s projected, adjusted-EBITDA hockey sticks hoovered up by stock peddlers who are pleased to call themselves equity analysts.

In the first place, of course, the question recurs as to why Wall Street would pay anyone millions per year to guesstimate utterly transient monthly establishment survey headcounts, which get drastically revised consistently; amount to a noise-ridden collection of statistical apples and oranges (i.e 10-hours per week burger-flippers and 50-hours per week blast furnace operators count the same); and have radically different economic implications as between jobs owing to government funded demand in the health care sector versus oilfield jobs reflecting competitive value-added in the global energy markets.

Still, even when it comes to the silly guess-the-jobs-number game, only one Wall Street firm, Bloomberg Economics, got it right with 12,000 jobs to spare, while most of the others were not even in the ball park of the 256,000 jobs print. The vaunted Goldman Sachs economics team, for example, actually got it only half-right at 125,000.

But why does anyone bother? As a matter of macroeconomic performance and business profits, the jobs count from the monthly BLS establishment survey is a third tier data point of marginal significance for profitability and returns on invested capital. It can’t hold a candle when it comes to factors like productivity growth, investment rates, unit labor costs, household incomes or trade, capital and financial flows with the rest of the world.