The Commentariat Discovers Seasonal Adjustment
On the heels of the BLS Jobs Report for December 3, it seems at long last, after 18 months of data distortion caused by the COVID crisis, some people are waking up to the fact that the "headline" numbers everyone focuses on are seasonally adjusted. Which wouldn't be a problem except COVID has essentially outlawed seasonality. COVID sets its OWN adjustment metrics, depending how widespread or destructive it is in any given month in any given location.
Without a consistent baseline for the usual ups and downs of specific industries, parsing through jobs data takes a little more careful consideration.
A handful of observers picked this up when it came to September's dataset, which was widely abused by hiring distortions in education, where the usually predictable seasonal swings went haywire. Not mentioned, but equally noise making were distortions in the hospitality sector, which, as we all know went through some tortuous times in the past 18 months. However, there is a strong seasonal element to hiring in this sphere as well, and when you overlay that to the effects of COVID, no one really knows where we stand in relation to the pre-COVID trend, unless you want to ignore seasonality altogether.
Which is probably a good thing to do right now.
In any case, the broadly held consensus estimate of around 550,000 jobs was well off the mark, hitting only 210,000. Some upward revisions to the previous two months results eased some of the disappointment. And as Joseph Brusueles noted in a tweet, "Inside the household survey not only did it increase by 1.13 million, an additional 594K entered the labor force in November. These are statistically significant numbers inside the BLS report. I would not take the topline establishment number as a major change in the trend."
So that alone indeed is a good result, and those people entering or re-entering the workforce will become a part of a powerful stimulus, as their spending power flows through the economy.
It is interesting to note that that the media focus on the monthly BLS report has returned to the white hot intensity last seen in the aftermath of the 2008 Financial Crisis. Every report, at least for the next two years, will be classified as "all important." That is, if the CPI report doesn't replace it for top honors.