A person who tracks investment markets closely – and I do – continually is amazed by overreactions to government statistics or utterances.
Simply put, mostly these are wildly incorrect and tend to be more propaganda than reality. Yet markets gyrate wildly based on them before regaining equilibrium.
Today provides yet another example of how ridiculous it is to act on those numbers in the moment. The Bureau of Labor Statistics came clean this morning, revising down its estimate of job growth for the year that ended March 2024, by 818,000 jobs.
That’s lopping about 30 percent off the previously reported figure of approximately 2.9 million jobs gained.
It was the greatest ex post facto revision of these numbers since 2009.
Why does this keep happening?
Let us count the reasons.
First of all, these numbers are not actual counts, but more like guesses based on economic models. And, as we are finding out in examples such as artificial intelligence, the people doing the programming or deciding the model factors, influence the outcomes in whatever direction they prefer.
Second, considering that most bureaucrats lean left, no matter which party supposedly is controlling the government, it is likely that the models are designed to aid the cause of the left whenever possible.
You should be aware of these statistical fun and games. To base investments on this obviously questionable information is nonsensical in my view. But that’s how the game is played, so you go with the crowd.
This brings us to utterances, such as we will hear Friday from Federal Reserve Chair Jerome “Jay” Powell.
Powell and his unelected rulers of the money world are meeting at Jackson Hole, an annual elitist gathering to set the monetary policy for the world. Lesser speakers will be making the rounds of the cable business networks, pontificating but not illuminating in coming days.
Powell, the Big Kahuna, speaks Friday morning, with much anticipation ahead of this. Think of the Great Oz.
Investors, or the computer algorithms to which investment firms have abdicated the role of parsing language and investing based on that parsing, will hang on every Powell syllable.
Just for kicks and giggles, monitor stock, bond and precious metals markets as Powell speaks to see them being moved significantly by Powell’s words.
Then recall that 818,000 job downward revision, revealed almost six months after the fact.
Sam Ross Jr's site 