Over-Hyped Oct. Jobs Report Does Not Assure Dec. Rate Hike – Schiff Report

Over-Hyped Oct. Jobs Report Does Not Assure Dec. Rate Hike – Schiff Report


* Friday, November 6, 2015
* Earlier today the government released the Non-Farm Payroll Report for the month of October
* I was told that this was the most import Non-Farm Payroll report ever
* They were looking for 190,000 jobs and we created 271,000 jobs
* Everybody now has jumped to the conclusion that a December rate hike is a lock
* There is nothing in this jobs report that indicates that
* The reason everybody believes that the Fed is like to raise rates is because Janet Yellen testified before Congress earlier in the week
* This is what the Fed Chair said about interest rates:
* If we get further improvements in the labor market and we make progress at achieving the Fed's inflation goal of 2% in the medium term
* How much improvement and what kind? We don't know, because thus far, no improvements have been enough to prompt a rate hike
* Yellen said that if we got those improvements, then a rate hike in December would be a "live possibility"
* This does not mean it will actually happen - it means it is possible
* She did not even use the word probable
* I don't think the Fed is going to raise rates in December
* We have one more "most important" jobs report between now and December and this month's numbers may be revised down, as others have
* From my perspective, if the Fed does not know that they will raise rates by now, they will not decide on the spur of the moment after a jobs report
* Even with positive economic news, the Fed still does not have to raise rates; they can come up with another excuse, real or unreal
* What happens if the stock market declines after a rate hike? what would the Fed do then?
* "Extend and Pretend" is working like a charm for the Fed now
* Getting back to today's job's report:
* This is the strongest month of the year following the two weakest months of the year
* Both of those months arrived with expectations of upward revisions, and they did not happen
* The three month average is 187,000 jobs
* The last three months have been slower than any prior three month period this year
* Last year, the 3-month average was about 250,000+ jobs
* So the job market is much slower this year than it was last year when the Fed was looking for "more improvements" before raising rates
* The unemployment rate did decline, but so far no positive data on unemployment rates have prompted the Fed to raise rates
* The Labor Force Participation Rate stayed at 62.4% which matches the low of this so-called recovery
* So we are not seeing more people entering the labor force
* This is not a sudden accelleration in the pace of job growth
* Let's look at the quality of the jobs:
* Most of the jobs, about 200,000 of the 271,000 jobs added are low-paying service sector jobs
* In second place, at 45,000, is temporary help
* Third place, at 44,000, is retail trade
* The fourth largest category is leisure and hospitality
* Manufacturing, mining, logging, transportation sectors lost jobs
* Where it really gets bad is in the demographics:
* All job gains went to people 55 and older
* People under the age of 55 lost 35,000 jobs
* If you look at the gender, men from 25 - 54 lost 119,000 jobs
* What would explain this?
* Older people can no longer afford to be retired, and are supplementing their retirement incomes
* Some of the older people are taking better jobs because they are more experienced
* Why are more women getting jobs?
* Women who were previously homemakers also need to supplement their incomes
* When you look at the demographic numbers, it is further proof that the Fed's explanation of the labor force participation rate is wrong
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