President Trump mentioned the word “jobs” or a variation of that word 16 times in his speech on the state of the Union.
And the broader theme of the economy was the star of the show. It was the first thing that came out of the mouth of the President right after “my fellow citizens”.
For this reason, we are fortunate that another job report will be published this Friday, soon after the topic has dominated national television. What is not so great is that the January employment report will be very complicated
Here is some solid meat and potatoes to chew before I deal with the complications.
The “experts” expect 160,000 new jobs to grow in January, compared to a modest 145,000 in December. The unemployment rate is expected to remain at 3.5%.
It got a bit more complicated when ADP / Moody’s Analytics announced on Wednesday that a whopping 291,000 new jobs in private companies were counted last month. Or twice as much as expected.
Wouldn’t you believe that we will create more than 160,000 jobs in the U.S. Department of Labor report
Think again Labor officials are deducting around 175,000 jobs from the January total for reasons that speak for them on their own, because they believe companies will tacitly stop doing business and job losses will not show up in the surveys.
The estimate that leads to this deduction is called the birth / death model. This is a seasonal adjustment to take account of job cuts after the holidays.
This is by far the largest deduction the department makes all year round. And although this supposition doesn’t seem to have had much of an impact in the past few years, it could lead to Friday’s number dropping
The ADP number makes people think positively about the January numbers and the adjustment of birth and death should make them feel negative