Shocked! -- Friday, September 4, 2015; The US Is At Full Employment -- Janet Yellen And The Federal Reserve

Note: after yesterday's "first time unemployment claims" report came out, I had decided to start posting that weekly number by exception. The weekly "ups and downs" of 5,000 or less is simply background noise, and not significant. With today's shocking "new jobs number" -- a monthly report --  I'm not sure if I will stick with that decision. So, we'll see. No one saw today's number coming and my hunch is that it will be revised upward; but to get it from 177,000 to 200,000 is going to require quite a revision.

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Wow!

Regular readers know how cynical I am when it comes to the unemployment numbers and jobs reports, but the jobs report coming out this morning exceeded anything I had imagined. What was it? 177,000? Anything below 200,000 is consistent with economic stagnation. Despite energy at all-time lows and gasoline demand at all-time highs, we have 177,000 new jobs added in August. Pundits had suggested the number would be 225,000, not great, but at least with that number Bloomberg and Reuters could tell us again how good the Obama economy is doing.
But 177,000? Wow. Even I was shocked, and I'm pretty cynical. [Wow, I was wrong. I thought I had read 177,000 but, in fact, it was 173,000. An incredibly bad report.]

But the dots are easy to connect:

• hourly wages are up slightly
• minimum wage mandates and pressure for minimum wage increases grow
• stores like Wal-Mart cut employee hours
• new jobs added: way, way below 200,000
• folks dropping out of work force; new records for low participation set again
• unemployment rate drops to 5.1%

Bullets #4, 5, and 6 are the reasons the market tanked this morning. Movers and shakers and anyone paying attention know that the unemployment rate ticked down because folks are dropping out of the labor force.

President Obama has a busy day today. He will see that unemployment has dropped to 5.1% and he will move on.

By the way, the August jobs number was hardly posted when already one of the major news services was already suggesting it was due to a statistical glitch. Next month the August jobs report will magically be revised to show that the August numbers was really 350,000.

I track the numbers here. Seldom in the past six years has there been a really good jobs report despite a gazillion dollars in stimulus. Even when the numbers are somewhat good, the numbers are almost always less than expected. Back in March, for example, the report was 235,000 new jobs added -- at least it was above 200,000. But it was less than what analysts had expected.

Probably just another statistical glitch.

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Bloomberg Spin

Bloomberg saw the numbers as a great report. Wow:

Employers added 173,000 workers in August and the U.S. jobless rate dropped to 5.1 percent, the lowest since April 2008 and a level that the Federal Reserve considers to be full employment.

The gain in payrolls, while less than forecast, followed advances in July and June that were stronger than previously reported, the Labor Department said Friday. Average hourly earnings climbed more than forecast and workers put in a longer workweek, the report also showed.

Persistent hiring indicates employers were upbeat about America’s demand prospects leading up to mounting concerns of further deterioration in emerging economies. Fed policy makers meeting in less than two weeks will weigh resilient U.S. employment conditions against the recent turmoil in world financial markets as they debate the timing of any interest-rate increase.

Earlier, Bloomberg asked if this might not be the most important jobs report ever? Wow, such hyperbole. And then the jobs number did not meet Bloomberg's expectations: any number of 200,000 -- even 205,000 -- would have been a reason to uncork the champagne, but alas, only 173,000.

Even the New York Times was more honest than Bloomberg:

Despite disappointing job growth last month, the unemployment rate fell to its lowest level since early 2008, sharpening the debate within the Federal Reserve over whether to raise interest rates when policy makers meet in two weeks.

Friday’s report from the Labor Department — which estimated that employers added a less-than-expected 173,000 jobs in August even as the official jobless rate dipped to 5.1 percent — provided evidence for both camps to make their cases.