Politics and economics are inevitably intertwined. And in this highly contentious politically charged season, it is no different. Each presidential election season there is always the concern about the other side pulling some sort of “October Surprise.” This season is no different.
Late last week the federal government’s Bureau of Labor Statistics (BLS) released its monthly job figures. The head line number was impressive: 7.8%. This was the first time that the national unemployment rate dipped below the 8% threshold during President Obama’s tenure.
Now within one month of the November 6 presidential election, the unemployment rate has dropped below the politically important 8% threshold and within a half percent of the 7.3% rate when President Reagan was reelected in 1984.
Conspiracy, Coincidence or Something Else?
Immediately upon release of the figures, GE’s former CEO Jack Welch sent a conspiratorial Tweet hinting that the President’s campaign strong-armed the numbers coming out of the Department of Labor’s BLS. Not one to be left out of the limelight, Donald Trump added more fuel to this conspiracy fire.
For conspiracy theorists there is no way around this: The President used his executive power to ‘cook the books.’
Reality is always much different and a whole lot less sinister.We’re talking about math here, folks. It’s all about the math. Private sector job growth for more than forty-our months has been up. Anemic, yes. Below the needed “replacement rate” that shows an economy growing enough to absorb new entrants into the job market? Yes. But up nonetheless.
Sure, one might question the statistical models or survey methods used by the BLS. But these are the same models and methods used for more than a couple of decades now through both Republican and Democratic Administrations.
Sure, the numbers are subject to revision and are volatile. But that hasn’t changed through the decades.
The numbers are volatile and no one challenges that. This is why we look at trends. And the trends since January 2008 and more recently year-to-date are clearly going in the right direction. Over the last quarter (before this one), the average monthly job creation has been at 150,000 or so. So with trends like that, it is only a question of math that brings the unemployment number down to where it was reported.
And for two icons of American business to question the independence and authority of an agency so integral to the functioning of world stock markets is RECKLESS and more than a bit of a partisan temper tantrum. (Democrats did not respond in this fashion denigrating an independent agency when the tables were turned during the Reagan years).
The BLS provides data that is vital to economic and financial analysis used every day in investment models. The agency is a reliable resource for objective information that is used by investors here and abroad when buying or selling stocks or bonds. If their numbers cannot be trusted (which is what these talking heads are saying), then nothing that comes out of this or any agency has any credibility.
Investment professionals are on the front line dealing with individuals daily who are already non-committal at best and downright mistrusting at the very least of anything to do with the “casino” that they believe Wall Street is. To throw fuel on this fire for simple partisan purposes (by either side) is irresponsible and simply making my job of helping investors untenable in the long run.
Lesson here: Just because you can tweet and instantly connect with the world, doesn’t mean that you should.
To understand the numbers, click here: