Realist, not conformist analysis of the latest financial, business and political news

The US Economy Did Not Add 312,000 Jobs In December – It Was Far, Far More

The standard report is that the US economy added 312,000 jobs this past December. This is untrue even though it’s the official number – the true number of jobs added was far, far, larger. The trick to this, the secret, is seasonal adjustments. We know, for example, that Amazon hires tens of thousands to work in those warehouses to get the presents out for the holidays. The US Post Office does much the same, hires armies of temporary workers. It’s also true that all of these get fired right around now, first week in January or so.

An economic statistic which showed jobs gains of say – just to invent a number – 700,000 every December along with 400,000 layoffs every January wouldn’t be all that much use to us:

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””] The economy added 312,000 jobs in December, the government reported Friday, catapulting markets and signaling and that President Donald Trump’s trade war with China has yet to pinch booming job creation. Job growth nearly doubled from November, when the economy added 176,000 jobs. Wages rose with average hourly earnings up 3.2 percent over the previous year, up from 3.1 percent in November. It was the third consecutive month that wages rose more than 3 percent, strengthening evidence that the tightening economy is delivering bigger payouts to workers. [/perfectpullquote]

What we actually want to know is what is the trend in the economy? Not whether Christmas hires happen every Christmas, but what’s happening to the economy as a whole and underlying those seasonal variations? So, what we do is try to work out what does happen at the same time every year. Thanksgiving’s on the same day each year and so we don’t count that every factory and office is closed on that day – we don’t record a horrible slump in GDP that last week of November or so. Lots of factory maintenance is done in the summer to coincide with vacation time, we just skate over that. And we don’t look at seasonal hiring for the holiday season when we count the number of jobs created.

The end result of this is that just about the only number for December job creation it absolutely wasn’t is 312,000. It was very much higher than that. We just don’t report it that way so we can see the trends of the underlying economy not the fact that the same thing happens every year, we send presents to each other therefore lots of packing and delivery people get hired. Hired for a few weeks that is.

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