In Like a Lion, Out Like a Lamb

We're talking jobs, of course.  At the beginning of March, we learned that non-farm payrolls grew by a robust 235k in February (later revised downward to a 219k gain).  Then on Friday, we learned that March payrolls only grew by 98k, vs. a forecast of 180k.  Thus job growth in March came in like a lion, and went out like a lamb.

Of course, the anti-Trumpers cited this as an "aha" moment, pointing to the number as evidence that job growth was stalling out under the new administration.  The appropriate response to which is "balderdash."

First, January and February saw big gains in construction jobs, in part because of very mild winter weather across nearly all of the U.S.  This effectively front-loaded the usual spring construction season.  That sector only gained 6,000 jobs in March, as heavy snowstorms cut across much of the nation.  Weather-related work absences in March totaled 164k.

Second, there was a big drop in retail employment.  It's probably too late in the year to attribute that to seasonality (temporary retail hiring picks up in late October and November, with cuts typically coming in January).  The more likely culprit is the fact that brick-and-mortar retail is largely dying.  However, consumer spending is not falling; it's just that online sales are supplanting brick-and-mortar buying.  In other words, Amazon is replacing Sears.

Now, Amazon needn't hire as many retail workers as Sears and Penney's, thanks to technology, so we may be seeing a trend in declining retail employment for some time to come.  Of course, those on the left will bemoan this, but it's a natural occurrence as technology advances.  McDonald's is hiring fewer order-takers at the counter (especially now that it has to pay them $15/hour in some locales) because they've installed self-serve order kiosks and encouraged app orders.

That trend, too, is decried by the left.  But two points are in order: one, those counter jobs were never supposed to be career positions, paying a high enough wage to support a family, so forcing McDonald's to do so was bound to invite technological advances.  (One acquaintance criticized McDonald's, saying that for the cost of developing the kiosk technology, they could have just paid all their workers $15/hour.  He neglected to consider that, once the investment in technology is made and the kiosks are installed, they basically work for "free" - other than maintenance and connectivity costs - until they crap out.  Plus they'll never ask for a raise.)  And two, technology has been replacing low-level jobs that can be automated since the Industrial Revolution.

For example, there are a lot fewer blacksmiths in America than there were a couple of centuries ago.  But are those who bemoan the loss of jobs to technology really willing to sell their cars and ride a horse to work?  Besides, I'll bet many of those who call for even the most menial of jobs to pay $15/hour ride Uber, and we've seen what that technology has done to the taxi industry (it's even resulted in the failure of several financial institutions that concentrated in lending collateralized by taxi medallions).

This is called disruption, folks.  It's here to stay, and it's only going to accelerate.

A third point regarding the March payroll number is one that I've made relentlessly since I started doing economic analysis more than a quarter-century ago:

"One month doth not a trend make."

Yes, March payrolls only grew by 98k.  Consider that in May 2016, payrolls only grew by 43k.  And yet, the sky did not fall.  The economy did not go into a tailspin.  The world did not end.

Indeed, June 2016 payrolls surged by 297k.  So now that better weather has returned, we may well see a strong showing in the April data.  That's what tends to happen; a weak payrolls report is often followed by a surge, as exogenous factors such as weather result in a strong catch-up effect.

It's important to ignore the media's focus on the worst aspects of an economic report, and look behind the headline numbers.  And there was a lot of good news in the March jobs report: wage growth held at 2.7%.  The unemployment rate fell to 4.5% as the number of unemployed declined by 326k.  The civilian labor force grew by 145k, as discouraged unemployed persons continue to be attracted back into the labor market.

Further, the stock market took the report in stride, with the Dow only giving up seven points (that's 0.03%).  If the report didn't rattle those who understand this stuff, why should it rattle anyone else?

Here's an example of how the media - even the business media - distorts the data:  CNBC (part of the NBC family, which includes the far-left outlet MSNBC) reported on the downward revisions to the January and February payrolls numbers as follows:

"January's growth was reduced from 238,000 to 216,000, while February fell from 235,000 to 219,000, equating to a total decline of 38,000" (italics added).

Uhh, no.  That doesn't equate to a total decline of 38,000.  It equates to a total two-month gain of 435,000, vs. a previously estimated gain of 473,000.

Unfortunately, CNBC doesn't really know better.  Sure, it employs some knowledgeable folks, like Jim Cramer on the equity side and Rick Santelli on the fixed-income side.  But Steve Liesman, CNBC's senior economics reporter, holds a B.A. in English and an M.S. in Journalism.  Those are hardly the credentials I'd want in a senior economics reporter, and I've known Liesman to be wrong a lot more than he's been right over the decade or so that I've been watching him.

Sadly, most Americans don't know better either.  They rely too heavily on the headlines, from the business media or - worse yet - the mainstream media.

But that's what your friendly neighborhood Curmudgeon is here for: to set the record straight, and help look behind the numbers, separating the kernels of truth from the chaff of yellow journalism.  Know the numbers, and the numbers shall set ye free.