The BLS August jobs numbers are in and they reported the U.S. economy added a positively dismal 96,000 jobs. Meanwhile, we reported August job growth was 185,000, nearly twice what the BLS reported.
I answered a zillion calls in the past couple of days inquiring about our employment number, then another zillion calls Saturday morning asking why our numbers were WRONG. I don't mean to be miss snub-nosed contrary here, but I am frustrated by the lack of understanding of what we are reporting.
TrimTabs is NOT trying to forecast what the BLS is going to report every month. The BLS numbers are FREQUENTLY, let me repeat that, FREQUENTLY revised. Those revisions are usually in the direction of our original job growth estimates. So if your goal is divining what the BLS is going to report, then you are not really interested in what is going on in the underlying economy. We are, and that is why we look to other indicators that give a better view of real-time economic growth.
Let's look at July's BLS numbers for a moment. The BLS initially reported job growth of 163,000 in July. In August, the BLS revised their estimate down 13.5% to 141,000, closer to our original July estimate of 115,000. We believe more downward revisions are likely.
Here are a few more examples. In 2011, when the BLS released its benchmarked jobs data, the BLS total employment estimates for the year were too low by 41% relative to its preliminary estimate. That is a nearly 500,000 job growth miss. Here's another. In 2009, post benchmark, the BLS increased its job loss estimates by a stunning 60%. That was a 2.2 million job loss miss. Meanwhile, on average our withholding tax-based estimates are within 15% of the benchmarked BLS data, even though our data is released more than a year before the BLS benchmarking process.
Going back to August, let's review the facts. Year-over-year growth in withholding taxes was up modestly in August relative to June and July. That tells us two things; 1) there was positive growth in wages and salaries, and 2) there was positive growth in jobs.
We believe job growth was due to three factors: 1) The small uptick in housing; 2) the mini-boom in mortgage refinancing; and 3) the nearly 20% growth in vehicle sales relative to a year ago.
Will this growth last? We don't think so.
Why? The home selling season is nearly over. The mortgage refi boomlet shut off three weeks ago with the increase in 30-year mortgage interest rates. Combine that with the massive level of uncertaintly concerning the approaching $300 billion to $500 billion dollar "fiscal cliff" and we are pretty sure the economy will continue to muddle along its sub-2% GDP growth path for the foreseeable future.
One thing is for sure, however, the very poor August BLS report gives the Federal Reserve cover to announce yet another massive monetary easing program. We believe that announcement will likely come as soon as this Thursday.
Well, that's it for Today's Macro Musings. The Federal Reserve announcement is up for this week, so stay tuned.