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Payroll Time

Jeffrey Snider profile picture
Jeffrey Snider

Never get hung up on one payroll report, good or bad. The Establishment Survey series, seasonally-adjusted and statistically smoothed as much as humanly possible, is still incredibly noisy. It didn't use to be this way, which is an important clue that "something" has changed. The lack of consistency in the monthly measurement is as the unevenness of overall economic growth.

That way we aren't surprised by any one weak payroll report because we realize they all are. What is truly inconsistent is how these are characterized as something they are not. The bigger issue is why.

If we go back to around the beginning of QE3 and QE4 in late 2012, the Federal Reserve's best statistical models projected a gentle downward trend for the unemployment rate. They did so starting with the assumptions that those particular QEs would be a powerful and lasting boost to the US economy.

Even so, their models calculated that, by the end of 2014, the unemployment rate would only decline to about 7.4% from then around 8%. That would have been considered good progress, and monetary success in keeping the economy in line of anticipated recovery.

Instead, by the end of 2014, the actual unemployment rate had collapsed far faster than any Economist could have imagined. It was already at around 5.6% to begin 2015, which was into the range their staff economists had forecast for full employment.

Obviously, something was missing given these results. In forecasting the rate in the Greenbook (or any other modeled predictions, such as those in September 2013 shown above), it was always assumed that the looming recovery would act like any other. In historical experience, and in common sense, as growth picks up in that cyclical process people who were then outside the labor force would begin to either enter or re-enter (the latter having been displaced by

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Jeffrey Snider profile picture
As Head of Global Investment Research for Alhambra Investment Partners, Jeff spearheads the investment research efforts while providing close contact to Alhambra’s client base. Jeff joined Atlantic Capital Management, Inc., in Buffalo, NY, as an intern while completing studies at Canisius College. After graduating in 1996 with a Bachelor’s degree in Finance, Jeff took over the operations of that firm while adding to the portfolio management and stock research process. In 2000, Jeff moved to West Palm Beach to join Tom Nolan with Atlantic Capital Management of Florida, Inc. During the early part of the 2000′s he began to develop the research capability that ACM is known for. As part of the portfolio management team, Jeff was an integral part in growing ACM and building the comprehensive research/management services, and then turning that investment research into outstanding investment performance. As part of that research effort, Jeff authored and published numerous in-depth investment reports that ran contrary to established opinion. In the nearly year and a half run-up to the panic in 2008, Jeff analyzed and reported on the deteriorating state of the economy and markets. In early 2009, while conventional wisdom focused on near-perpetual gloom, his next series of reports provided insight into the formative ending process of the economic contraction and a comprehensive review of factors that were leading to the market’s resurrection. In 2012, after the merger between ACM and Alhambra Investment Partners, Jeff came on board Alhambra as Head of Global Investment Research. Currently, Jeff is published nationally at RealClearMarkets, ZeroHedge, Minyanville and Yahoo!Finance. Jeff holds a FINRA Series 65 Investment Advisor License.

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