Latest Inflation Numbers and Discussion

Yeah the USD is just plunging with anticipation of a rate cut.

Just before I'm about to depart for an overseas trip.
 
Montecfo said:
BLS revised its jobs numbers cutting the estimated number of jobs by 818k (!) for the 12 months ended March of this year. This is the largest revision since 2009.

Now we do not know what the revisions will look like for the rest of this year for another year. But it really puts an exclamation point on the overstatement of original jobs numbers and repeated revisions (almost always down) over the past 18 months or so.

We place so much stock in these numbers and they seem to be less reliable these days. My guess is will if anything add more fuel to the interest rate cut plans the Fed is currently mulling.

https://www.cnn.com/2024/08/21/economy/bls-jobs-revisions/index.html
Click to expand...
I probably shouldn't say it - again.

What the heck.

This is me being surprised.
 
I had a friend who did a remodel... tore down 3 walls and rebuilt them and then tore dow the last wall and rebuilt that one due to stupid regulations.
 
Montecfo said:
BLS revised its jobs numbers cutting the estimated number of jobs by 818k (!) for the 12 months ended March of this year. This is the largest revision since 2009.

Now we do not know what the revisions will look like for the rest of this year for another year. But it really puts an exclamation point on the overstatement of original jobs numbers and repeated revisions (almost always down) over the past 18 months or so.
Click to expand...

Here's the numbers from 2019. Every administration goes through this adjustment every August of every year as the previous 12 months estimates are reconciled with actual numbers from state unemployment offices.

IMG_20240821_224950.png
 
Indeed.

Headline PCE was as expected. Core PCE at 2.6% was less than expected.

I feel the Fed has pivoted to supporting the labor market. This report makes it easier.
 
Looks like about 2.5% incrase in our SS payments. 6.6% increase in our supplement. After a ~6% raise in Part B last yr. SO nice to keep up!
 
There was also a better than expected GDP report in Q2 announced last week.

Of course another jobs report coming next week.
 
The jobs report at 142k looked a bit soft compared to the 160k expected. But once again the story was the revisions to prior months. June and July revised downward by 86k(!). So 142k less 86k is just 56k new jobs we learned about today.

And July's number has been revised down to just 89k jobs. And it will be revised again, likely downward, next month. June was revised downward by 60k jobs (!).

If you look at the graphs, jobs growth is declining rather sharply.

And it looks like a lot of part-time jobs. The household survey showed full-time jobs down over half a million jobs. Wow!

Headline unemployment fell to 4.2% but again, this is driven by part-time jobs
The so called "U-6" unemployment rate, which includes discouraged, workers and part-timers wishing for full-time work, rose to a multi-year high.

Calling the report mixed seems a bit generous, at least from here.

 
Really interested to see what happens the next two weeks. Historically speaking, rate cuts only come when the Fed needs them (something really bad is happening)... but this time feels different (dangerous mindset) that the economy needs a boost and might just run north from it.

If I had to guess sharp rise or drop between now and Spring... 15% up or 30% down... take your pick.
 
Interest rates are pretty much in the area of what is normal over my lifetime. I could see a small cut in rates. I still have inflation concerns given the huge deficit spending that the Federal government continues with no abatement in site.
 
Chuckanut said:
Interest rates are pretty much in the area of what is normal over my lifetime. I could see a small cut in rates. I still have inflation concerns given the huge deficit spending that the Federal government continues with no abatement in site.
Click to expand...
Totally agree. Having said that, I've almost always been wrong when I try to guess what the FED will do and what effect it will have, so I just sorta sit here and let it all happen. I'm not smart enough to "make a play" from the FED actions (or inactions.)
 
Rising unemployment together with rising inflation (stagflation) are not often seen together and would without doubt be the worst case scenario. So far there’s no indication this is happening.

+1@ Montecfo regarding rising unemployment. The labor market is quickly transforming into a “buyers market” where employers have the upper hand.

I continue to believe the real risk ahead is trade imbalances around the world.
 
MichaelB said:
I continue to believe the real risk ahead is trade imbalances around the world.
Click to expand...
Realistically, what does that mean to USA and to those of us on the FIRE Forum? I know that trade imbalances are "bad" but sometimes it's a country by country issue with winners and losers IIRC. Any thoughts/predictions?
 
Montecfo said:
The jobs report at 142k looked a bit soft compared to the 160k expected. But once again the story was the revisions to prior months. June and July revised downward by 86k(!). So 142k less 86k is just 56k new jobs we learned about today.

And July's number has been revised down to just 89k jobs. And it will be revised again, likely downward, next month. June was revised downward by 60k jobs (!).

If you look at the graphs, jobs growth is declining rather sharply.

And it looks like a lot of part-time jobs. The household survey showed full-time jobs down over half a million jobs. Wow!

Headline unemployment fell to 4.2% but again, this is driven by part-time jobs
The so called "U-6" unemployment rate, which includes discouraged, workers and part-timers wishing for full-time work, rose to a multi-year high.

Calling the report mixed seems a bit generous, at least from here.

Click to expand...
In 2024 isn't there a more accurate measure of employment that can't be fudged month to month?
 
momoney said:
In 2024 isn't there a more accurate measure of employment that can't be fudged month to month?
Click to expand...

It's not being fudged. It's being updated from monthly estimates to actual reported numbers. Every month the US Labor Department makes estimates of the employment situation. Once a year, in August, the Labor Department compiles actual employment numbers from all 50 states from the past 12 months and retroactively makes a one time annual adjustment to the previous 12 months.

If there was a different way of measuring employment and if the current metric for calculating employment were to be changed then there would be no way to directly compare past data with the future employment data.
 
Last edited:
Qs Laptop said:
It's not being fudged. It's being updated from monthly estimates to actual reported numbers. Every month the US Labor Department makes estimates of the employment situation. Once a year, in August, the Labor Department compiles actual employment numbers from all 50 states from the past 12 months and retroactively makes a one time an annual adjustment to the previous 12 months.

If there was a different way of measuring employment and if the current metric for calculating employment were to be changed then there would be no way to directly compare past data with the future employment data.
Click to expand...
There used to be a different way for calculating unemployment. As I recall, thee was a change in 1980 and again in the early 90's. I think using the 1980 method would have the current UE number a bit higher. Also, I would like to have them report U6 along with U3.
 
xaviemb said:
Really interested to see what happens the next two weeks. Historically speaking, rate cuts only come when the Fed needs them (something really bad is happening)... but this time feels different (dangerous mindset) that the economy needs a boost and might just run north from it.

If I had to guess sharp rise or drop between now and Spring... 15% up or 30% down... take your pick.
Click to expand...
5.25% to 5.5% is pretty high historically, so I’m not surprised to see the Fed back off at least a little bit.
 
The way BLS measures unemployment hasn’t fundamentally changed in decades, so historical comparisons are valid and relevant. There was a change in ‘94 (see here), but this had much to do with survey and data collection methodology. And there is no doubt the numbers are not “fudged”. Like inflation data, it is heavily scrutinized by every economics group in the public, private and educational sectors around the world, everyone looking for (and not finding) flaws.

The US measures unemployment 2 different ways. The monthly household survey asks people / households about their employment (hours, pay, how long looking for work, etc) and the establishment survey asks businesses about changes in employment, wages, hiring / firing, etc. The household survey is adjusted annually, and over time, after adjustment, the two tend to track closely. Payroll taxes are also reported daily by the US Treasury and any employment discrepancy would quickly be spotted there.
 
Koolau said:
Realistically, what does that mean to USA and to those of us on the FIRE Forum? I know that trade imbalances are "bad" but sometimes it's a country by country issue with winners and losers IIRC. Any thoughts/predictions?
Click to expand...
A good topic for another thread, and it is a real issue. The reason I bring it up is because reducing our trade deficit is likely to push inflation back above our comfort level.
 
MichaelB said:
And there is no doubt the numbers are not “fudged”. Like inflation data...
Click to expand...

I have no clue whether the unemployment data reflect reality or not. But comparing them to the inflation data doesn't instill much confidence.
 
MichaelB said:
The US measures unemployment 2 different ways. The monthly household survey asks people / households about their employment (hours, pay, how long looking for work, etc) and the establishment survey asks businesses about changes in employment, wages, hiring / firing, etc. The household survey is adjusted annually, and over time, after adjustment, the two tend to track closely. Payroll taxes are also reported daily by the US Treasury and any employment discrepancy would quickly be spotted there.
Click to expand...
DW and I were selected for the household survey about 30 years ago. It was an interesting experience. First, they had to convince us they weren't scammers. Yeah, even back then. I think a lot of people just shred the randomly generated request. I seem to recall sitting on it for a while until the surveyor called us a few times and I finally picked up or returned the call. Then, the surveyor came to our home for an initial interview. This took some time, over an hour.

After that, she called us once per month to ask about any updates or changes. It was focused on employment, but also asked a few other things like mortgages, births, deaths and so on. The monthly calls just took a minute or two.

They may do it differently today now that there is the internet.

I can say back then they were very particular about things and persistent. If the other surveyors were like ours, they got good data.
 
CaptTom said:
I have no clue whether the unemployment data reflect reality or not. But comparing them to the inflation data doesn't instill much confidence.
Click to expand...
On the contrary, inflation data is very high quality.
Koolau said:
Probably, but would we USE a measure that can't be fudged?
Click to expand...
We can and we do.

Both the methodology and the data collection are among the most heavily scrutinized data anywhere in the world. Feel free to provide legitimate, data based examples showing errors in these measures.

Like double entry accounting, these numbers are also supported by GDP, payroll taxes, and other measures of economic activity. If inflation or employment measures are wrong, so is GDP and payroll tax collection. An error or mismeasurement anywhere will show up somewhere else in the national accounts.
 
Last edited:
You must log in or register to reply here.

Similar threads

target2019
BlackRock sees 'exceptionalism' powering US stocks higher in 2025
2
Lsbcal
Lsbcal
Gumby
  • Sticky
Some important "trigger" income levels for 2025
jim584672
J
Mark1
Capvaxive™ Vaccine (PCV21)
pacergal
P
RamStride
Pre-Retirement Savings Forecasting Tool link
Out-to-Lunch
Out-to-Lunch
S
Quicken for Mac - ruminating again
2
audreyh1
audreyh1

Latest posts

Back
Top Bottom