One of the great things about number-based subjects is what they reveal about bigger trends. A number is an important datapoint that shows you the relative standing of x in relationship to as many variables as you want.
Let’s consider the disappointing April jobs report last week.
Economists had predicted the economy would create in the neighborhood of one million jobs that month. The actual number was 266,000. That’s not a slight miss, like say 900,000. That’s a colossal miss.
From an economic predictive standpoint, it was the worst jobs’s miss in recorded history. Yet some of the reactions to this news were interesting.
The Biden administration and its supporters urged investors and the general public not to read too much into one employment report.
Alternatively, others argued that this weak number proves their point that more help is needed to support the estimated 10 million Americans without a job.
On the flip side of the political world, conservatives argued that the generous jobless benefits on hand were a disincentive to look for work.
Still others suggested the weak jobs growth may reflect ongoing difficulties with supply chains in many different industries, from food to semiconductor manufacturing.
The Covid pandemic caused shortages among a variety of supplies. Now, with the economy opening up, large companies are penalizing their ‘partners’ for unexpected shortfalls.
Finally, Wall Street investors cheered the weak number. Why? If the economy is weaker than we think, the US Federal Reserve’s ultra-loose monetary policy will continue on.
There’s another worry though. Maybe what really ails the US economy isn’t weak jobs growth, but mounting inflation. We should all hope not, but I fear it may already be with us.
Disclosure: This piece is provided as educational information only and is not intended to provide investment or other advice. This material is not to be construed as a recommendation or solicitation to buy or sell any security, financial product, instrument, or to participate in any particular trading strategy.