Regular readers may recall that I’m not a big fan of this Bureau of Labor Statistics Employment Situation data series, as it is unusually noisy and subject to further revisions and modeling adjustments. (See Ignore Today’s — and Most — Jobs Reports). As we discussed not too long ago, the Employment Situation report is “the single most over-hyped, over-analyzed, over-emphasized, least-understood economic release known to mankind.” It is also one of the “least useful economic data points” at least as far as investors are concerned.
Friday’s disappointing report for January looks to have an inordinate number of asterisks:
Was December’s poor report a one-off?
Has stormy weather in the Midwest and Northeast hurt hiring?
What is the net result of the end of federal unemployment benefits?
Are private-sector job gains still outpacing government hiring?
Is slowing real estate a drag on other sectors?
The acutal January number was 113,000 jobs gained, following the weak December nonfarm payrolls gain of 87,000. Estimates had ranged from 105,000 to 270,000.
To me, the most fascinating aspect of the employment report is the hoopla leading up to it. It is merely a single monthly data point in an ongoing series, one that 90% of the time is almost insignificant.
Once we get past the noise factor, we then must confront the issue of how we experience time. The intersection between our memories of the past with our imagined expectations of the future creates a sort of unique awareness of the moment. This perhaps helps to explain the recency effect.
There are multiple manifestations of this confused temporal understanding. Emphasis is placed on what is occurring at the moment, regardless of its significance. Planning for the long-term future suffers, reflecting an inability to accurately imagine the future.
This is incredibly important when it comes to the sort of policy issues we run into where the benefits are off in the future but the costs are here in the present.
Consider this while you excitedly wait for yet another monthly payroll report.
(Barry Ritholtz writes about finance, the economy and the business world for Bloomberg View. Follow him on Twitter@Ritholtz. To contact the author of this article: Barry Ritholtz at firstname.lastname@example.org.)