The stronger-than-expected number from last Friday's job report that was reported for June makes it look like the Fed's money printing is finally starting to help the economy. The Fed also figured out long ago that any jobs report that doesn't conform to its needs of the moment could be explained away with a carefully orchestrated internal research report.
By JOHN CRUDELE
Posted: 11:37 PM, July 8, 2013
NY Post
You have to hand it to the Fed.
On the one hand, the central bank would have liked last Friday’s job report to have been mediocre. That would have taken pressure off interest rates until the Fed decided they should go up.
On the other hand, the stronger-than-expected number that was reported for June makes it look like the Fed’s orgy of money printing is finally starting to help the economy.
On the third hand, the Fed long ago figured out that any jobs report — weak or strong — that doesn’t conform to its needs of the moment could be explained away with a carefully orchestrated internal research report.
With so many hands working on excuses for the economy, it’s no wonder that the Fed has such a strong hold on public opinion.
Today, I’m going to loosen the Fed’s grip a bit.
Last Friday, the Labor Department announced that the US economy created 195,000 jobs in June, which was larger than the 175,000 expected by those referred to as “experts.”
As I mentioned before the report was released, the March, April, May and June employment figures are always biased upward by statistical razzmatazz.
And, as I also reported, the June report wasn’t nearly as healthy as it may have looked.
Apparently, Ben Bernanke and his cohorts don’t read my column because they seem to have been preparing for the worst. And a report done by the Chicago branch of the Fed — and circulated in the media in mid-June — gave the central bank cover in case the jobs numbers continued to be poor.
A little background is required first. The conventional wisdom is that 150,000 new jobs are needed each month just to absorb people entering the economy for the first time.
But job growth has been pathetic for years. While 400,000 to 500,000 new jobs would be considered good coming out of a recession, we’ve been getting an average of around 180,000 — and that’s when we are on a roll.
There are, of course, two choices if you are a policy maker like the Fed and need to protect your reputation. You either have to create more jobs or try to persuade people that the number of jobs being created is really better than it looks.
The Chicago Fed recently took the latter approach. In a mid-June report , it argued that 80,000 — not 150,000 — is the real number of new jobs needed each month to absorb newbies into the labor force. It also said that the figure needed each month will probably come down in the years ahead.
Why does the Chicago Fed think this? Because of demographics. Baby Boomers — those 76 million workers who were born from 1946 to 1964 — will one day wake up and decide to stop working, it believes.
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