Friday’s Jobs Report Will Be a Real Bummer

The question is, what does that mean for the markets and Fed stimulus?

  • Share
  • Read Later
John Moore / Getty Images

Friday’s jobs report was supposed to come out last week, but its release was delayed due to the lingering effects of the government shutdown. The delay in the report’s release, however, won’t be the only way in which it is effected by the shutdown.

Analysts at Scotiabank foresee a bleak number tomorrow when the Labor Department announces the number of jobs the U.S. economy created in October, mainly because their surveys were conducted “smack dab in the middle of the partial government shutdown.” Scotiabank took a look back to the previous government shutdown during the mid 90s, and found that it lead to the Labor Department actually registering a loss of 6,000 jobs during a time of otherwise decent job growth.

Clinton shutdowns

Scotiabank does not predict the same result this time around — it’s forecasting Friday’s report will show about 80,000 new jobs were added in October, though it doesn’t rule out the possibility of a negative number. Unfortunately, it also doesn’t predict that job growth will aggressively rebound in the months after the shutdown as it did in 1996, either. There’s just too much uncertainty in the economy between budget negotiations, another debt ceiling deadline and the implementation of Obamacare for businesses to dive headfirst into serious investment in human capital.

So why does this matter? Friday’s jobs report is just one of many pieces of incoming economic data. But markets tend to react strongly to it because it is perceived as the most important data point for the Federal Reserve. The central bank will meet once more this year, in December, and there’s increasingly a belief among market watchers that it will announce a shift in policy this time around.

In a change from previous Fed meetings, the focus at the next meeting may be lowering the threshold unemployment rate at which it would consider raising short-term interest rates rather than paring back its monthly bond purchases. As it stands now, the Fed has said that it would consider raising short-term rates once the unemployment rate hits 6.5%. But according to a recent Goldman Sachs report, the next big policy change might be to lower that threshold to 6%, in an attempt to keep down expectations for future short-term interests rates which have risen in recent months.

But there are many folks out there that think this is a misguided attempt to avoid the fact that when they do eventually taper bond purchases, it will send markets into a tailspin. Here’s the independent research firm Bianco Research in a note published this week:

“Unsurprisingly, the Fed still does not get it. They are hopeful that by lowering their threshold for the first rate hike to 6.0% unemployment, they will be afforded the luxury of pushing forward with the taper without consequence. This only makes sense if the market believes the level of holdings matters more than the flow of purchases. History has shown the market cares about flows and any taper will be taken badly.”

In other words, regardless of what the economic data say, the Fed has painted itself into a corner by getting markets hooked on a large, monthly purchases of government debt and mortgage bonds, and any paring back of the program will be painful, regardless of how it’s done.

15 comments
issam-ibrahim
issam-ibrahim

Entonces, ¿por qué es importante? Informe de empleo del viernes es sólo una de las muchas piezas de los datos económicos entrantes. Pero los mercados tienden a reaccionar fuertemente a ella, ya que se percibe como el punto de datos más importante para la Reserva Federal. El banco Read more: https://twitter.com/alaamiah central se reunirá una vez más este año, en diciembre, y hay cada vez más una creencia entre los observadores del mercado que va a anunciar un cambio de política en esta ocasión.

manapp99
manapp99

So, as this story written before the jobs numbers came out is strikingly wrong does that mean that the shutdown was actually good for the economy? 


http://www.cnbc.com/id/101182289

"Forget the shutdown: Job creation surged in October despite dimmed expectations from the impasse in Washington.

There were a net 204,000 new jobs created for the month" 



raul
raul

8november2013manila, ph

economy in an intelligent view,

today, "super typhoon haiyan" is smashing, breaking

our beautiful country -- one of the strongest

storms recorded on the planet -- my God! kindly save

our beloved country.keep safe, for each and one of us.

 

 friday’s jobs report will be a real bummer . . .

the question is, what does that mean for the markets

and fed stimulus?

http://business.time.com/2013/11/07/tomorrows

-job-report-will-be-a-real-bummer/

with all due respect to the writer sir christopher matthews

of time.the answer is simple, veryvery sorry to say "none"

and i say "none at all".i had written this so many times before

that millions and millions of jobs, employment - comes from

strong, alive economy, and strong, active economy comes from

lively, robust manufacturing. only good, bright economists

knew this very well.thanks'

fb:     thegreatdepression.part2@yahoo.com

 

please kindly take care and God bless . . . . . . . raul

lapazjim
lapazjim

Well here it goes again!! The old up and down stock market and the words of warning to shareholders.Dump your stocks or by more.That's all this BS  does.If they speculate the jobless rate will drop stocks go up and if it goes up the market goes down.We call this a form of manipulation.

jwarrencollins
jwarrencollins

There have been so many cans kicked down the road by the gutless occupants of Washington that the end of the road looks like a landfill. Bernanke used to talk of "unwinding" all his money printing, but now he'll just pass that mess on to Yellin who was among the architects of that particular and latest euphemism (quantitative easing)...provided the moron Senator from South Carolina (Linsay Graham) doesn't block the transition to the office (to protect his reelection prospects from the right flank) and take the whole system further down the inflationary rabbit hole. 

coregamer
coregamer

And since we know that dreams are dead,

And life turns plans up on their head,

I will plan to be a bum,

So I just might become someone.


Rich are still doing well. No need to worry.

BruceStrong
BruceStrong

Boomers are retiring on mass and will continue for the next 10 years, so get ready for a huge increase in spending, i.e. pensions and 401K that is!

AdalbertoCervantesRodriguez
AdalbertoCervantesRodriguez

I think that Mexico and USA may be better than India, if we let the mexican and US PhD and scientists work together in each module of the ERP, and créate something really advance for our civilization, mexican american should be working together for a new Era. The true is that the mexican and US education is without direction, to have it, it is necessary to unify all the level of education, and structure the knowledge by modules at all the levels to créate the productivity models, I created. http://www.youtube.com/watch?v=jTMv2XAUHP4 The mexican and US government should work at all levels of the mexican and US education and structure the knowledge in the way to be more productive, protect our companies, our Nation. No podemos dejar las empresas mexicanas y americanas en manos de estos tipos por falta de acuerdos en el sector educativo, realmente falta un reforma educativa que redunde productivamente en el sistema mexicano y americano https://www.facebook.com/photo.php?v=474264039355030&set=vb.388313877950047&type=2&theater

AdalbertoCervantesRodriguez
AdalbertoCervantesRodriguez

What it is comming to Mexico because CIA has a complete building in Mexico at this ttime http://t.co/9BflFUERSe is happening in Mexico, many have died for sure. It is already implemented in Mexico, CIA handled to mafias to continue doing their criminal activities in Mexico. Obama wants to silence Mexican government, but mexican americans are not going to be silenced after killing thousands of mexican and mexican americans because he is a capo from Chicago mafias. Indans are killing americans as part of the CIA partnership. Go away from USA and Mexico killers India is not an allie according with NSA system, so why are they working as spies in government and Corporates? Are they just comming for our money and lives because of course they like to kill? http://aristeguinoticias.com/2410/mexico/video-ella-es-bianca-la-joven-que-rechazo-dar-discurso-a-modo-en-Jalisco/

AdalbertoCervantesRodriguez
AdalbertoCervantesRodriguez

Indian IT companies were invited by Calderon, to start their frauds in PEMEX, http://lnkd.in/bzzQXbh The Indian consultants monopolized the project in SAP, no mexican was involved in this project. It smells fishy and with tax money worse. No a mexican american involved in the project. Smell like a fraud with tax money. Indians work together and they protect each other, but they do not support other kind of people that could disagree with them, allowing that the fraud in government and Corporates. No indian alone has done a complete implementation os SAP in LATAM, You do not know spanish well, legal requirements, you do not know the economic system. I do not want LATAM to suffer as USA for all these IT fraudsThis is a international problem, Corporates supporter for IT indian companies are not paying taxes legally as it suppossed to be made. Countries should look for the consultants to put them in jail. This is like FOBAPROA in Mexico, Obama copied it from Mexico. This is a total fraud- The bail out is totally a fraud. Americans believe to much in their government, Another fraud.

AdalbertoCervantesRodriguez
AdalbertoCervantesRodriguez

Money and control...period. That´s all CIA and indians activities world wide The song of the illuminaties http://lnkd.in/bXUSuDR The South Gods against the illuminaties http://lnkd.in/b8vsr66 This illuminaties only wants our money and if they have the chance to kill us to have it. They enjoy it. The illuminaties are copying spies, do not trust in their credential, everything is fake

AdalbertoCervantesRodriguez
AdalbertoCervantesRodriguez

One of master´s degree professor was a college of her, I know that they are right, we want to see the numbers. Fraud using ERP all over the world through IT indian Companies and Indian Consultants. Necesitamos las herramientas, la educación no tiene el nivel adecuado debido a grupos en el poder. http://lnkd.in/bwjACS9 We need the tools, we have a low level of education because these elites. Of course if they do not kill her before

coregamer
coregamer

@AdalbertoCervantesRodriguez Americans don't have control of our government because we have been separated from our elected officials who are bought into their seats with UNLIMITED amounts of corporate money. Same goes for votes on statewide issues where corporations spend MILLIONS. Looking back recently at the GMO labeling they spent 3:1 where most support for labeling ws from actual residents in the state. The 3:1 advantage was mostly out of state from corporations.


Stop blaming Obama. Obama is the glue holding this trainwreck from falling apart and hes done a damn good job protecting the underclass despite the worst congress ever in existence which DOES NOT REPRESENT THE PEOPLE. Come 2014 we will elect more Democrats and finally get some change. Democrats are getting elected nonstop. fatty mc fatty Chris christy is the only republican who recently got re-elected and he worked with obama when his state got hammered by massive floods as a result of global warming which his party is responsible for ignoring.

coregamer
coregamer

@AdalbertoCervantesRodriguez But that still will not fix the problem we have in this country with the waay our politicians are elected. Once they get control of the house, senate and whitehouse they need to pass reform on election contributions and taxes. corporations are not people and they do not have america's best interests at heart.