The Federal Reserve has been telling us over and over again that its decision on cutting interest rates depends on the data. Among other things, the Fed wants to see a steady slowdown in the employment market reflected in the data before it cuts interest rates.
But what if the data have been wrong? For months?
Today in its regular Quarterly Census of Employment and Wages the Bureau of Labor Statistics raised just that possibility. The Quarterly Census of Employment and Wages covers more than 95% of U.S. jobs and is drawn from unemployment insurance tax records filed by more than 12 million establishments. That’s a much bigger the 119,000 businesses and government agencies used to compiled the monthly jobs report. The next one of those–and it will certainly move the financial markets–is due before the stock market opens tomorrow..
The quarterly report serves as a kind of reset of the baseline for the monthly reports. And the new figures suggest that payroll increases were about 60,000 less per month last year than the roughly 250,000 average that the monthly reports showed. Friday’s May payrolls report is projected to post a gain of about 185,000. That’s up slightly from 175,000 in the April report. But that number would represent a major slowdown from the year-to-date high of 315,000 jobs added in March.
Which would be a significant drop–if it were real instead of just a statistical difference of opinion.
The Fed will have to figure out what this data mean when it meets on interest rates next week on June 12.
