good news on U.S. unemployment<\/a> and now, today, we have bad news on U.S. unemployment.<\/span><\/p>\nYesterday ADP (the private payroll processing firm) said that there had been 157,000 private sector jobs created in June.\u00a0 Today, the official number of jobs created as reported by the U.S. Department of Labor says that non-farm payrolls only grew by 18,000 in June, and the unemployment rate rose to 9.2%.\u00a0 So what’s going on?<\/span><\/p>\nAnalysis:<\/strong> This is one of those moments as an investor where having multiple data sources is a good thing, not a confusing thing.\u00a0 Rather than obsess about the specifics of how many jobs were created and which of the two numbers is accurate, the actual confusion is the thing to focus on.<\/span><\/p>\nWhen there is a conflict in data, and not agreement, it usually indicates a time of confusion in the actual, real world.\u00a0 In fact, two years ago on this blog it was confusing data about economic growth that led me to declare an end to the Great Recession, as measured by gross domestic product (GDP).<\/span><\/p>\nFor me then, the ADP vs. Department of Labor disagreement is a sign of a labor market in transition.\u00a0 The question then becomes: a transition to what?\u00a0 Fortune and ecstasy or ruin and agony?<\/span><\/p>\nTo answer this question we can actually turn to the data.<\/span><\/p>\nFirst, yesterday’s ADP report is a statistical sampling survey so it has the possibility of statistical error.\u00a0 In fact, the report is routinely criticized by investors because it frequently overstates the number of jobs created.\u00a0 That is, the ADP report is usually too aggressive.\u00a0 But, and this is a big ole but (apologies to Sir Mix A Lot), the direction of the ADP report is not often wrong.\u00a0 ADP’s report says that jobs were created in June in the private sector.\u00a0 How many?\u00a0 Who knows?<\/span><\/p>\nSecond, today’s U.S. Department of Labor unemployment numbers, also gathered in a statistical survey, show that jobs were created in the U.S. in June.\u00a0 How many?\u00a0 A very small 16,000 jobs.\u00a0 Yet, note the trend: jobs were created.<\/span><\/p>\nThird, so both of the major jobs surveys say that jobs were created in June.\u00a0 This is a good thing.\u00a0 The question is whether or not the jobs creation is really good – the ADP survey – or not so good – the Department of Labor survey?\u00a0 I’ll get to that in a moment.<\/span><\/p>\nThis morning’s official U.S. governmental data also includes the slightly unsettling information that the April and May unemployment numbers have been revised downward.\u00a0 Specifically, the total number of jobs created was revised downward by 44,000 to 217,000 jobs created in April and 25,000 in May.<\/span><\/p>\nAgain though, note that even with the revisions that the trend is toward job creation.<\/span><\/p>\nNow, is the U.S. economy creating lots of jobs, or very few?\u00a0 Encouragingly, consumer spending continues to trend upward.\u00a0 This means that business revenues are continuing to grow and that sales volumes are up.\u00a0 Why is this important?<\/span><\/p>\nWhen sales volumes are up it means that the business is selling more units.\u00a0 Those new units have to be manufactured, shipped, stocked, and sold.\u00a0 In turn, this requires more people working.\u00a0 So businesses will have to start hiring soon.<\/span><\/p>\nA mitigating factor, though, is whether or not consumer confidence holds up.\u00a0 Weakly confident consumers don’t buy and unfortunately the trend in consumer confidence is down.<\/span><\/p>\nSo this is a moment where intuition can really help serve as another source of information.<\/span><\/p>\nMy intuition tells me that the U.S. consumer is still in her\/his thick skin mode.\u00a0 By now folks in the United States have adapted to the environment of the Great Recession.\u00a0 They have modified their spending behavior to the point where, on average, they are living within their means.\u00a0 Most consumers are not happy about the unemployment rate, but most also realize that the worst of the Great Recession is over.\u00a0 So the consumer is unlikely to be wobbly even in the face of big, bad news.\u00a0 I also know that most consumers confidence closely tracks the gyrations of the Dow Jones Industrial Average.\u00a0 Stock market up?\u00a0 Consumer confidence up.\u00a0 Stock market down?\u00a0 Consumer confidence down.<\/span><\/p>\nMy intuition also tells me that investors are gaining confidence.\u00a0 They seem to feel that the Greek debt crisis is tapering in importance.\u00a0 They also seem to feel that three of the four possible outcomes in the U.S. debt crisis are positive.\u00a0 Scenario 1: the Republicans completely win – and the U.S. budgetary books come more into balance – and investors party.\u00a0 Scenario 2: a compromise is reached – the U.S. staves off a debt crisis until some point in the future and investors are happy.\u00a0 Scenario 3: the Democrats completely win – and the U.S. increases the debt ceiling and puts off to another day the day of debt reckoning; investors are glad.\u00a0 Scenario 4: there is an impasse and the U.S. government defaults on its obligations and financial markets worldwide crater.\u00a0 Most investors don’t seem to think that this latter scenario is likely.\u00a0 There is a small constituency of investors that do seem to be very nervous.<\/span><\/p>\nWhat to focus on: the U.S. debt crisis is the most important issue confronting the financial markets right now.\u00a0 Of secondary importance, but still important, is that the second quarter corporate earnings season is about to kick off.\u00a0 U.S. businesses are likely to have done well.\u00a0 That should be a positive force for investors to focus on.<\/span><\/p>\nIn conclusion, I think that investors and the investment markets will muddle through the next 6 weeks and come out on the other side amidst improving, if not blue-blue skies.\u00a0 If you are a risk averse sort I would avoid investing until there is greater clarity on the twin debt crisis of Greece and the U.S.\u00a0 If you are not as risk averse, then you can probably be invested in a mutual fund or index fund that broadly invests in U.S. financial markets.<\/span><\/p>\nImportance grade:<\/strong> 10; just as yesterday’s data was very important, so is today’s unemployment data.\u00a0 Until there is greater clarity around the important debt crises, markets are likely to move sideways.<\/span><\/p>\nJason<\/span><\/p>\n","protected":false},"excerpt":{"rendered":" Ah yes, the last 24 hours is one of those brief spans as an investor and a finance blog writer designed to make you look foolish.\u00a0 First we had good news on U.S. unemployment and now, today, we have bad news on U.S. unemployment. Yesterday ADP (the private payroll processing firm) said that there […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[3],"tags":[],"class_list":["post-4490","post","type-post","status-publish","format-standard","hentry","category-the-blog"],"_links":{"self":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/4490","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/comments?post=4490"}],"version-history":[{"count":0,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/4490\/revisions"}],"wp:attachment":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/media?parent=4490"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/categories?post=4490"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/tags?post=4490"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}