The Fed Missed This Crucial Piece of Jobs Data

Recent weakness in withholding tax collections through the end of July accurately informed us that a negative surprise was coming in last Friday’s nonfarm payrolls report, which showed a slight decline in the number of new jobs.

The Fed apparently hasn’t gotten the news, or thinks it’s transitory. But Excise tax collections were also weak for the second straight month. Another month of weak excise tax collections in in August would suggest that the problem is not transitory.

Likewise, the slight decline in the number of new jobs reported in July seems not nearly enough to reconcile with the weakness in withholding taxes. The BLS continues to use statistical massage to keep the number positive. The fact is that the tax data doesn’t give credence to the notion of any job gains at all. That can’t continue indefinitely.

Sooner, rather than later, the facts as revealed by the tax data will begin to show up in the conventional economic data. That would call into question the consensus market narrative of a goldilocks economy. It would shake market confidence, but it would take months of weaker data to make the Fed consider reversing tight policy.


Lee Adler

3 Responses to “The Fed Missed This Crucial Piece of Jobs Data”

  1. You are all wrong! Taxes are leveling off. Yes, but only because citizens are keeping more of the money they earn. Trump lowered taxes on the individual. This allows consumers to choose between spending and saving more of their dollars. Citing only reduced tax collections is an incomplete analysis. If anything it shows we are finally putting the money into the wage earners pockets. Not into government runaway waste spending. Government has been out of control for way too long. The private sector is finally able to begin saving instead of spending every dollar they earn. The consumer will decide when to spend, not the morons in Washington DC. The public and psudo analysts have been brain washed into thinking the government knows best. Citizen’s are finally seeing the light. The financial markets will adjust. But with a more realistic approach for the future. Government has been putting the cart before the horse entirely too long. Let’s give the horse a chance to do it’s thing. Knee jerk analysis is your problem. Have some patience!

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