"All Yours Janet": JPM Warns Fed About Using "Arguably Flawed Statistics"

Tyler Durden's picture


The December jobs report was an ugly mix of slowing employment growth and disappointing labor supply. JPMorgan's Mike Feroli doesn't mix his words in his brief report on today's ugly jobs data. While other 'economists' proclaimed we should "ignore it" or blamed it on the weather, Feroli notes for example, "It's hard to see how the weather -- or anything else -- was to blame for the 25,000 decrease in employment of accountants." But it his comments for the Fed that are most concerning as he worries, "the forward guidance decision could be even more difficult than the tapering call... lowering the unemployment threshold further would be doubling down on predicating policy on an arguably flawed statistic."

Via JPMorgan's Mike Feroli,

All Yours Janet

The step-down in nonfarm job growth from an upward-revised 241,000 in November to just 74,000 last month can partly be blamed on weather and, perhaps just as important, on the month-to-month noise in the series. Just as the hype over upside risks after strong November data was probably overdone, so too should the string of disappointing December data be taken in stride. Given the economic fundamentals we'd guess the underlying trend in job growth hasn't materially shifted. More troubling though is not what we are learning about business' labor demand, but what is happening in households' labor supply: the unemployment rate plunged 0.3%-point to 6.7% as the labor force participation rate fell another 0.2%-point to 62.8%.

So far, the fall in unemployment is not being accompanied by even the slightest hint of wage acceleration -- average hourly earnings were up just 0.1% last month -- but it does raise the risk that the economy may bump up against capacity constraints sooner than hoped. Bernanke's last meeting as Chairman will be a tricky one. We believe the Fed can convince itself there were enough special factors distorting this number that another $10 billion taper will be appropriate at the January FOMC meeting, though there may be some advocating a pause.

The forward guidance decision could be even more difficult than the tapering call. Rather than lower the unemployment threshold further -- which would be doubling down on predicating policy on an arguably flawed statistic -- we think the Committee will continue along the path of downplaying the significance of the unemployment rate in the setting of interest rate policy.

The weakness in the establishment survey was not just in the headline jobs number, but also in the ticking down in the average workweek to 34.4 hours, and the sluggish 0.1% gain in average hourly earnings, the lowest increase since the summer.

The big question is how much of the disappointment was weather distortion. The 16,000 decline in construction payrolls is an obvious candidate as a casualty of cold weather in the survey week. Another clue comes from the 273,000 who reported themselves as employed but not at work due to bad weather, about 100,000 more than an average December. Caution should be taken in simply adding this 100,000 to the nonfarm payroll number, as the nonfarm number counts people as employed so long as they were paid, whether or not they were at work. Our educated guess is weather may have taken 50,000 off payrolls. It's hard to see how the weather -- or anything else -- was to blame for the 25,000 decrease in employment of accountants. Another outlier was health care employment, down 6,000 and the first monthly decline in over a decade, undoubtedly a data point that will enter the civic discussion on health care reform. Going in the opposite direction, retail employment had a strong month, up 55,000, which tends to occur in Decembers following a late Thanksgiving (even after seasonal adjustment). Temp help was also strong, up 40,000. The weakness in average hourly earnings took year-ago wage gains down to 1.8%, partly a base effect as earnings late last year got a boost, perhaps ahead of scheduled tax increases.

Job gains as measured in the household survey came in a somewhat more respectable 174,000 and unemployment plunged 490,000, the most in three years. The decline in the participation rate undid the November rebound that occurred in the wake of the government shutdown. Most demographic groups saw participation decline, though it was more concentrated in persons with lower levels of educational attainment. Similarly the decline in unemployment was fairly broad-based. This decline occurred even before extended unemployment benefits began expiring at the end of December, and in fact was heavily concentrated in those unemployed less than five weeks, i.e. those who will not be affected by extended benefits. The unemployment rate of those unemployed six months or less, which some researchers have flagged as a more reliable measure of how labor market slack affects inflation, fell to 4.2%, a fair bit below the 4.9% long run average.

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Fri, 01/10/2014 - 20:42 | 4321430 Charles Wilson
Charles Wilson's picture

The BLS sez that if you substitute hamburger for steak there's no loss of value.

So I guess if we substitute Yellen for Bernanke, nothing's really changed now has it?

Fri, 01/10/2014 - 20:48 | 4321453 kliguy38
kliguy38's picture

you mean "pink slime" for hamburger.......there...... fixed it

Fri, 01/10/2014 - 21:16 | 4321513 Charles Wilson
Charles Wilson's picture

Ah kin alluz counts ahn'ya...

Fri, 01/10/2014 - 22:03 | 4321621 Soul Glow
Soul Glow's picture

Nothing has changed in the financial system for hundreds of years.  It is no secret that the House of Rothschild runs Europe, but the United States of America is no defferent.  Look no further than the Bush clan, who having Pierce in their blood have worked Wall Street as long as anyone.  Everyone knows Morgan to be the name of The Street but did you know JP's father sold Civil War Bonds through his House?  He did so alongside the the House of Delino.

After Rockefeller got oil rich he got in on the mix, nevermind the Warburgs for now, and combined all the forces onto a round table:  The Fed.

Fed Chairs will come and go, but the shares are owned by the same families who have always owned them.  They have played their game long enough, and they know it.  They are ready to let their House of Cards fall.  Will you be ready?

Fri, 01/10/2014 - 22:15 | 4321648 DeadFred
DeadFred's picture

By coincidence I just got through stocking the new pantry. When one is not enough...

Fri, 01/10/2014 - 22:24 | 4321674 Soul Glow
Soul Glow's picture

The confusion in peoples souls will be far more shocking than the weeks/months it will take to get our society out of the dirt and running on oil again.  People can farm their lawns, if they choose to.  Otherwise they will choose death.

Sat, 01/11/2014 - 00:58 | 4322048 max2205
max2205's picture

Sub pussy for tuna?

Fri, 01/10/2014 - 22:13 | 4321642 lordbyroniv
lordbyroniv's picture

We are so fucked.  Why hasnt everyone figured this out and rolled out the gouiltine yet?  I know MY life sux!

Fri, 01/10/2014 - 20:42 | 4321431 Mr Pink
Mr Pink's picture

If every American lost their job and used up all their unemployment benefits the unemployment rate would be 0.0%

What flaws is he talking about?

Fri, 01/10/2014 - 20:50 | 4321459 nmewn
nmewn's picture

I think it falls within the U-3 Liars Citing Statistics category...column T, way over there on the right...lol.

Fri, 01/10/2014 - 21:37 | 4321556 frankTHE COIN
frankTHE COIN's picture

Janet has to be careful.
Does XXX mean porn....? Or
Does XXX mean Cyanide.

Fri, 01/10/2014 - 20:47 | 4321436 29.5 hours
29.5 hours's picture



"Temp help was also strong"

I guess he wrote that without irony. "Temp help" is destroying the fabric of the working class. This is what we get from the vaunted "job creating" types in government and Wall St.




Fri, 01/10/2014 - 20:44 | 4321437 buzzsaw99
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jpm doesn't give a fuck about unemployment, they just want more qe induced bonuses. die bitchez.

Sat, 01/11/2014 - 00:47 | 4322030 HardlyZero
HardlyZero's picture

Ahh, what favors to get Yellin' to put out more QE.   She's a cougar vixen !    Wait until the VIX takes off...Yellen Vixin'.

Fri, 01/10/2014 - 20:44 | 4321438 nmewn
nmewn's picture

Yellen: If only I could digitize people, all my problems would be solved.

Fri, 01/10/2014 - 20:48 | 4321454 LawyerScum
LawyerScum's picture

the Polar Vortex took our jobs!

Fri, 01/10/2014 - 20:59 | 4321472 nmewn
nmewn's picture

The frosty El Ninja, using ice throwing stars, unleashed upon our beloved economic biosphere! Somethings got to be done, our few remaining digits could blacken & fall off as well if this keeps up!

Fri, 01/10/2014 - 20:59 | 4321470 GotNuttin'todo
GotNuttin'todo's picture

Global warming....wait, cooling....warming then cooling?....global changing....Global shenanigans? Oh Shit, who cares,...global apathy.

Fri, 01/10/2014 - 21:05 | 4321487 nmewn
nmewn's picture

Its the hot/cold/wet/dry eco-pocalypse weather the warm-mongers have been raving about.



Fri, 01/10/2014 - 21:26 | 4321527 Obchelli
Obchelli's picture

In short

Bullish for stocks!!!

Fri, 01/10/2014 - 21:04 | 4321474 Yardfarmer
Yardfarmer's picture

As Charles Biderman relates, the November upward revised stat was based only on BLS surveys from employers suggesting that the figures could be off by more than 100,000!  it looks that given the ridiculous NFP print today a figure so appalling that not even the ministry of truth could massage upwards that he is right on the money.http://youtu.be/Osy8dhnpKS4.

Fri, 01/10/2014 - 21:42 | 4321568 NoDebt
NoDebt's picture

The ministry of truth massaged the last 3 and then did the old "kitchen sink" on this one.  New year, get the bad news out.  Watch it slowly ramp up better and better as we get closer to the elections.

You have to look at this encoded.  The translation programs work FOR the matrix.

Fri, 01/10/2014 - 21:02 | 4321476 Cursive
Cursive's picture

The actual title of his report was, "All Yours Janet."  Mike Feroli has some balls, maybe big enough that they clank between his ankles.  I mean, is one of the fucking Tylers?  Me thinks Janet is ordering a hit on his office as I type....

Fri, 01/10/2014 - 21:01 | 4321478 disabledvet
Fri, 01/10/2014 - 21:02 | 4321481 Soul Glow
Soul Glow's picture

JPM wants to Un-Taper.  I am Jack's lack of surprise.

Fri, 01/10/2014 - 21:16 | 4321484 One And Only
One And Only's picture

What. The. Fuck.

The Federal Reserve (private institution with a monopoly over money and credit) wasn't created on Christmas Eve (while no one was paying attention in an age which information just didn't transmit that quickly) with the largest shareholders being banks (shares which can't be sold) to focus on unemployment.

The FED doesn't give a FUCK about unemployment. The "dual mandate" of inflation and unemployment verbiage is just a falsehood platitude designed to keep dumb naive housewives and henpecked 'yes men' hypnotized. No one wants the proverbial pitchforks in the streets so the FED is using every tool iin it's unicorn shed to assist in the two metrics it actually negatively impacts.

The dollar has lost 98% of it's value since the FED came into existence. Yea, clearly, they are concerned about inflation. A full THIRD of America is NOT WORKING, clearly, concerned about employment. Obviously stocks are near all time highs, their mandate has nothing to do with stock prices. Huh.



Fri, 01/10/2014 - 21:37 | 4321550 BuddyEffed
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Let's just hope their dual mandate isn't transitioning to "Kicking Ass and Taking Names".

Fri, 01/10/2014 - 21:49 | 4321582 One And Only
One And Only's picture

The trilateral mandate....

i. unemployment

ii. inflation

iii. healthcare

Fri, 01/10/2014 - 21:37 | 4321551 BuddyEffed
BuddyEffed's picture


Fri, 01/10/2014 - 21:51 | 4321592 Seer
Seer's picture

Actually, the Fed is doing an amazing job of keeping the USD from totally collapsing.  It's a big chessboard and the Fed, with only smoke and mirrors, has managed to stay at the top of the game!  Nature is about deception  Humans are OF nature.  But... winners of the Ponzi game?  Best looking horse at the glue factory?  When everyone is pretty much dropped out then the game is no longer being played, your chips are no longer recognized.  But, again, you have to admit, by all accounts it should never have been able to have gotten to here- we were toast quite a while ago.

This death-spiral was on auto-pilot from WAAY back when.  We committed ourselves to perpetual growth.  This is likely to be MUCH bigger than the fall of Rome (it's global).  This one will never be matched.

Sat, 01/11/2014 - 12:36 | 4322718 KickIce
KickIce's picture

The ponzi lives through ignorance and apathy.

Fri, 01/10/2014 - 21:10 | 4321500 MrTouchdown
MrTouchdown's picture

What's with this forward thinking bullshit? Who cares what the numbers say? Deficits don't matter anymore!


In all seriousness, I'd be laughing if it weren't so serious, heh.

Fri, 01/10/2014 - 21:37 | 4321555 Obchelli
Fri, 01/10/2014 - 21:43 | 4321569 Seer
Seer's picture

Once again, blaming everyone but the System itself!

Hey Peroli, there's no argument for the FACT that our notion of predicating our economic system on perpetual growth on a finite planet is WAY over-the-top FLAWED!

It's like pointing out where someone has put a scratch or a dent in the car while the car is ever-increasingly speeding speeding toward the cliff.  Yeah, so fucking what!

Fri, 01/10/2014 - 22:04 | 4321625 pupdog1
pupdog1's picture

When I was complaining to my CPA about countless USA engineering jobs being offshored and H-1B'd by congresssluts and places like GE and MSFT, he told me that for ordinary accounting work, the same thing was happening in his field.

25,000. Guess he wasn't just whistling Dixie.

Fri, 01/10/2014 - 22:19 | 4321658 notadouche
notadouche's picture

"Feroli doesn't mix his words..."  

Perhaps "mince" would have been a better choice.  

Sat, 01/11/2014 - 10:40 | 4322519 Itinerant
Itinerant's picture

No, in the new dispensation people mix their words, various parts compliment the hole, and some people with bad spelling do to have a PhDs.

[No, in the new dispensation people mince their words, various parts complement thew hole, and some people with bad spelling do too have a PhDs.

Fri, 01/10/2014 - 23:53 | 4321908 Bunga Bunga
Bunga Bunga's picture

Get over it, skewed statistics are a completely normal sympton of central planning.

Sat, 01/11/2014 - 09:35 | 4322457 d edwards
d edwards's picture

Yeah, the stats aren't flawed-they're FRAUD.


I still think BB bailed out (so to speak) cuz he knows the stuff is about to hit the fan. And it will be all yours,  Janet. bwhahahhaha

Sat, 01/11/2014 - 00:52 | 4322038 gwar5
gwar5's picture

Yellen has a magic vagina. Money will appear out of thin air like coed working her way through school.


Sat, 01/11/2014 - 08:27 | 4322386 Sufiy
Sufiy's picture

Peter Schiff: Gold & Dollar - An Imaginary Recovery Does Not Create Real Jobs

 Huge miss in Jobs numbers with only 74k created vs estimated well north of 200k can not be just dismissed as a blip in the data. Peter Schiff discusses that FED can not really Taper now, there is no real recovery and FED does not have the exit strategy. Gold is waking up to these developments. What if this data is the real state of the economy? Once people will realise how wrong is the expectation about the recovery Gold will go straight up. COMEX data shows that Gold shorts will be in trouble very soon.



Sat, 01/11/2014 - 10:36 | 4322513 Itinerant
Itinerant's picture

Bad weather favorably affects all kinds of jobs: emergency responders, plumbers, heating maintenance, sundry repairmen, demand for shovels, gear and clothes, not to mention municpally contracted road maintenance (snow, ice, salt, towing). Many people probably have to spend more money than they otherwise would have. Note that much of the employment for snow removal, etc goes to sub-contractors in the construction/equipment/transportation sectors.

Does the extra demand balance the lost hours in other sectors? I wouldn't know. Just saying these kind of analyses are complete and utter BullShit.

As for rephrasing labor participation as labor supply, and talking about bumping up against capacity constraints, utter disengenuous BullShit.

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