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Goldman Warns Snow May Leads To Lower Jobs Number, But Snowstorms Will Result In Higher Wages
One of the most amusing conundrums of the great Polar Vortex economic collapse of the first quarter of 2014, in which Q1 GDP was initially supposed to rise by 2% only for it to plunge by over 2% as a result of harsh snow (in the winter) was the relentless series of economic data "misses" where for some 2 months in a row, nearly all the releases were one after another miss of consensus sell-side expectations (in fact the only time this series of misses has been worse is this year, in 2015!). What happened subsequently is that after every single miss, the economists would simply say "blame it on the weather", making one wonder just what does the word "seasonal" in "seasonal adjusted" stand for.
A perfect example of this is the Twitter feed of DB's permabulllish cheerleader Joe LaVorgna, whose series of tweets blaming the weather for this, that, and everything else, is now enshrined in internet folklore:
Of course, such things as snowfall in the recent past should make Wall Street's economists - all supposedly smart, intelligent, 7-figure paid creatures - factor that into their upcoming forecasts and adjust these accordingly. Paradoxically, they never did and instead used the weather as an excuse for their gross incompetence at forecasting the future (as they are doing again this year).
At least they did until now, because moments ago that bank that is usually at the forefront of original thought (like how to sell our clients preselected securities that we know will fail and we can short them in advance... and the clients too), had the brilliant idea of looking outside its office at 200 West and realizing that, gasp, it's snowing.
And then a lightbulb went over the giant mollusc head, at which point Goldman had a brilliant idea: "if we have blamed the snow for everything so far, shouldn't we also blame it for the most important data point to come - tomorrow's nonfarm payrolls?"
And sure enough, it released a note prewarning that tomorrow's jobs data will likely be weaker than the consensus of 235K, because, drumroll, it's snowing.
From the report:
We expect nonfarm payroll job growth of 220k in February, below the consensus forecast of 235k. Labor market indicators were mixed in February, and we expect that the effect of four major snowstorms in the month leading into the February survey week will also weigh on payroll growth. We expect a one-tenth decline in the unemployment rate to 5.6%, reversing the increase seen last month. On average hourly earnings, our baseline expectation is for a 0.2% increase, but we see some upside risk from possible statistical distortions related to the severe snowstorms.
Among the factors Goldman lists as arguing for a "weaker report", it lays out the ISM and PMI, job availability, job cuts and of course the "weather."
Weather. Our method for estimating the impact on payrolls of snowstorms and temperature deviations from seasonal norms suggests a hit from harsh weather conditions in February. The Regional Snowfall Index recorded four major snowstorms during this period, and we expect these storms to have a substantial impact on activity. Temperatures remained warmer than usual for the country overall in the four weeks leading into the February survey week. While not relevant for the February report, the final two weeks of February saw the two most extreme (coldest) weekly deviations from average temperatures in the 18-year history of the data, suggesting that weather conditions may be a factor in next month's report as well.
It gets better: according to Goldman there is a close correlation between snowstorms and hourly earnings. Yup. You read that right.
We see potential upside risk to reported average hourly earnings in February from the impact of snowstorms. Similar snowstorms last year distorted reported earnings upward through a composition effect that arises because reductions in paid-for hours predominantly affect lower-paid hourly workers as opposed to higher-paid salaried employees. However, we have not found strong evidence historically that snowstorms have been associated with jumps in reported average hourly earnings.
But why: everyone knows that the most contentious wage negotiations always take place during a blizzard?
Laughter aside, we salute Goldman for at least doing what no other weatherman, pardon, economist on Wall Street is willing to do: i.e., factor in the publicly available data, and realize that sometimes, not too often, reality impacts the BLS' C:\economy\jobs\goalseek.xls spreadsheet.
As for all the other penguins, expect them all to blame the weather, especially if like the ADP report, tomorrow's NFP comes in at or well below 200K. Incidentally based on our own tracker, which also takes into account such things as reality into account, the energy sector collapse, the massive job losses in the shale sector, and west coast port shutdown, and the substantial slowdown in the auto sector now that the subprime boom is officially over, means we expect a jobs print under 100,000K, in line with what final Q1 GDP will be: just about 1.5% or less.
Finally, don't be surprised if the BLS comes up with a "seasonally-adjusted" jobs number of over 300,000 tomorrow. After all, when it comes to the BLS, everyone knows by now that all the numbers are goalseeked and serve merely to fulfill a political agenda, which means Arima X 12 adjustments galore. Indicatively, the average seasonal boost to the unadjusted number over the past decade is 1.5 million jobs.
Or said otherwise, the actual adjusted jobs number is about 10-15% of just the seasonal adjustment itself!
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Snow way!
What's the difference between snowmen and snowwomen?
SNOWBALLS.
The lower the supply of labor, the higher the wage for everyone.
I will gladly reduce yesterday's payrolls because it's snowing today.
-Wimpy, home of the Giant Mollusc Burger
Could I please have some extra snot on that?
Goldman can go pound salt! Or at least spread a little around the sidewalk, it's a tad slippery out there.
Not that logic (Or even common sense) have anything to do with anything these days, but if winter weather is a drain on GDP, why is it that these asshats don't take that into account when making their projections before winter (Which tends to occur every year)?
I'm in the field. Construction. These pencil pushing bean counters with little pussy fingers, have to just make this shit up to justify their salary. Does anyone think they ever go out into the real world and see what's going on?
Hell no.
I could write a dissertation on what's wrong with housing, construction, folks that work with their hands and the economy on the ground. They don't have a clue.
Construction. No demand. No loans. ( liquidity trap). To much off the books illeagal labor. And they send at least half " back home", which ain't here. More demand destroyed. Over regulation by every gov agency. Adds to costs, in magnitudes. Too many gov employees. They do not produce value.
Question??? If a gov employee pays tax, does it count? Does it add, subtract or balance?
These geeks haven't got a clue.
The geek(s) still sign the paycheck.
You should be smart enough by now to baffle them with bullshit.
Not good in the long term, you know that, but bitching is lost in the clutter of every one else doing it right now to save their skin.
I work for a technology company based on the Silicon Valley and I can tell you that the average merit increase is being 2% in 2015, when it is usually is in the 3ish... and I am talking about one of these big cash cows companies that actually make products and have profit. All the signs I see, even on the technology world, is that companies are preparing for the inevitable crash
Q: Where do you find elephants?
A: It depends on where you lost them.
Q: Why do elephants wear blue tennis shoes?
A: Because the white ones get dirty too fast.
Q: Why do elephants live in herds? A: To get a wholesale reduction on the blue tennis shoes.
etc...
Funny
The snowMAN smiles when he sees the snowBLOWER.
Hey Joe, clutch at straws much?
Joe could single handedly bring about an economic recovery by renting out ad space on that immense noggin of his.
pods
pods:
Pretty faddish and ephemeral. I do recommend Henna for the ad, although the flashing (panic) lift up to it is beyond me.
Maybe we could do something in a Vinyl wrap.
The weather is also to blame for war in Syria. Not the Western military alliance trying to overthrow the gov there of course.
http://news.discovery.com/earth/weather-extreme-events/did-climate-chang...
$35/hr to union members to shovel out MBTA tracks. Of course along side Slave errr..... Prision labor of what, $.35/h
YAY SNOW
Now the mayor wants to increse fines to $1500 for not clearing you share of the sidewalk of the 10 feet of snow we got.
YAY SNOW
If you got a plow in the Boston area, life is good.
https://www.youtube.com/watch?v=OElW2BrB6So
"we found evidence based on the number we requested to the BLS"
Yeah...the BLS did not respond to my request.
Of course they didn't adjust the numbers for snowfall. That was supposed to be a thing of the past by now.
1985 Government scientists predicted NYC to look like Daytona Beach
http://dailycaller.com/2015/03/05/new-york-city-global-warming/
thank god that never happened. Think of what NYC would SMELL like if it sat in Daytona Beach weather.
Does that include yellow snow?
Don't eat yellow snow !
And watch out where the huskies go!
Already have the Jobs number and are commenting on them?
I've been waiting for this. Polar Vortex 2.0! I can hardly contain myself in expectation of hurricane season where the economic indicators will all be downgraded because of all that wind. But then again it'll be a boon for all of those window manufacturers replacing broken panes of glass!
Job growth generally rises for about 4-5 quarters after we have peaked out econmically. Companies use what is in their rearview mirrors to see their future path. And until they start hitting the pot holes, they stay the course.
Things are going to change rather fast, once the first bad number is posted. I am expecting a number around 159k or so for tomorrow.
But the metrics have been hosed up for years now...so I am sure it will be anything BUT what I could rationally expect.
It's the age old problem of Economy vs. Nature
Silly Tyler.
Seasonaly adjusted just refers to how they spice up the figures.
Right in your face.
Hey Winston!
That reminds me of long ago (probably a few centuries) I was looking at a buncha BLS and other federal agency seasonal adjustment factor data series. And just out of curiosity, took the "seasonal factors" which over any prolonged year, should be net neutral and fond them to be...
Are you waiting for this?
If Growth Oriented, to be whether figured on an additive (wrong) or geometric basis, to be biased upwards!
If Inflation (bad) Oriented, whether figured on a arithmetic or geometric basis, to be a net bias downward!
They were not "seasonals" whatsoever
That was over 25 years ago.
Nothing to see move along.
So I went to the next senior investment policy committee meeting and pointed this out and was told that I was nuts, just not possible, didn't know what I was talking about., etc., to mind my own job. etc.
Happy happy joy joy
I know that it never enters the minds of the sad little morons in the MSM. This stupid blame snow in the winter crap, is just that...crap. It's weak and pathetic, to bring up the fact that it snowed in places where it...snows. It's winter! This countries population has become so stupid that it's easy to peddle pure bullshit. They run right out and parrot it.
No thought needed just roll out tripe, over and over!
Even UGG boots sales endure a crises:
Morgan Stanley Downgrades Deckers Outdoor (DECK) to Equalweighthttp://www.streetinsider.com/Analyst+Comments/Steady+UGG+Brand+Continues+to+Bring+Success+to+Deckers+Outdoor+Corp+%28DECK%29+-+Sterne+Agee/10247243.html
Mother's Day deals: half price UGG boots, 70% off
http://www.mirror.co.uk/money/personal-finance/transfer-isa-other-provid...
Goldman just fucking the friendly muppets up the ass again.
Just wait till global wormings begins!
Mustard brings them up and woofing works.
This is why I love Economics.
Nothing is factual, just theory.
http://newsbusters.org/blogs/julia-seymour/2015/03/05/and-thats-way-it-w...
Walter Cronkite before NWO propaganda said cold is hot and hot is cold.
2+2=5. I LOVE big brother. Man, that shit never gets old!
Thanks for the laughs...
Tomorrow's NFP will be a blowout number. Whether or not any jobs were actually created is entirely beside the point.
Yep...and Au will close tomorrow below 1175.
BFD QED
I would think the folks who love Keynes would love this weather? Roof collapses, busted mail boxes, potholes, snow plowing. Shouldn't the economy be growing at 6-8 percent because of this weather?
In other news, Goldman Sachs predicts $200 a barrel oil at the top of the market, which you can bet they were selling short at the time.
Their mouths only move to talk their book.
So basically, an 8 ball "snowstorm" is said to reduce hiring but get higher wages while Goldman Sachs bets against it.
I'm sorry - was reading ZH - got to this headline 'Goldman Says' and just drank a beer - went to the posts. Did I miss anything ?
WARNING Unemployment will lead to fewer people being employed........No shit?
This just in: Night time leads to darkness leads to joblessness
Hey geniuses at Goldman Sachs of gold there is this weird fucking thing that happens where I live around the second time that the hands of clock reach the sixth hour it gets dark outside ....a lot of people stay inside and sleep when that happens ...does the night then lead to unemployment too ?
You DUMB FUCKS!