Fed Abandons "Yellen's Favorite" Labor Market Conditions Index (Because It Just Won't Fit The Narrative?)

Tyler Durden's picture

Once Janet Yellen's favorite indicator (until it started to turn down, and became just "experimental"), The Fed's Labor Market Conditions Index (a 19-factor smoothed model that has historically correlated extremely well to recession) has been abandoned because The Fed "believes it no longer provides a good summary of changes in the US labor market."

The Fed writes...

As of August 3, 2017, updates to the labor market conditions index (LMCI) have been discontinued.


We decided to stop updating the LMCI because we believe it no longer provides a good summary of changes in U.S. labor market conditions.


Specifically, model estimates turned out to be more sensitive to the detrending procedure than we had expected, the measurement of some indicators in recent years has changed in ways that significantly degraded their signal content, and including average hourly earnings as an indicator did not provide a meaningful link between labor market conditions and wage growth.

As Mike Shedlock noted so poignantly, "Using similar rationale, the Fed ought to disband itself."

Of course,  this is not the first indicator that The Fed has abandoned (Secondary Market CD rates, M3), which got us wondering, what is that really sparked the decision to abandon this broad, less-noisy, cyclical indicator?

Perhaps this is why...


  1. As The Fed ended QE3, the growth rate in the US Labor Market peaked for the cycle.
  2. As The Fed began raising rates, the growth rate in the US Labor Market was plunging... and was in fact negative when The Fed hiked rates in Dec 2016.
  3. And now, as The Fed starts to shift 'dovish' on rates (preferring to focus on the maturing balance sheet), the US Labor Market is showing signs of life.

So, maybe, just maybe, The Fed killed this 'signal' because it exposed their entire lack of data-dependence?

Perhaps The Fed should take a look at this Labor Market Breadth Indicator?

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Chippewa Partners's picture

It's what they do.      Lie. 

SlowBro's picture

What's wrong with good old fashioned Goal Seek?

GUS100CORRINA's picture

Fed Abandons "Yellen's Favorite" Labor Market Conditions Index (Because It Just Won't Fit The Narrative?)

My response: Why? That is because it is all BULLSHIT that is STINKING UP THE JOINT!!!

FIGURES LIE and LIARS can FIGURE!!! Need I say more?


SeuMadruga's picture

Maybe, but ironically those rate hikes - actually acting on the return over all bank reserves - would in fact increase the base money the banking sector relies upon to expand monetary aggregates with more loans and credit that end up buying back their own stocks as well as other assets...

Rebelrebel7's picture

The Fed is now faith dependent.

G_T_A_44's picture

The Fed is and has been nothing but Market dependent for some time now.

macdavy's picture

its now fake news

youarelost's picture

Sounds like when the got rid of M3 right before it exploded

NoWayJose's picture

Just give me a chart/timeline of every Fed decision and I will invent an index to support their decision.

Seasmoke's picture

Don't ever forget Bernanke 6% unemployment !!!!

asteroids's picture

Abandoning your model because it doesn't fit the fact shows, at best, you are ignorant. At worst, you are intellectually dishonest. Take your pick with the FED.

silverer's picture

Well, that index scam didn't work as intended. We'll now use a newer, updated index scam.

LawsofPhysics's picture

Again the Fed changes how they "measure" economic data because they are in fact ENABLING THE GREATEST THEFT/FRAUD IN THE HISTORY OF THE PLANET!!!


Calculate inflation the way we did in 1970, go ahead I triple dog dare you!


"Full Faith and Credit"


Get long sharecropping and guillotines because we all know how such "let the majority eat cake" monetary experiments turn out.

G_T_A_44's picture

Zero Fed data is accurate. Zero. It is and always has been filled with hedonics; adjustments and outright nonsense. Like Carlin said, You have to be asleep to believe it.

JailBanksters's picture

Sounds a lot like the IPCC

Where you start with the result you want, then create the algorithm to get to that result.

Which is a lot like Goldman Sachs price discovery, where you start with the price you want to the stock to discover, then make the appropriate trades to get to that price.

Surprise Surprise, they are all from the same gene pool.

RaoulDuke66's picture

The Fed is part of the political administration, and so its role is to talk up the economy (not to talk about it). How many recessions has the Fed ever predicted? Answer: f__k all. 

uhland62's picture

The book Gold Warriors (by P. & S. Seagrave) has no high opinion of the Fed, from its founding. I tend to believe them.

Iskiab's picture

The fed isn't a government institution, it's a corporation.

It's an entity setup by the banking industry for the banking industry.

Golden Showers's picture

I wouldn't worry about it. The Labor Market is just one of those adjuncts that don't matter.

So I worked one job back in 2005, 12 years ago, making $12 an hour. I work the same job in 2017 making minimum wage here ($8.40 then $9.20 with experience) with half the staff. At night.

That's your labor market. And I'm in it. Don't thank me. The people I work with are ignorant asshole children. Every year gets worse. But one thing I'm truly grateful for is not working in marketing or sales or banking, or whatever you have. Because I smell and I have a tan. I smell like honest labor and I get outside in a T-shirt.

It's not like the Fed is an honest private institution-- parasitizing all of us daily while it's greatest hide behind tax-free foundations and murder, create wars for profit. What is so endearing to me is how the FED can ignore indices that I'm in and still take my taxes.


Taxation without representation. That's what I'm saying. Taxation without re-presentation. That's an old quaint notion of US Government and Law that really doesn't fucking matter no mo.

Janet Yellen. Really? Are you FED comptrollers that fucking lazy? You fucking lazy ass fake Jewish whores of Lucifer can't make up some shit about the "Labor Market?" Are you that stupid and weak?

Don't matter to me. I have faith in the One True Creator. Janet, your hair is really fucking ugly you old piece of shit. Only face on this planet more disgusting is the Queen of England piece of shit monarchy leftover dinner from the Jacobins and the Weichaupt Bauer bullshit archon squad of stupid murderous illigitimate wanna be sovereigns. The more you talk the more you lose power. And that's why you hide like the scum vampire shit you are. And you know it. Fuck you.

adonisdemilo's picture

Obviously they can't use it because the numbers tell a different story to the one they're telling.

Econogeek's picture

WOW.  Unvarnished intellectual dishonesty on display.

One has to hope that they are at least wincing and cringing in private.