As we said a week ago in "Scapegoating Nemo ", it was only a matter of time before Wall Street's heroic band of permabullish lemmings used a snow storm in the middle of, gasp, winter, as a "valid" excuse to justify why an economy priced to central planning-perfection may deviate slightly from a path that has missed every major upside inflection point in the past four years (but... but, there is always a reason... if only for the Fed to print). And appropriately enough, the first such excuse comes from none other than Groundhog Phil's nemesis Joe LaVorgna who just cut his Non-farm payroll forecast to 125K due to "inclement winter weather." Truly odd how there is never an exogenous reason for "better than expected" data. Ever. Next, and as always, rain in the spring will be blamed for a Durable Goods plunge in April, sun and balmy warm weather in the summer will be the cause of a collapse in retail spending in July, and finally, a gust of wind in the fall will lead to a double dip depression.
Commentary for Monday: This is the survey week for February nonfarm payroll employment so we are concerned the next batch of jobs data could be adversely affected by inclement winter weather. The Bureau of Labor Statistics provides data on the number of people who could not report to work because of bad weather—we have dubbed this series “weather workers”, and the top five months for weather workers are the following: January 1996 (1846k), January 1977 (1100k), January 1982 (1079k), February 2010 (1031k) and January 1978 (843k). Using initially reported nonfarm payroll figures, the average reading for these five months is +2k, although the economy was in recession in January 1982 when payrolls were down -231k. If we exclude this observation, then the average gain is 62k, better but still obviously very weak. In light of the possibility that February nonfarm payrolls are adversely distorted by weather, we are estimating only a +125k increase, down from a trailing three-month moving average of +200k. However, if jobless claims trend lower during the employment survey week and other measures of employment such as the ISM and ADP surveys show further improvement, then we will obviously adjust our forecast accordingly. Moreover, the level of January employment is likely to be revised higher, as this has occurred in four out of the last five years. Incidentally, the survey for the unemployment rate is conducted one week later, so there should not be a noticeable impact on the rate, which we expect to edge down one-tenth to 7.8%.