Press Meme That 'Strong Jobs Data Brought Down Markets' Friday Doesn't Hold Up

March 7th, 2015 8:09 AM

Stocks took a beating yesterday. The Dow Jones Industrial Average fell 280 points. The S&P 500 and the NASDAQ each declined by over one percent.

The subject line of a USA Today email I received shortly after the closing bell crystallized the establishment press "wisdom": "Dow plunges nearly 280 points as strong jobs data raises Fed rate hike fears." The problem is that even though the government's reported seasonally adjusted payroll job additions of 295,000 were indeed strong and beat expectations, the underlying raw data doesn't support the excitement.

The problem is that actual February 2015 job growth came in below February 2012 and 2013, both overall and in the private sector:


Despite those mediocre raw (i.e., Not Seasonally adjusted) results, reported seasonally adjusted job additions somehow came in at impressive levels of 295,000 overall and 288,000 in the private sector.

As I explained at my home blog yesterday (with minor edits for clarity):

The Feb. 2015 raw overall figure is 135K below 2013 and 51K below 2012, but this year’s seasonally adjusted figure of 295K is only 19K lower and 48K higher, respectively. I’d say today’s seasonally adjusted number makes things look at least 75,000 jobs better than justified.

Readers comparing this year to 2014 may point out that this year’s seasonally adjusted figure went up by less than the raw increase. The answer there is that the February 2014 seasonally adjusted figure was miles higher than the horrid 741K in raw job additions justified.

The result is similar on the private-sector side. The Feb. 2015 raw figure is 86K below 2013 and 26K below 2012, but this year’s seasonally adjusted figure of 288K is only 9K lower and 39K higher, respectively. I’d say today’s number makes the situation in the private sector look at least 60,000 jobs better than justified.

It seems at least as likely that the markets plunged because the real jobs data before seasonal adjustments was weak.

When you get right down to it, either justification for the markets' respons indicates that the economy is weaker than advertised:

  • If the real explanation is a negative reaction to fundamentally unimpressive jobs numbers, it's stunning that one such month can move markets so much.
  • If the real explanation is that investors are scared it will tank if the Fed ignores the underlying data and raises interest rates anyway, that demonstrates how fragile the economy's foundations really are.

Regardless, the press's claim, as exemplified in yesterday's "STRONG JOBS REPORT" headline at the Associated Press, that the jobs number were presumptively great, doesn't hold up.

Additionally, as master headline organizer Matt Drudge has noted since Friday afternoon, the following serious problems remain:

92,898,000 Americans Not Working...
Labor Force Participation Rate at 37-Year-Low...
Record 56,023,000 Women Not in Labor Force...
Black unemployment rate nearly twice national average...
Net Employment Gains Since Recession Went To Foreign-Born...

Cross-posted at