Last week WAS LOADED with ECONOMIC FAIRY TALES.
Everyone from the Fed to Wall Street to the White House tried to call Friday's jobs report "good enough," with total nonfarm payroll employment increasing by 156,000 in September. But that's just spin. (It should be noted that Wall Street's non-farm payroll estimates have come down 25-30% this year.)
More importantly, as we highlighted on Friday, jobs growth (year-over-year) continues to slow from its cycle peak hit in February 2015. Simply put, employment is slowing along with U.S. economic growth.
With that in mind, back to economic fairy tales. Here's a recap of last week’s headscratchers:
- Cleveland Fed head Loretta Mester: "It's a solid labor market report... it makes sense to move up the [fed funds] rate another 25 basis points." (10/7/2016)
- Fed Vice Chairman Stanley Fischer said holding rates steady in September was a "close call" and expect "gradual increases" in interest rates, even though productivity growth is "exceptionally poor." (10/9/2016)
- Then this gem from Jason Furman, chair of the White House Council of Economic Advisers, "I don't think you're late cycle... I just don't believe in the concept of late cycle." (10/7/2016)
We crowned Furman’s statement “the most glaringly irresponsible” of the week but Fischer and Mester certainly gave him a run for his money.
We'll say it again... the U.S. economy is slowing.