Unemployment Understated By Three Percentage Points

[Read the Footnotes]

https://www.washingtonpost.com/business/2020/06/05/may-2020-jobs-report-misclassification-error/?tid=pm_pop&itid=pm_pop

 

Recent unemployment stats understate unemployment by 3 percentage points due to "misclassification error". Should have been 16.3% instead of 13.3%. 16.3% probably still does not capture the magnitude of the issue for various reasons related to classifications, definitions, etc.

 

What do anticipate for market impact from this revelation?

 

This is an understatement of 18%.

[SHDL]

I personally find this all very suspicious and amusing but I don’t think it will have much if any impact on markets. In the short term there is too much optimism amongst bulls and the bears are mostly capitulating from what I can tell. In the long term obviously none of this matters.

[Spekulatius]

I personally find this all very suspicious and amusing but I don’t think it will have much if any impact on markets. In the short term there is too much optimism amongst bulls and the bears are mostly capitulating from what I can tell. In the long term obviously none of this matters.

 

The market was up when the unemployment numbers were worse than expected and the market was up when the number was much better than expected. I think the market just looks for an excuse to go up!

[SHDL]

I personally find this all very suspicious and amusing but I don’t think it will have much if any impact on markets. In the short term there is too much optimism amongst bulls and the bears are mostly capitulating from what I can tell. In the long term obviously none of this matters.

 

The market was up when the unemployment numbers were worse than expected and the market was up when the number was much better than expected. I think the market just looks for an excuse to go up!

 

Good news -> higher profits -> stonks go up

Bad news -> more stimulus -> stonks go up

 

You literally cannot lose!

 

—

 

Jokes aside, it was also extremely suspicious how some “good” news about certain therapeutics were released like a minute before the really bad jobs numbers came out a month or two ago. I would not be surprised if someone was pulling the strings behind the scenes.

[Mephistopheles]

The unemployment report that came out Friday contained this footnote. The information was already out on Friday so you can assume Fridays price action took into account this misclassification.

 

On a related note, I am unsure if the numbers adjust for effects of PPP. If not then the unemployment number is artificially low. When PPP expires, we will see many of those employees laid off. And what about the airline bailout? They aren't allowed to lay off until September I believe, so that's also another factor keeping the number low.

[ERICOPOLY]

Next week the gyms and bars open in California. Daycares and schools open too, people with kids can go to work.

 

Much is changing and the increased traffic on the roads makes it obvious.

[AzCactus]

The questions around the reopening are:

 

1. How long does it take for businesses to get to pre-covid employment?  (My guess awhile)

2. What happens when positive cases spike?  I live in AZ and the numbers have hit recent records (in terms of daily cases), my guess is confidence would be too shaken if we shut things down, so I imagine this will be a new normal.

[Read the Footnotes]

The unemployment report that came out Friday contained this footnote. The information was already out on Friday so you can assume Fridays price action took into account this misclassification.

 

On a related note, I am unsure if the numbers adjust for effects of PPP. If not then the unemployment number is artificially low. When PPP expires, we will see many of those employees laid off. And what about the airline bailout? They aren't allowed to lay off until September I believe, so that's also another factor keeping the number low.

There are many other unusual reasons that the numbers are low in addition to the normal issues with unemployment statistics. Another pandemic specific issue is the shear number of people who are on temporary furlough or layoff that are still receiving some sort of compensation and are therefore ineligible for benefits, yet.

 

This is probably the best answer

Good news -> higher profits -> stonks go up

Bad news -> more stimulus -> stonks go up

 

You literally cannot lose!

 

I am still not sure I think the numbers are the least bit representative and Trump has been boasting as if we should be tired of winning at this point. Which makes me think that some portion of the populace or the market are not aware of footnotes and reporting issues, but are just getting a very positive seeming soundbite. The strong form efficient market hypothesis assumes information is assimilated immediately, I'm guessing that's wrong in this case.