Macro Scan: (doesn't) Obama care?

Well, with the forthcoming jobs data this week for the United States, already tipped to disappoint due to the strike action, (the largest U.S. strike in recent years), by Verizon Communications Inc workers, I also touched on in yesterday's Macro Scan, (Déjà vu: Will the Fed actually hike?), how a strong US dollar has been a negative factor for major international corporates in the US and how there have been a large number of full-time lay-offs this year already.

While the strike by Verizon's workers could possibly trim U.S. nonfarm payroll growth in May by at least 35,000 jobs, according to a Labor Department report shown last week, (Striking workers who do not receive a paycheck during the reference period are treated as unemployed), I wonder, as often is the case as a snowball gets rolling, whether the massive job cuts of April will 'roll-over' into the month of May as well? 

Nonfarm payrolls doesn't tell the whole story

Source: Free Images

Nonfarm payrolls do not tell the entire story of the US labour market. With some extended digging around, you would have found that the pace of downsizing in the U.S. labour market last month actually increased as U.S. based employers announced workforce reductions totaling 65,141 during that month, according to the latest report released from global outplacement consultancy Challenger, Gray&Christmas, Inc. "The April figure represents a 35% increase over March, when employers announced 48,207 planned layoffs." That means that April's 2016's job cuts were 5.8 percent higher than the 61,582 recorded in April 2015. And if you cast your mind back, the recent FOMC meeting and subsequent minutes that were presented to us later came before the Fed were privy to any of this information. 

FOMC: all ifs and buts ...

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So, all those ifs and buts (or just cover ups and lies?) within the minutes should serve to reason that the Fed will NOT be hiking in June and unless there is a dramatic improvement in this week's nonfarm payrolls, you can discard July as well. However, conversely, a tactical hike would not surprise me under the Obama administration, setting Hillary up for pole position and seeking to mask the true state of the economy with Yellen tied to the puppet strings ahead of the US elections. I mean, what were all those 'secret' meetings in April with Obama about anyway? It is not the norm that both the US president and US vice president would be present at such meetings with the Fed chair. In fact, in the entire history of the United States, that has never taken place before. 

Source: Free Images

Moreover, it is the first time that Obama met with Yellen privately since appointing her to the position as chair of the Federal Reserve. This happened at the start of April when several US economists had reduced their growth tracking estimates in the first-quarter putting Gross Domestic Product (GDP) to near to zero, after a 1.4 percent gain in the last quarter of 2015. Don't forget, that the first quarter GDP reading is artificial. 

In 2013, the Bureau of Economic Analysis (BEA) announced new methods of calculating GDP that would immediately make the economy "bigger' than it used to be.  A change was made to bolster the first quarter numbers as they often came in too low - So go figure and keep that in mind.

GDP manipulation ... how it is done?

Source: Free Images

The way this is done is by claiming the money spent on research and development and the production of “intangible” assets like movies, music, and television programs as  “investments” thus leading to the perception of faster growth convincing Americans and markets that the economy is performing and growing more than it actually is. Moreover, no matter whether the data were manipulated, 2016's Q1 was the third quarter, or best part of a year, that the US economy has been in decline. So the Fed's requirement to see a continued improvement in growth in order to hike in the coming months will not be met by June and cannot be measured by July either until the estimates of Q2 prove to skyrocket; I don't see that happening with all the recent poor data that has come out on balance for Q2 already - do you?

Anyway, back to job cuts in the US ...

So, as of yesterday's article, (Déjà vu: Will the Fed actually hike?), I have since discovered that US employers had announced a total of 250,061 planned job cuts through the first four months of 2016 and the highest January-April total since 2009, albeit well below those four months of the year that saw 695,100 job cuts in the height of the financial crisis. However, this is still a dreadful statistic that simply doesn't bode well for the FOMC who are relying on continued improvements in the labour market in order to continue on their path of incremental interest rate hikes throughout 2016 where their initial implied planning for four rate hikes this year has been drastically compromised by the poor performance of the US economy, growing at little above 0% a quarter.  

So if April was so terrible, can May improve?

Source: Free Images

Well, it is summer time, which means vacations and driving season in the U.S. We just had a long weekend for memorial day, and given all the low gas prices and air fares, it was probably a busy period for tourism business in May. That means many part time seasonal jobs are opening at hotels, restaurants and tourist attractions such as museums, historical sites, theme parks and even zoo's (RIP Harambe the Gorilla).

The pseudo that is the nonfarm payrolls data

But, these roles are being filled with either heavily indebted students who can't afford to pay off their loans or the baby boomers who can no longer afford to retire and are going back to work at wherever they can find it, and what better a temp position than an extra security guard at the museum or mucking out the penguin dung at the local zoo? The point is, again as I have stressed before, these job's creations are low paid and part-time and that is the problem with the pseudo that is the nonfarm payrolls data. No matter that U.S. payrolls have experienced 66 consecutive months of net job gains, remember, just Fuhgeddabouit! 

Obama cares?

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Obama is on track to become the first president ever to have never had a year of 3% growth for the US economy. Even in his eight-year tenure where others may have only had four years. In fact and on average, he is on track to have the fourth worst performing U.S. economy in the entire history ever since the U.S. founding. Yet, he recently went on to claim quite the opposite when he told a Howard University's Class of 2016 that the country is "a better place today" than when it was after he graduated from Columbia University in 1983. However, further jesting he said, "by ALMOST every measure"... 

Source: Free Images

Perhaps he has a bad sense of humour, or it's just that Obama doesn't actually care?