What the Jobs Report Does and Doesn't Do
As always, before we begin any discussion of Employment Friday, we need to remember why we care about jobs in the first place. It is commonly assumed that employment leads to consumption, but this just isn't borne out in the data. Employment gains consistently lag consumption gains. So that's not why we care.
At times, we might care because employment can lead to Fed action, but even there, the causation is indirect. I have argued that the Fed's primary focus is on inflation and that employment really only matters on the margins. In other words, if labor gains were weak but inflation was high, today's Fed would tighten policy. More on this later....435 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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