That damn report keeps taunting me. For the last six months I've been on the wrong side. Just when you start to second guess your first thoughts, things turn on you making you look silly. I think its important to be humbled by your mistakes every once in a while, so allow me to show you my latest dud relating to today's employment report.
Here are some excerpts of an email I sent out Saturday:
In autumn I wrote about waiting for the jobs recovery until 2004. Gold needed to get above $360 and stay there to begin releaving the deflationary pressure that was causing capital to disappear and taking workers along with it. [... cut stuff on caital flows, corporate expenditures, and productivity ...]
And the week before the March report I said that you might want to wait a little bit longer on those jobs. There was considerable uncertainly in the market from international and domestic political concerns. Also I pointed to the dollar whipping around: gold shooting up to $430, falling to $390, and then on the rise again. All these monetary errors were taking their toll on planning, and it was an extention of the inflationary signals I was talking about in December, alteranating between drowning and dessication.
We know how that played out. January added over 150,000 payroll jobs, and from March to May about 900,000 jobs were added. I clearly underestimated the ability of the economy to blow off that uncertainty and hire away. [... cut useless babbling ... ]
This month I refuse to be behind again. The dollar has continued it rollarcoaster ride -- back to $430, down to $375, and back above $400 again. With all this motion and renewed heaviness in the dollar, I fear that the oil prices could just be taking a breather. [...]
However, despite problems -- slowing order growth, more monetary problems, more uncertainly with Bush then Kerry then Bush and back to Kerry in the lead, temp jobs not turning permanent, the UI claim moving average being stubborn, etc -- I think I'm going to go out on a limb and say this month will be in the high 300,000, maybe even touching 400,000. This isn't reflected in any model, but then again they've been continually low-balling every number this year.
So, I just switched.I went from underestimating by about 100,000 a month to now overestimating by about 250,000. That sucks. The only month I've actually been close has been February. However, at least I'm still hitting close to the target on the inflation and commodity prices, and those are the ones that I care about getting right.
My biggest concern is that this low employment number causes the Fed to take the rest of the year off. So you can't get everything right all the time. Maybe I should have stayed with the low numbers.