Experienced teaches us that data can be whatever it wants to be in the short term. Statistical techniques, i.e. tricks, are often reversed through data revisions when nobody is looking. Revisions take place when Administrations or Administration’s polices goals change.
MSM is spinning the labor report as strong, but I caution against reading too much into it. Non-farm payrolls is a highly revised and unreliable economic time series. Those interested in understanding why, please contact me. No reason to waste time and space explaining it.
The headline number showed a whopping 500K payroll increase, but behind the scenes the numbers are far less robust.
Average weekly hours worked (AWW) worked dropped for the third consecutive month to 41.3. This times series is far more stable than Non-farm payrolls number. AWW is included in the Economic Activity Composite (EAC) due to its reliability and consistency over time.
The EAC, the computer measure of US economic activity in the Matrix, continues to drop (see chart below). ITCO has fallen below zero in November, and LTCO is quickly approaching 0. Unless the Federal Budget spending shows something completely unexpected later this month, it's highly likely that ITCO will stay below 0. In other words, the US economy is in the initial stages of contraction.
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Economic Activity Composite (EAC) ITCO and LTCO (Line 98-99 Trends Tab of Matrix)
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