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Saturday, July 9, 2011

Breakfast: Egg on face w. juice; hold the Humility

When the arrogant and pompous won't admit outwardly that they were wrong- in this case, the over-exaggeratedly positive predictions for yesterday's embarrassingly weak BLS jobs report- it is Fun to go back to the previous day's news and see how much they set themselves up for egg on the face.

I could have used many examples but since I like reading the Guardian UK, I will choose a news story they wrote late morning Friday UK time which was actually early dawn, US time, just prior to the June labor statistics report being released.  Its quite a fascinating read because it shows not only the disconnect between opinion/prediction and reality, but how news basically works less to inform as it does to sway and mold thought:

(Remember this was written mere hours before the BLS report was released)

"The US jobs market is likely to have improved last month, raising hopes that the world's largest economy is bouncing back.  Wall Street economists have significantly increased their forecasts for key US employment figures due at 1.30pm London time, after American payroll processor ADP said on Thursday that the private sector created more than twice as many jobs as predicted last month.

The consensus estimate for Friday's benchmark non-farm payroll data has risen from 90,000 new US jobs in June to at least 120,000, with some economists predicting as many as 200,000 positions were added in June. Employers hired just 54,000 more people in May, after a three-month period in which an average of 220,000 jobs were added each month. The unemployment rate is expected to stay at 9.1%...

Thursday's encouraging ADP figures fuelled hopes that last month's disappointing employment figures were a temporary setback and that the overall economy will rebound in the second half of the year.  Kurt Karl, chief economist at Swiss Re, said: "If it really is a good report it implies that we turned a corner late in the second quarter."

Ian Shepherdson, chief US economist at High Frequency Economics, added: "We always took the view that May was hit by one-time factors like severe weather conditions and supply-chain disruptions [from the Japanese earthquake] ... Shepherdson boosted his forecast for Friday's non-farm payroll figures from 100,000 to 175,000 on the back of the ADP report."

Wasn't that funny?    Really..  wasn't it?

Let's re-state the reality:  18,000 jobs gained. -- worse than May;  9.2% Unemployment -- also worse than May..  44% of the totality of Americans unemployed (over 6 million people) have been out of work 27 weeks or more..  over 500k have lost their jobs since March 1st.. on and on..

Now these are supposed professionals.  They have degrees from lovely Universities with slogans written in Latin, and everything.  Obviously they were wrong.  But that's not the important part-- everyone's wrong at some point and no one is perfect.  But notice how smug and self-assured they were in their predictions; assertive in their intentions that the economy is strong and all is well.

And notice that the writer never at one time contradicts or even plays devil's advocate for academic purposes?  This is important..  He never raises doubt or expresses possibilities as to what if the jobs report figures are bad?  Nor does he even seek out any expert to express an opinion on it.   The possibility is not ever considered. There's no advantage for him to inject so-called 'gloom' into an optimistic 'recovery' puff piece.  And in so doing, the article simply blends in to become just another forgettable example of corporate finance shilling.

Politicians are liars and investors/banks are miscreants.. we all know that.  But there's never a good excuse why the media have to play along so willingly.

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