Zero Hedge
February 3, 2012
Courtesy of Lee Adler of the Wall Street Examiner
The headlines are blaring of a massive surge in January employment that blew away analysts expectations. Frankly, I find it hard to believe that any analysts would not have expected this “news.” The real time Federal Withholding Tax daily data for January, which I dutifully cover each week in the Treasury updates, showed a massive surge beginning in late December. Since everybody didn’t get a 10% raise, the analysts might have inferred that more people were working. Whether that’s a sustainable trend or not is another question, but for January at least, there should have been no mystery.
I like to look behind the headlines at the real unadjusted, unmassaged, unmanipulated numbers to get some idea of what’s really going on. Here’s where things get strange. Total reported employment and full time employment plunged in January, as is normal for that month. So the Gummit survey data doesn’t square with the tax collections. Had we based our forecast for the headlines (which is the only thing that matters to the market in the short run) on the withholding data, we would have gotten it right, but for the wrong reasons. It’s a head scratcher that suggests that the Gummit’s employment numbers shouldn’t be trusted, which isn’t news. What we do know for sure is that there was a gigantic surge in withholding taxes from late December to mid January, and that surge disappeared completely in the last week.
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