Donald Trump keeps getting lucky.
First, of course, there was his election to the presidency. Now, the first major economic report of his administration has gone his way.
On Friday the Labor Department announced that 227,000 new jobs were created last month. That was well above the 175,000 that were expected by the experts and a lot better than the 156,000 created in December.
While the unemployment rate did rise 0.1 percentage points to 4.8 percent, the Labor Department in its press release called that “little changed.”
The good numbers create a dilemma for President Trump, who has questioned the validity of government data, especially on unemployment. Will the new president now embrace the figures he so recently hated? Yeah, probably.
As my readers already know, employment data — especially in January — isn’t all that it seems. The 227,000 new job figure is after the Labor Department does a seasonal adjustment.
There is never really job growth in January. There can’t be with so many companies downsizing after the holiday.
In fact, the raw data shows that 2.9 million jobs were actually lost last month. The government adjusts all of its data for the seasons to avoid wild fluctuations because of holidays, school breaks and such. This January’s loss was comparable with the one recorded in January 2016.
What isn’t comparable is the degree of seasonal adjustment that the Labor Department used. The Department changes its seasonals each month and that seems to have been the difference in January between an ordinary report and one that President Trump can crow about.
If Trump had been in office longer and had already put his people in charge at the Labor Department, I’d be suspicious that something sinister had gone one. But the Trump Administration hasn’t had time for that yet.
So the seasonal adjustment change seems to be nothing more than a lucky bounce. And these adjustments tend to bounce the other way later in the year, so be prepared.
As I’ve explained before, January’s headline employment figure — the one the Labor Department reports after seasonal adjustment — is usually disappointing. Still, there have been a couple of recent years when, like this one, the figure was surprisingly good. In the previous good years, mild January weather was usually the main factor.
This January’s figure also overcame another hurdle — the subtraction of jobs from the count because of something called the Birth/Death Model. The Labor Department uses this model to guess at the number of jobs being created by companies that are being “born” without the government knowing it or quietly dying without reporting to authorities.
January is always one of the “dying” months and it usually means that the report for the first month of the year is disappointing. This time the Labor Department removed 247,000 jobs from the count because if the BirthDeath Model guesstimate and it didn’t matter.
The better-than-expected employment number creates a number of interesting scenarios.
For one thing, it may give Trump some breathing room — the so-called honeymoon that most presidents enjoy when first taking office. Moves by Trump on things like trade and immigration have dominated the headlines because of attacks by critics.
But Trump won the election on economic issues. So critics might be hesitant to keep up the pace of their attacks now that there is a tailwind for the president on this one vital issue.
The game is far from over as far as the economics are concerned.
Economic growth in the fourth quarter of 2016 was mediocre and the year as a whole was the weakest in half a decade. The economy doesn’t turn on a dime — even for Donald Trump. GDP in the first quarter of Trump’s presidency is showing an improvement but these upward blips have been unsustainable before.
The good jobs report also creates a problem for the Federal Reserve, which decided this week to hold interest rates steady.
The Fed has vowed several rate hikes this year. And it desperately needs to keep that promise in order to keep up with the financial markets, which are already boosting borrowing costs.
Friday’s employment report puts the Fed one step closer to those rate hikes.
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