[NEW Job Data is Wrong] Will the Fed Raise Rates FASTER?

hey everyone meet kevin here so you've

probably heard the headline news that

the unemployment rate has dropped to six

percent down from 6.2 percent

we added 916 000 jobs in march but

what do we think that jerome powell

thinks about these numbers

do these numbers give jerome powell

chess palpitations that

oh my gosh maybe it is officially time

to raise rates

sooner after all if you look at the bond

market it's kind of what the bond market

thinks you look at the bond market oh

good old bond market mr bond market oh

my goodness

mr bond market sent the 10-year treasury

yield uh

up substantially well a good chunk after

the numbers came out if you look at the

three-day here of the 10-year

you see that big spike that's right when

these jobless claims came out

not jobless claims the new unemployment

data came out which allowed the bond

market to be excited wow great the

economy is improving as expected

that's it there's no way rates aren't

going up let's assume rates are going up

now we didn't hit all-time highs we did

have all-time highs earlier this week

where we hit a figure of around 1.76

uh for the 10-year treasury yield

remember as we see these treasury yields

go up we tend to get downward pressure

on high beta stocks like tesla or

other tech stocks or energy and ev

stocks

but anyway what is this going to do

to drone powell is drone power going to

go golly

the market's right the economy is just

growing faster than we expected

and it's time to raise rates sooner well

there are three things that we can

look at to try to understand what jerome

powell

is going to believe and so here we go

let's go ahead and pull up the

report and the three things that we're

going to look at have to

well i'll just go and order them we'll

just make it nice and simple the first

thing we're going to look at

is race yes race this is not

to make race-bait content it is because

it is true that race is something that

jerome powell looks at

jerome powell was very happy that before

the pandemic

minorities were in his opinion able to

participate

in the economy at a higher rate than any

time previously

we had a very low unemployment rate of

3.5 percent

and finally we were seeing the

unemployment rate amongst minorities

also trend towards that figure implying

that more minorities were able to

participate in

this recovery that we had since 2008 so

that prior recovery between 2008 to 2020

that was something that john paul was

very excited about and it's also

something that jerome powell has been

very heavily focused on in this recovery

he is asking for not only stable prices

as part of his dual mandate

the other part being maximum unemployed

maximum employment

but the second part about maximum

employment is that

or or if we zoom in to max employment we

now know that jerome powell

is not just saying oh we want on the

unemployment rate to be like 3.5

or whatever it's that when he refers to

max employment he wants to see

max employment amongst all races

all genders and as much employment as

possible in a way that is going to

foster

positive climate change yeah that is

another thing that they're now gearing

towards

and all of these things for all these

things to happen just means

interest rates at the fed may stay lower

longer

but let's look at this data to see if

anything has changed so first

racial data let's uh erase some of these

things here a little bit because it gets

a little too messy when i highlight all

this stuff

i highlight a lot when i'm reading

anyway

the unemployment rate for asians rose

to six percent in march following a

decline in the previous month so

actually

the unemployment rate got worse for

asians

for hispanics the unemployment rate

edged

down which edged is small so it barely

went down

to 7.9 percent for whites

we're at 5.4 unemployment

and blacks are at 9.6

and look at this keyword here folks

little

changed changed little for black

unemployment

that's bad when we look at the actual

race part of this unemployment report

it's not pretty do the people who won

are white

people white people won whites are at

5.4 percent

and they didn't even tell us how much

that changed although we could look at

prior reports but it's not so important

right now what's more important

is that the minority unemployment rate

is substantially

higher than the total unemployment rate

and this is something that jerome powell

absolutely looks at when considering

should we raise

rates or not so race number one number

two

is what i call the actual total

unemployment

figure this is something that jerome

powell references a lot so take a look

at this

the this chart shows us what the

civilian labor force is

and what how many people are unemployed

so we jump over here i'm just going to

point this out to you

this is the total labor force this is

the number of unemployed

and so what jerome powell likes to do is

he goes to the top of this form

and he looks at this right here the

total

total number of people not in the labor

force who currently

want a job so they want to work but they

can't get a job maybe because they're

training or they're studying or they're

getting their license or for

one reason or the other they're not

picked up by the unemployment statistics

with 6.9 million people in that bucket

and that number is

up 1.8 million since before the pandemic

so let's try to break this out so we're

going to draw these little lines here to

break this out a little bit

so look what we got here of everybody

who is counted by the unemployment

report which does not include the people

who want a job but don't have a job

we're at six percent unemployment that's

the headline leading statistic that

everybody talks about in cheers right

but let's just include the extra

1.8 million people who want a job

but don't have a job so in order to do

that we're going to go over here

and all we're going to do is we're going

to add 1

point was it 1.6 or 1.8 1.8 1.8 million

so we're going to add 1.8 million to

this number and 1.8 million to this

number and then we're going to divide

and then we'll get an unemployment rate

based on well that's

obviously going to be higher but how

much higher is the interesting

note so let's go to uh 9 7 10 let's do

the little calculator here there we go

nine seven

ten plus eighteen hundred which is one

point eight million so we're gonna do

eleven five ten and then we're gonna do

160

five five eight plus eighteen hundred

one six two three five eight and now

we're going to divide

eleven five one oh divided by one six

two three five eight enter seven point

one percent

so we actually have 7.1 percent

solely unemployment by only by simply

including

the people who want a job but don't have

a job and aren't included in the

unemployment report and i'm only

including the 1.8 million people

that have been added to this group since

the pandemic

because it kind of gives us an idea of

just including that extra pandemic

damage

we're up another 1.1 percentage points

if we now include the full 6.8 let's

redo the numbers here and this is

this is the stuff jerome powell looks at

jerome powell is not a headline

he's not a headline news kind of guy he

is uh he's a give me give me the

nitty gritty kind of news kind of guy

kind of news kind of guy that's uh

that's a new word okay anyway

uh 6.8 and add 6.8 over here so let's do

the same math again

nine seven one zero plus

six uh 6800 which is 6.8 million that's

16 million

510 000 people actually unemployed

add 6 800 on top of 160 558

because obviously if we're including

them in the labor force we have to

actually include them in the labor force

uh one six seven three eight

okay now we're going to divide 16 510

divided by

167358 equals

uh we're actually at 9.9 percent

unemployment if you consider those folks

that is not good

this is not an improvement like the

headline news might be like oh yeah

things are fine

everything's fine jerome powell's gonna

raise rates

really look at this this is bad

this is not good okay so race not good

total actual unemployment not good not

getting much better

this number was 10 last month and i'm

not sure if that was just

rounding but it's it's not improving

that greatly

okay then the last thing is take a look

at this

people like to chart in the media how

many jobs are being added per sector

but one chart that we don't get often is

how many jobs are still

missing from certain sectors and that's

really easy to determine here take a

look at this

leisure and hospitality still down

3.1 million since february 20th

we've got a local government education

i'm just going to look at the minuses

here okay look at this

minus over half a million uh 270 000

310 000. these are all education jobs

that we've lost

since the pandemic employment and

construction is 182

000 below now we have had employment in

certain sectors like consulting

and business and professional services

actually go up you see that here the

thirty seven thousand six thousand

eight thousand but that's nothing those

are really small numbers

the biggest numbers are all all

signaling

lots of pain since before the pandemic

look at this employment and

manufacturing

down 515 000 employment in other

services down three ninety six thousand

here employment and social assistance

down three oh six thousand since feb

2020

wholesale trade down two hundred thirty

four thousand

uh three hundred eighty one thousand

jobs missing in retail trade financial

activities down eighty seven thousand

this is not good this is not good

uh another thing to note here was the uh

there's also a section where they talk

about part time this is sort of just a

bonus here

uh let's take a look here oh yeah

here look at this at the very bottom

here the number of persons employed

part-time for economic reasons at 5.8

million

changed little but is 1.4 million

higher than in feb 2020 these are

individuals who would have preferred

full-time employment

were working part-time because their

hours had been reduced or they were

unable to find full-time jobs

nothing in this report is good like

jerome powell is not going to read this

report and go that's it

the bond market's right that's it raise

rates they're good we're gonna go higher

in rates this is not good

it's still very bad when you look at the

overall details here like

you read the headline it's like yay six

percent added nine hundred fourteen

thousand jobs

if you look at the detail it still sucks

now hopefully it changes quickly but

remember we have three big things that

we have to change

race total number of people who want a

job

having a job especially relative to

before that's the second thing

but then the third thing is the total

net loss

per sector those are the things in my

opinion dronepile is going to be looking

at and this report

does not signal any needed change

by the position of the federal reserve

so i'm maintaining my belief that the

fed is not interested in raising rates

uh anytime soon

and obviously something that could throw

a wrench in this is seeing inflation

which uh cpi data comes out in about two

weeks so we'll take a look at cpi data

when it comes out but for now we don't

have an indication at least from this uh

unemployment report that jerome powell

is going to be freaking out and thinking

about raising rates anytime soon

anyway hopefully that helps you look at

these unemployment numbers a little bit

more in depth

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