CORRECTION: How Will the “Better than Expected” November US Jobs Data Affect the December FOMC Decision?

the consequence of the unexpectedly positive US November jobs data on the December FOMC decision

Correction to Yesterday’s Post: This correction is regarding the likely FOMC interest rate decision that will happen in roughly 12 hours from now. Though the incredibly strong November US jobs report likely contained many fabrications, the likely decision today is to leave interest rates unchanged, and not to cut interest rates again, as I misread some data yesterday. Thus, the risk for slightly further weakness in gold and silver prices before a reversal in prices happens remains, as well as a year end decline for the US stock market. This corrected view is reflected in the narrative below.

As my patrons know (the transcendent level), last week I sent them a video in which I stated that if the November US jobs report was manufactured to report a surprise to the upside, that a consequent smash in gold and silver prices should be expected. And this is exactly what happened.  Despite this occurrence, I have also informed my patrons of the support levels at which gold and silver prices would likely rebound, emphasizing the limited downside versus the very healthy potential upside. These levels I have provided for weeks have not been violated as to date. But still, Friday’s unexpected surprise in US job numbers resulted in a $20+ drop in gold prices on Friday and a significant drop in the price of silver that has seen silver prices slip by 8.9% since the start of last November. Last Friday, the US Bureau of Labor Services reported that 226k jobs were created in November, smashing the consensus expectations for 183k new jobs created. However, mainstream financial media always presents the numbers without a critical eye to present the best possible interpretation of the data, but the real meaning of the data always lies within the detail. In November, 41,000 striking workers in the automotive industry returned to work, almost accounting for the total 43k difference in expectations and reported numbers. Even so, the implied message the BLS wanted to send Americans is that the economy is robust and booming, which is incredibly difficult to believe given the ongoing struggles of middle America. So just how were such fake numbers manufactured?

To begin, the job numbers always include estimates of jobs created, so the 43k difference in real and predicted numbers could conceivably consist of estimated jobs that are inaccurate. Secondly, the BLS jobs data is always the net number of the lost jobs and created jobs for the prior month, and does not differentiate for quality of jobs. Thus, 100,000 high-paying full-time jobs could have been lost in a month, and replaced by 150,000 low-paying part-time jobs that would add a net number of 50,000 jobs to the job data even though the addition of 50,000 jobs is not a net positive development since high paying jobs were lost and replaced with lower paying, lower quality jobs. In addition, certain data produced by non-government personal, like hedge fund billionaire Ray Dalio, has shown that the top 0.1% of wealthiest Americans have continued to accrue most of America’s wealth in 2019, a trend that has been on the upsurge for the last four decades, to the point whereby they have captured nearly the same wealth as the bottom 90% of all Americans. Furthermore, though I have not seen any data regarding the inequality of income gains in America for 2019, I would not be surprised if the trend of the top 1% of income earners in America capturing a disproportionate amount of all income in America has not continued this year when this data is eventually released. Data which shows soaring wealth and income equality in America with a dying middle class opposes all conclusions released by the BLS about healthy job data indicating a robust and healthy American economy, as no economy can be declared healthy in which the extremely wealthy own almost all wealth in the nation and the middle class continues to die off every year.

In fact the conclusions that the BLS releases to accompany their monthly job data of robust economic conditions often only apply to the 0.1% to top 1% of income earners in America. Consequently, as the reality spreads of economic contagion throughout America except for the 1%, gold and silver are still poised for very strong rebounds in price in the near future. Lastly, Wednesday’s December FOMC decision should reveal the level of veracity or falsehood of the “unexpectedly strong” November US jobs data report. If the US economy is really as robust as claimed, there absolutely should not be any reason to cut interest rates again on Wednesday. If anything, the strength of the economy, if the November jobs data was truthful, would even present a case for US Central Bankers to announce a December interest rate hike. In the end, the likeliest outcome is for no change in the interest rate decision issued by the FOMC on 11 December.

J. Kim

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