Father Gerald: Father, you have made the bond of marriage a holy mystery…Hear our prayers for Bernard and Lydia through your Son, Jesus Christ our Lord, who lives and reigns with you and the Holy Goat, eh, *Ghost*. One God, forever and ever, Amen.
Father Gerald: Bernard and Lydia, I shall now ask if you freely undertake the obligations of marriage. Bernard, repeat after me. I do solemnly declare that I know not of any lawfully impediment…why I, Lydia…
Bernard: …why I, Bernard…
Father Gerald: Whoop, sorry!…May not be joined in matrimony to Lydia John Herbert.
Bernard: May not be joined in matrimony to Lydia *Jane* Herbert.
Father Gerald: Lydia, repeat after me. I do solemnly declare that I know not of any lawfully impediment why I, Lydia Jane Herbert…May not be Johned in matrimony…
Lydia: May not be *joined* in matrimony…
Father Gerald: to Bernard Geoffrey Siddle…Delainey.
Lydia: to Bernard Geoffrey *Sinjin* Delainey.
Father Gerald: I call upon those persons here present to witness… that I, Bernard… Delainey…take thee Lydia Jane Herbert… to be my awful wedded wife.
Bernard: to be my *lawful* wedded wife.
Father Gerald: That’s right… That’s right. May Almighty God bless you all in the name of the Father, the Son, & the Holy Spigot… *Spirit*.
Congregation: Amen!
Rowan Atkinson tripping over his words in 1994’s Four Weddings and a Funeral will never get old nor not be funny. Record seasonal adjustments in official data this Presidential election year has gotten old. When random segues to systematic, there are no conspiracies about. To position, whether you’ve a bullish or bearish stance, unbiased readings on fundamentals are a must. Absent this, you’re taking measured risks on mismeasured bases. That brings us to crossing the Rubicon from the downward revisions, to which we’ve numbed, to the month of September 2024, which we’ve renamed the seasonally blissful month of September. We were open to looking past two glaring examples until Thursday morning’s Retail Sales crossed the wires. Turning a blind eye to a Holy Trinity of seasonal manipulation rendered us the shameful fools after being fooled twice.
Exhibit A. On October 2nd, ADP reported a 143,000 monthly gain in private payroll employment for September. On a raw, not seasonally adjusted (NSA) basis, the monthly decline was -260,000. In ADP’s 15-year history, no September registered a worse unadjusted outcome. It begs the question, from whence came the seasonal adjustment (SA)? The answer is simple. It was manmade. ADP’s seasonal adjustment was the largest on record, a 403,000 boost (orange bars). If the September 2023 seasonal adjustment – a 258,000 add – was applied, the headline number would have posted a -2,000 result. By the way, last year’s monthly change seasonal was the second largest on record.
Exhibit B. On October 4th, the Bureau of Labor Statistics released a 254,000 monthly advance for total nonfarm payroll employment (NFP) which blew away the forecasting community. Once again, though, it was all about the seasonals. Last month’s seasonal factor (total seasonally adjusted payrolls count/unadjusted figures) was the largest for any September in a series that dates to 2002 (green line).
Exhibit C. And then there were those Retail Sales, about which the media fell over itself lauding the ‘resilience’ of the U.S. consumer based on the ‘plus’ sign in front of the seasonally adjusted figures (light blue bars). The thing is, not seasonally adjusted sales were $681,679 billion in September 2023, a whisper higher than the $681,456 tallied last month. In fact, unadjusted sales have been falling since July (purple line). The pandemic aside, the seasonal adjustment provided the second-biggest boost in a decade.
Were only unadjusted data reported, year-over-year (YoY) comparisons would be akin to the methodology Corporate America employs in earnings season. Applying this calculation to NSA retail sales yielded these results:
- Headline -0.03%, Autos -3.55%, Furniture & Home Furnishings -5.26%, Electronics & Appliances -6.60%, Building Materials 0.08%, Food and Beverages 0.61%, Health and Personal Care 3.72%, Gasoline -11.36%, Clothing 0.31%, Recreation Goods -6.98%, General Merchandise 0.58%, Miscellaneous Stores 6.73%, Nonstores 7.65%, Food Services and Drinking Places 1.38%.
Durable goods (i.e., financed purchases) are weak; staples’ performance is modest (think food, clothing and drug stores) and Nonstore robust as bargain hunters flock online. Note: Given its outsized jump, we’d best define “Miscellaneous,” as a subsector comprised of florists, gift and souvenir shops, and stores that sell office supplies and stationery, pets and pet supplies, and used merchandise.
As we continue to chuckle at the memory of that scene in Four Weddings and a Funeral, we’re pleased to say we’re not too tired to watch the movie one more time. That puts us in better standing than those occupying the ranks of continuing jobless claimants exhausting their unemployment benefits. September’s 80% YoY moonshot shows the growth of the Exhaustion Rate is rising rapidly (red line). Most states offer a maximum of 26 weeks of benefits. For millions, this cash flow stream will run dry just as student loan repayments restart. Have we ever seen 18 straight months of a rising Exhaustion Rate outside recession? The answer is no. The exhaustion precedent is an awful, not lawful, one.
Back in the seasonally adjusted world, where hot money traders and indexing reside, we were reminded of an article published by the Economic Policy Institute titled “If the Economy is So Bad, Why is the Unemployment Rate So Low?” The date of release: March 7, 2008.