Video Transcript
Jeremy Glaser: For Morningstar, I’m Jeremy Glaser. After November’s much-better-than-expected employment report, all eyes are on December’s report. I’m here with Bob Johnson--he is our director of economic analysis--for his preview.
Bob, thanks for joining me.
Bob Johnson: Great to be here today.
Glaser: So, you mentioned that this December report is probably going to be more valuable than usual or maybe more looked at than usual. Why is this such an important report?
Johnson: Well, I usually poo-poo this report just a little bit because it’s highly volatile from month to month. There are a lot of seasonal factors, and there are a lot of revisions to the numbers. So, I’m always very cautious about the report.
Secondarily--and maybe more importantly--employment always lags everything else. What usually happens is the consumer spending is on the front end of the train. They have to buy more things first, and then first retailers draw down their inventories as do manufacturers. And then eventually when it’s just too good to go anymore, they have to hire people for their factories to produce more. So, it’s the last thing that happens. What you really need to watch is the consumer stuff. But a lot of people, because they touch employment every day--everybody has got a job or has a friend who’s got a job or trying to get a job--everybody watches this data like a hawk. But it really is a lagging indicator usually.
