McDonald’s to the Rescue
You’d think the government would show some appreciation for all McDonald’s has done for them. Instead of bashing fast food, they should be praising the fast food provider for announcing the addition of 60,000 jobs in April. Without those hires, the May “growth” in employment of 54,000 may well have been negative.
But then, maybe the government figures they don’t need McDonalds after all. Not when you can take a real jobs number of a LOSS of 152,000 jobs and turn it into a plus 54,000. How’s that work? Well every month the Bureau of Labor Statistics (BLS or BS for short), adds or subtracts jobs based on the “Birth/Death” model. Simply put, the BLS realizes that new businesses are created, and old businesses go out of business all the time. But the dynamic is too fast for the BLS to get accurate data on a monthly basis. So they come up with a number each month to adjust their survey, up or down, based on their calculations (guesses) on how many jobs were created by new businesses opening their doors each month, and by jobs lost by old businesses that close their doors. Sounds reasonable. Except that it is pretty much an impossible task, so why try? (Other than to come up with the number you want, if the real number isn’t to your liking).
Looking at the current data, officially we added 54,000 jobs in May. Of those 54,000, 206,000 were added by the birth/death model. Hmmmm. So while all the established companies in the construction field added 2000 new jobs in May, new construction businesses started up from scratch in May added 35,000 jobs. On the trade front, established companies laid off 5200 workers, but not to worry, brand new start ups added 25,000 workers. And while established Leisure and Hospitality companies laid off 6000, brand new businesses in that booming industry added 75,000 jobs. You just can’t make this stuff up…unless of course you work for the BLS.
Spoke to a neighbor over the weekend that said he just received a report from his (soon to be former) broker on how now is a great time to buy stocks. Follow that advice I’m thinking maybe McDonald’s is a good buy. Not necessarily their stock, but that $1 menu might be looking pretty attractive in a couple months.
More info on the BLS Birth/Death Model
Bill DeShurko 