Lingering Questions About Last Week’s Jobs Report

“There are three kinds of lies: lies, damned lies, and statistics.”

–Benjamin Disraeli, as attributed to Mark Twain

The labor market looks strong but with some big asterisks next to it.

October 9, 2024 – We’re still scratching our heads over last week’s jobs report.

We saw unexpected growth. Generally, that’s good news.

But we’re skeptical of the government data. After all, in late August, the Bureau of Labor Statistics revised most of their numbers over the past year, causing over 818,000 jobs created since March to vanish without a trace.

Suddenly, jobs are on the rise again. The unemployment rate even ticked lower to 4.1%. There may have been a revision to the revision.

Either way, the market is now expecting interest rates to decline at a slower rate. 10-year Treasury Bonds roared back over 4% on Monday. The yield curve, which had un-inverted, re-inverted.

The markets don’t seem to mind yet. However, the whole report is suspiciously healthy. The jobs report indicates that the statistical lies are getting more outrageous.

Our first concern is with the truth, not the spin. We want to know what’s really going on. And the actual mystery relates to the surging number of government employee jobs.

To get answers, we turned to Andrew Zatlin. Andrew is an economist, analyst, and friend of Grey Swan, currently with SouthBay Research. He’s worked with several of our publishing endeavors over the years and is capable of picking up on trends well before they become obvious on Wall Street.

Our recent correspondence with Andrew regarding last week’s unusual jobs report is below. Andrew is the first to look at how the government may be on a hiring spree ahead of the election to help goose up the economy. Enjoy ~~ Addison

Lingering Questions About Last Week’s Jobs Report

Addison Wiggin & Andrew Zatlin, Grey Swan Investment Fraternity

Addison:

Hi Andrew, Maybe you can help me out with some of these numbers. Is unemployment going down? How does that jive with the jobs report?

We’ve got Record jobs -> record stock market close -> record government jobs, coincidence?

Andrew Zatlin:

First, two points:

Unemployment comes from a survey of homes
Payrolls come from a study of businesses

Unemployment showed an impossibly large (~800K) jump in government jobs. The jump made the denominator bigger (more people working), and the math meant a drop in the Unemployment rate. The reality is that, without this bullshit number, unemployment rose to 4.5%

You may not know this, but I was the first person to discover this.

Zerohedge even cited me for this on this point:

“Only not this time, because as noted earlier by Andrew Zatlin of Southbay Research, while historically the September adjusted number has been relatively tame, regardless of how large or small the unadjusted number was, this time something changed as the unadjusted number of government workers absolutely exploded by a record 1.322 million leading to a record September increase in adjusted government workers.

“It’s remarkable to see a one-month 3% jump in government jobs. Perhaps these are the hall monitors for the polling booths. Or perhaps these numbers are just wishful thinking. One thing is for certain: the Fed gets a hall pass next month when the ugly post-Hurricane numbers come out,” said Zatlin.

Curiously, it wasn’t just the Household survey that tracked an unprecedented increase in government workers: if one takes the Establishment survey unadjusted print (source Table B1 from the jobs report), one sees the same thing. Here, the number of not seasonally adjusted government workers soared by 918K (from 22.541 million to 23.459 million), while the number of not seasonally adjusted private sector workers plunged by 458K!”

Addison:

I’ve suspected and written as much since early ‘23 when trying to forecast rising consumer debt and interest on revolving debt trends. To me, they are a bigger problem than anyone in the financial media is giving credence to.

Thanks for hanging some meat on the bones.

How much of the headline numbers do you think is willful ignorance… spin… and incompetence?

Andrew:

It doesn’t matter.

October payrolls matter now because they come right before the next Fed rate cuts meeting.

And they will be strong, except for the hurricane impact. ~~ Addison Wiggin & Andrew Zatlin, Grey Swan Investment Fraternity

So it goes,

Addison Wiggin,
Grey Swan

P.S. Mr. Zatlin confirms a strategy I’ve long employed: it’s not my opinion of what the jobs report actually says; it’s only necessary to forecast how the market and the Fed interpret it.

Unfortunately, that leaves the door open for all kinds of misinformation and data manipulation. And dystopian social media narratives about how the government’s main objective is to destroy us and steal our wealth.

P.P.S. Hurricane Milton is nearing the West side of Florida. What a curious state. Doom of unknown proportions is arriving slowly. Without detail, other than barometric readings, wind speed and storm direction forecasts.

One quick way to determine how strong the storm will be is not from sophisticated weather modeling supercomputers, but from the restaurant industry – particularly the regional chain Waffle House.

The chain is now infamous for being one of the last places to stay open and the first to reopen after a storm.

As the Associated Press notes:

If a Waffle House stays open in town, even in a limited capacity, neighbors are reassured that the coming storm is unlikely to cause devastation. A closed location of the dependable diner chain has come to indicate impending disaster. The metric is known as the Waffle House Index.

What might sound like silly logic has become one of the most reliable ways for Southerners — and even federal officials — to gauge a storm’s severity and identify communities most in need of immediate aid.

On Tuesday, about two dozen Waffle House locations remained closed in the Carolinas and the chain’s home state of Georgia, nearly two weeks after the states were battered by Hurricane Helene. Several other locations were open but serving a limited menu.

There are more bizarre weather and economic indicators out there, but not many. The Waffle House Index is one worth watching for those facing wind and rain in the Sunshine State this week.

Thank you if you have also written in. Keep your ideas flowing here: addison@greyswanfraternity.com

“There are three kinds of lies: lies, damned lies, and statistics.”

–Benjamin Disraeli, as attributed to Mark Twain

The labor market looks strong but with some big asterisks next to it.

October 9, 2024 – We’re still scratching our heads over last week’s jobs report.

We saw unexpected growth. Generally, that’s good news.

Suddenly, jobs are on the rise again. The unemployment rate even ticked lower to 4.1%. There may have been a revision to the revision.

Either way, the market is now expecting interest rates to decline at a slower rate. 10-year Treasury Bonds roared back over 4% on Monday. The yield curve, which had un-inverted, re-inverted.

The markets don’t seem to mind yet. However, the whole report is suspiciously healthy. The jobs report indicates that the statistical lies are getting more outrageous.

Our first concern is with the truth, not the spin. We want to know what’s really going on. And the actual mystery relates to the surging number of government employee jobs.

Lingering Questions About Last Week’s Jobs Report

Addison Wiggin & Andrew Zatlin, Grey Swan Investment Fraternity

Addison:

Hi Andrew, Maybe you can help me out with some of these numbers. Is unemployment going down? How does that jive with the jobs report?

We’ve got Record jobs -> record stock market close -> record government jobs, coincidence?

Andrew Zatlin:

First, two points:

Unemployment comes from a survey of homes
Payrolls come from a study of businesses

You may not know this, but I was the first person to discover this.

Zerohedge even cited me for this on this point:

Addison:

Thanks for hanging some meat on the bones.

How much of the headline numbers do you think is willful ignorance… spin… and incompetence?

Andrew:

It doesn’t matter.

October payrolls matter now because they come right before the next Fed rate cuts meeting.

And they will be strong, except for the hurricane impact. ~~ Addison Wiggin & Andrew Zatlin, Grey Swan Investment Fraternity

So it goes,

Addison Wiggin,
Grey Swan

P.S. Mr. Zatlin confirms a strategy I’ve long employed: it’s not my opinion of what the jobs report actually says; it’s only necessary to forecast how the market and the Fed interpret it.

One quick way to determine how strong the storm will be is not from sophisticated weather modeling supercomputers, but from the restaurant industry – particularly the regional chain Waffle House.

The chain is now infamous for being one of the last places to stay open and the first to reopen after a storm.

As the Associated Press notes:

If a Waffle House stays open in town, even in a limited capacity, neighbors are reassured that the coming storm is unlikely to cause devastation. A closed location of the dependable diner chain has come to indicate impending disaster. The metric is known as the Waffle House Index.

What might sound like silly logic has become one of the most reliable ways for Southerners — and even federal officials — to gauge a storm’s severity and identify communities most in need of immediate aid.

On Tuesday, about two dozen Waffle House locations remained closed in the Carolinas and the chain’s home state of Georgia, nearly two weeks after the states were battered by Hurricane Helene. Several other locations were open but serving a limited menu.

There are more bizarre weather and economic indicators out there, but not many. The Waffle House Index is one worth watching for those facing wind and rain in the Sunshine State this week.

Thank you if you have also written in. Keep your ideas flowing here: addison@greyswanfraternity.com

Under the frost-crusted shrubs, the bears are sniffing around for scraps of bloody meat.

They smell the subtle rot of credit stress, central-bank desperation, and debt that’s beginning to steam in the cold. They’re not charging — not yet. But they’re present. Watching. Testing the doors.

Retail investors, last in line, await the Fed’s final announcement of the year on Wednesday. Then the central planners of the world get their turn: the Bank of England, Bank of Japan, and the European Central Bank.

Treasuries just suffered their worst week since June. And in Japan — the quiet godfather of global liquidity — something fundamental is breaking.

Silver continues its blistering ascent. Gold and bitcoin have settled in at $4,200 and $92,000, respectively.

It’s absurd, really, for any politician to be talking about “affordability.”

The data is clear. If higher prices are your goal, let the government “fix” them.

Mandates, paperwork, and busybodies telling you what you can and can’t do – it’s not a surprise why costs add up.

In contrast, if you want lower prices, do nothing– zilch. Let the market work.

For 30 years, Japan was the land where interest rates went to die.

The Bank of Japan used yield-curve control to keep long-term rates sedated. Traders joked that shorting Japanese bonds was the “widow-maker trade.”

Not anymore.

On November 20, 2025, everything changed. Quietly, but decisively.

The Bank of Japan finally pulled the plug on decades of easy money. Negative rates were removed. Yield-curve control was abandoned. The policy rate was lifted to a 17-year high.

Suddenly, global markets had to reprice something they had ignored for years.

What happens when the world’s largest creditor nation stops exporting cheap capital and starts pulling it back home?

The answer came fast. Bond yields in Europe and the United States began climbing. The Japanese yen strengthened sharply. Wall Street faltered.

The rate cut narrative is calcifying into gospel: the Fed must cut to save the consumer.

Bankrate reports that 59% of Americans cannot cover a $1,000 emergency without debt or selling something. And yet stocks are roaring, liquidity junkies are celebrating, and the top 10% now account for half of all consumer spending.

Here’s the plot twist: before 2020, consumer confidence faithfully tracked equity markets. After 2020, that relationship broke. As one analyst put it, “The poor don’t hate stocks going up. They just don’t feel it anymore.”

So when the Fed cuts rates in one of the hottest stock markets in history, who exactly benefits? Not the 59%. Not the middle. Certainly not anyone renting and watching shelter inflation devour their paycheck.