Bloomberg Surveillance: US Data Quality, Labor Market, and Geopolitics

Concerns Over US Data Quality

• ⚠️ US data quality has become a significant concern, with Steve Englander describing it as "more fool's gold than the gold standard."
• 💡 The Bureau of Labor Statistics (BLS) is criticized for intellectual laziness over the past decade, particularly with the "birth death adjustment" which significantly inflates employment growth without reflecting real-time conditions.
• 📉 This reliance on outdated models is expected to lead to substantial revisions in employment data, potentially showing a weaker January number.
• 🧩 Even the unemployment rate is questioned due to its sensitivity to small changes in reported unemployed individuals against a constant labor force.

Labor Market and Economic Dynamism

• 📊 The labor market is described as "pretty mediocre," not a disaster but with low odds of finding a job for the unemployed.
• 🚀 The potential impact of AI and productivity gains is noted, with optimism for long-term job creation despite short-term concerns.
• 🇺🇸 The US economy's dynamism is attributed to deep capital markets, bankruptcy laws, and flexible labor markets, though there's a risk of losing this edge due to potential interference and questioning of traditional success factors.
• ⚙️ Unlike other countries where hiring can be rigid, US firms historically hire when making money, demonstrating labor market flexibility.

Geopolitics and International Relations

• 🤝 A strengthening of the US-EU deal and further engagement in Asia are anticipated, focusing on strengthening trade deals.
• 🇮🇳 Progress on a US-India deal is noted, though past friction over issues like Russian oil purchases and geopolitical scrapes has made the process more difficult.
• 🇷🇺 The US is actively trying to squeeze the lifeblood of Russia's war machine, with European allies increasingly willing to take actions like converting frozen Russian assets for Ukrainian use.
• 🇨🇳 This increased pressure on Russia makes China's support for the Russian client state more apparent.

Consumer Confidence and Economic Outlook

• 📉 Consumer confidence has collapsed, hitting its lowest level since May 2014, and showing a concerning downward trend for some time.
• 😟 Consumers are worried about jobs, affordability, and income levels, aligning with actual economic data showing flat real disposable personal income.
• 💳 There's a significant pickup in credit card balances, suggesting consumers may need to pay back debt due to income constraints and labor market conditions.
• 🗣️ Consumer confidence is influenced by both economic realities (prices, jobs) and political factors or news disruptions.