Long experience has shown me that it really pays to read beyond the financial headlines. You usually have to dig into two or three articles about the same story to get all the relevant facts -- or even to learn what the real news is.
Like today's big story about "651,000 Jobs Lost in February." It's tempting to give that a glance and just move on -- the job news is bad and everybody knows it. But, here's what you might well conclude if you did some digging: The 651,000 figure is probably way off, perhaps by as much as 30% -- meaning the jobs losses would be more like 846,000.
Why a 30% difference? Not for some nefarious reason, but instead because economic data nearly always undergoes several revisions after the initial report. When more data than usual is coming in on a given economic activity -- like a labor market that loses at least 2.6 million jobs in four months -- the revisions tend to be large. The people who crunch the numbers literally have more work to do.
For example, the initial report for December 2008 was a loss of 524,000 jobs; a month later that December figure was revised up to 577,000; another month later (today), December's figure was revised up to 681,000. That's a 29.9% increase over the initial report.
Since you've read this far, I may as well fill in the rest of the ugly picture. The New York Times and Wall Street Journal each ran stories about how today's unemployment rate of 8.1% itself understates joblessness. If you include people who want a job but have stopped looking and part-time workers who want a full-time job, unemployment stands at 14.8%.
There may be no silver lining for the labor market in the near future, but I can alert you to one of the best ideas I've read in a long time -- an alternative strategy for employers who feel like they will soon be forced to lay off workers. It's a strategy that General Electric actually used with great success in the 1930s. Bob Prechter saw fit to spell it out in detail in the latest issue of his
Elliott Wave Theorist.
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