MarketWatch missed the memo

MarketWatch: The U.S. economy pumped out nearly 300,000 new jobs in December to catch Wall Street by surprise and give cover to the Federal Reserve’s decision to raise interest rates shortly before the end of 2016.

Now it’s time for a come-down.

Economists polled by MarketWatch predict there’s been a more mundane 185,000 increase in new jobs in January, down from a 292,000 gain in December, which was the largest in a year. The December report blew past Wall Street estimates.

A smaller increase in new jobs in January could be trouble on the heels of the dismal fourth-quarter GDP reading, adding to the angst of investors coping with big stock losses early in the year.

Does that mean the economy really is slowing, as the deceleration in fourth-quarter gross domestic product suggests? The government last week said GDP rose just 0.7%, down from 2% and 3.9% in the prior two quarters.

Hardly, economists say. The December gains were probably exaggerated, they say, by unusually strong holiday hiring or other seasonal quirks.

By the same token, a more lax pace of hiring in January is likely to understate the health of a U.S. labor market that has produced an average of 240,000 jobs a month in 2014-15.

No, December was not a great jobs month, it was  great seasonal adjustment month.  Actual jobs produced was about 20,000; if I recall   The issue is simple, if we are in a mild downturn, then the prior history is non-stationary and thus the seasonal adjustment is crap.