Unemployment drop is good for investors

Forget the conspiracy theories about rigged data. The latest jobs numbers are bullish for retailers and consumer products companies.

By Jonathan Berr Oct 5, 2012 11:46AM
Unemployment fell to 7.8% in September, its lowest level since President Barack Obama took office, prompting accusations that the incumbent administration rigged the data to bolster its chances for re-election. 

Investors should ignore the ludicrous claims and focus on the buying opportunities presented by an improving economy while keeping in mind that the gains may not be sustainable.
Scott Hoyt, a senior director of consumer economics for Moody's Analytics, tells MSN Money that the data, which showed a gain of 114,000 in nonfarm payrolls, indicated some "data anomalies," such as a big increase in the number of part-time workers who say they want to work full time. Government jobs also showed gains, reversing recent declines.

"We were surprised by the drop in the unemployment rate," he said, adding that claims of political manipulation of economic data are not new. "You hear that every so often. . . . We have never given any credence to those claims." 

Image, Resume copyright Dynamic Graphics, age fotostock, age fotostockIf the jobless improvements hold, the holiday season may turn out to be better than retailers had expected. That is good news for a variety of companies -- including Wal-Mart (WMT), Sears Holdings (SHLD) and TJX (TJX) -- that appeal to lower- and middle-income consumers. It also includes those like Macy's (M) and Nordstrom (JWN) that appeal to wealthier shoppers. Surging consumer confidence, coupled with a rebound in real estate, will also bolster a wide array of companies, including Procter & Gamble (PG), Costco (COST)  and Home Depot (HD), along with companies that cater to the wealthy, such as Tiffany & Co. (TIF). 

Of course, these improvements could evaporate if Congress fails to stop the nation from tumbling off the fiscal cliff, if the situation in Europe deteriorates significantly or if China's economy overheats. Though a lower unemployment rate no doubt helps Obama's re-election chances, conspiracy theories about rigged data make no sense.

For such a diabolical plan to work, it would have to be hatched at the highest levels of government and  would have to involve multiple sets of data, because the cooking of one month's report would be too easy to spot. Though other countries, including Greece and China, have been accused of fudging their data, there is no evidence that this has happened in the U.S.

Jonathan Berr is long Wal-Mart. Follow him on Twitter@jdberr.

203Comments
Oct 5, 2012 4:12PM
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The rate only dropped because so many have ran out of benefits, and now are not being counted as unemployed. Does anyone know anybody that has gone back to work. I sure don't. Not in my community. More are getting laid off and what about that deal that Obama has made with Lockheed Martin not to close down till after the election is over. What does that say. He is try to hide the real numbers.
Oct 5, 2012 4:12PM
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Unleash the Bull alright..more like unleash the BS...I have been out of the markets for 4 years and just cashed in the rest of my stock. Never again will I trust in any wall street garbage.I am investing in real estate before Obama destroys whats left of the dollar...PS Foreigners are buying up tons of real estate too ..dont fall for the BS!
Oct 5, 2012 4:11PM
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Market fading that’s because investors due their homework. Investors are checking the numbers and guess what they found, they don’t add up. Just wait till the Sequestration budget cuts kick in and 277,000 (low estimate) former military members and government contractors hit this job market. Wonder if someone in the government can wave another magic wand, but then the election will be over so there will be no need.  114,000 new jobs are not even enough to cover the new entries entering the workforce, this is insane, as has been said several times “the numbers just don’t add up”. Rigging the numbers for public consumption for a large part of the under informed, or blind, or the Obama cult members of our society before an election is almost criminal. I am so tired of being lied to by both sides. Can I please get honest news without all the blatant lies or the spin and cheerleading from both the left and the right.

Oct 5, 2012 4:08PM
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THIS IS all manipulation of the numbers both side do it. Out of work for three years, construction is flat. count the empty storefronts in your town, we are not in a recovery not from where I sit. I wish it were true but I don't see it.

Oct 5, 2012 4:06PM
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Reported just yesterday...

The Labor Department reported that new claims rose a seasonally-adjusted 4,000 to 367,000, while the four-week moving average, considered a more accurate gauge of labor market conditions, was flat at 375,000.
Oct 5, 2012 4:03PM
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Hey Jack Welsh...........My Emerson microwave doesn't explode into flames and my Maytag Washer doesn't have an exploding basket spewing parts all over the laundry room!

 

P.S.  Talk about "cooked books"...........I loved reading about the fraud in not 1 but 2 of Jeffy Immelts divisions!  How's that 1.2 billion payment to the SEC coming along?

Oct 5, 2012 4:02PM
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So the unemployment rate is 7.8% .......Right

 

And I'm Howard Cosell & this is Monday Night Football.....Woo Hoo.

 

I'm sure everybody with half a brain belives that these new figures are fudged to help Obama after the  whipping Romney gave him in the debate.

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Does anyone believe this? Unemployment is still double digits. Plus, under employment is a plague. This is all White House propaganda.
Oct 5, 2012 3:59PM
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the administration has just stopped tier 4 euc benefits for the unemployed and as people use up

 their tier 3 benefits they are dropped out of unemployment , nice timing don't you think??

Oct 5, 2012 3:59PM
Oct 5, 2012 3:57PM
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Our little town in California is over 8% because I am one of them. In the last 2 years business have close their doors and when they do open new business, they are min wage to maybe 10.00 if your lucky. We have many people here that are losing their homes and most of them I know. I made almost 21.00 dollars an hour and when you lose that and even with unemployment you still have problems and you need to work 2 or 3 jobs to make ends meat. The goverment only cares about bigger cities and towns when it come to jobs. The little guy gets screwed every time.
Oct 5, 2012 3:57PM
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I wonder what would have happened or be said if the numbers went the other way...

Hippocrites!

Oct 5, 2012 3:55PM
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Does that mean I'll get a raise now?
Oct 5, 2012 3:54PM
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Jonathan Barr,

 

Why doesn't it surprise me that you are pushing this as a positive for retailers since you have a long posistion in WMT!

 

ROFLMAO........You and all of the rest of these wall street news writers do know that pump and dump is illegal..........don't you!

Oct 5, 2012 3:53PM
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What a joke?? If you actuallly beleive that unemployment is below 8% then you are dumber than the folks that wrote this ridiculous atrticle. Plus .... who are these numbskulls doing this interview .... where did they get these folks .. out of the Community College in Ohio???
Oct 5, 2012 3:50PM
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Jack Welch who cheated GE stockholders on his  expense accounts for years says the jobs data is fishy.. his ex wives say everything about Jack-in- a box is fishy.
Oct 5, 2012 3:49PM
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Question:  how can you talk about the unemplyment rate without looking at the employment rate?  I mean if you have high unemployment rate but at the same time high employment rate, then that could be good as more people overall are getting jobs.  Again another useless statistic that the media flashes before us as a smoke screen.  114000 jobs created out of 350 million people equates to a 0.03% employment rate. 

What I would like to know:  How many jobs were lost and total income lost (#jobs times yearly wage), how many jobs were hired on and total income hired.  What percentage of the actual work force is ideled.   How many people are collecting welfare. 

Oct 5, 2012 3:47PM
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The market is flat today....if the financial analyst believed these numbers the market would have taken off today!

Oct 5, 2012 3:45PM
Oct 5, 2012 3:42PM
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Mr. Barr;

 

The last time 783k jobs we're added in one month the GDP was 9.3%. Does it feel like we're growing at 9.3%? These numbers are b.s. and that's the reason you don't see the bulls in the market today.

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