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 1:59PM
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Ok...Did they fool you?

367,000   Jobless claims

114,000   Jobs gained....& that brings the unemployment down from 8.1% to 7.8%  ?

 

Right......and just after Romney cleaned Obama"s clock at the debates...let's fudge the numbers to help Obama.

 

All the people that blieve that the unemployment rate is truly above 8% give me a thumbs up.

All the whining liberals that think the unemployment is 7.8% give me a thumbs down. 

Oct 5, 2012 1:15PM
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Just after Obama blew it, mysterious downtic in unemployment numbers appears. If you believe this number, I have some more ocean front property for sale in Arizona . Surely Obama wouldn't lie.
Oct 5, 2012 1:39PM
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Why do people think that 7.8 percent is good?
Oct 5, 2012 1:17PM
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Lets not get ahead of ourselves just yet.  NBC stated quite a few of those jobs that were created last month were part-time jobs.

Oct 5, 2012 3:03PM
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Unemployment rate goes down???

 

What jobs were created to cause this? 

Oct 5, 2012 2:04PM
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Not sure why everyone is so excited about part time and government jobs. 

 

But let's wait for a week or two when they decide to give the accurate numbers, which for the past several months has been revised down from their initial report.

Oct 5, 2012 2:34PM
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Baloney!  Those of us on main street know exactly what's going on!  Been to 5 different employment agencies and every one of them has the same story..............there are no jobs!
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 1:48PM
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Pretty sad. You could have predicted this. You knew they had to come up with something that would make Obama look good after his debacle on t.v.. It is quite sad.
Oct 5, 2012 1:32PM
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...anyone count the 1000's who fell off the grid last month...this is just politics!...and bad politics at that!!
Oct 5, 2012 2:10PM
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What about all the people unemployed or under employed no longer being counted.....you cannot believe the 7.8% number.
Oct 5, 2012 3:59PM
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.

Oct 5, 2012 2:44PM
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Romney is right. My son is one of those still unemployed but because he has fallen off the unemployment roles, it does not show up as part of the unemployment stat. Anyone who believes otherwise is very naive and does not understand how the numbers are skewed to project what the current government wants us to see. If you look at what the say they have added and then compare it to the more than 23 million still unemployed, the unemployment rate can't be a 7.8%. It is closer to 12% unemployment. It is just not possible, and the numbers don't lie.

 

The trouble is getting the media to tell the truth. But that won't happen because it does not support their agenda.

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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 3:53PM
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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 3:03PM
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Ignore all the talk.  Talk is cheap.  Look at performance.  We know what Obama can/cannot do. 

Its time for a change.  This time a real change.

Oct 5, 2012 1:32PM
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Obama is losing & is now resorting to "Cooking" the "Employment Books". All of a sudden 63,000 more Local, State & Fed Gov't jobs show up.

 

The grand total of jobs re-adjusted for the last 3 months are 146,000 new jobs. 44,000 jobs are in Healthcare. Add in those new found Gov't jobs & that equals 107,000 jobs. Jobs gained in all other areas equals 39,000, or 13,000 per month This doesn't account for the people that have retired or lost the unemployment benefits that are no longer looking for work. Bottom line is these 39,000 jobs are for the "Holiday Season" from Halloween through New Years & after that there will be another huge plunge.

Oct 5, 2012 1:18PM
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I hope you realize that 144000 jobs won't even the graduating class of 2011.
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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