Salmon: The GIGO Jobs Report

This column was originally published on Nov. 8.

NEW YORK (Reuters Blogs) -- This is undoubtedly the most distorted jobs report in living memory. Scroll down a bit, and you get to a whole box entitled "Partial Federal Government Shutdown", which explains that for a multitude of reasons, the amount of "nonsampling error" in this report is going to be much bigger than it normally is - and yet, the BLS also made the correct decision that for the sake of "data integrity", it was not going to try to correct for any of those nonsampling errors.

The markets, however, are hard-wired to take the payrolls report seriously, especially right now. We had a very strong GDP report yesterday, which was itself subject to all the same errors and omissions, and there's something more generally febrile about the broader atmosphere: yesterday alone saw an unexpected rate cut in Europe, as well as a decidedly frothy first-day valuation for Twitter. On top of all that, we're still in the very heart of good-news-is-bad-news territory, where traders only care about when the famous Taper will begin. The stronger the data, the more worried they become, and the more that stocks and bonds sell off.

Put it all together, and you have a recipe for volatility. News organizations have a largely unspoken rule of thumb that the bigger the market move, the more important the news must be; their readers, certainly, have an inexplicably insatiable appetite for stories which try to answer the "why did the markets move so much?" question. But today of all days, the right reaction is to take a deep breath and try not to pay too much attention to any of the numbers coming out of Washington and New York.