Record of new dentists and companies

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A misclassification error. Classification error. With this formula the Bureau of Labor Statistics justified the 3 percentage points less attributed to the May unemployment figure, the same that made President Trump’s fingertips consume for tweet compulsively his satisfaction. In fact, with half a country in revolt and the National Guard deployed, good news was needed. In short, the real figure of jobless in the United States it is at 16.3% and not at 13.3%, however something unexpected compared to 19.7% in April and the black forecasts of all analysts. Visually, the situation is this

if the positive reversal may appear minimal given the 20-year context of the employment trend, the second graph shows how the ratio between real rate and downward estimates marked the absolute record since the historical series is traced: in short, material from tweets. But in what the Bureau is he wrong? In the most classic of interpretations from sliding doors by statistical institutes: people busy but absent temporarily from work due to the lockdown of their companies they were classified differently in the polls of March and April and in that of May, going from “unemployed under temporary suspension” to “unemployed” tout court and vice versa with extreme confusion.

In short, net of the undeniable improvement, it is noted by many that the timing of this V-shaped recovery of the occupation is a little suspicious. Or, at least, in the wake of certain astonishing macro reversals that China has accustomed us to over the years. And there are at least a couple of macroscopic abnormalities to make it even more extraordinary.

The first is contained in this chart

which shows that in the midst of the country’s general lockdown the record figure of 345 thousand new business activities would be born, in fact a datum which equals a off-setting compensation of 60% of the closings recorded throughout the month of April. And the temporal underlining is important, because the record figure would refer only to the week between 10 and 16 of May. Basically, the El Dorado of free enterprise. But even in this case, the Bureau had to point out how in May the calculation methodology relating to the ratio birth / death of companies has changed, in this case “by inserting new and more recent information into the model database”.

Fear? That they were considered as new businesses of the activities that anticipated the reopening, inserting them in the rankings on the basis of criteria for modifying the operating offices in compliance with the safety measures and mandatory spacing.

Even more interesting is the case represented in this other graph

from which it can be deduced that during the lockdown the United States dental offices have started a campaign of purchases of medical and administrative staff worthy of the transfer market in its last days of the winter window. Assuming that, according to official data of the American Dental Association, there are about 200 thousand dentists all over the country with outpatient clinics, in the month of May something like 245 thousand new jobs would have been created in the sector. All while the studies were closed due to lockdown and in some States, such as California, they still are, given the delicacy of the dental activity compared to the risks of contagion. Of course, the quarantine also implied a greater abuse of food and in particular of natural antidepressants such as sugarstherefore an increase in caries and the need for specialist visits immediately after reopening appears probable. The fact remains that, after the first two, three months and disposed of all the waiting lists, American dentists will also return to normal operationbut with 245,000 more doctors, anesthesiologists, nurses, hygienists and secretaries. Again, the May figure alone halved the sector’s net loss in April. Plaque and tartar as a new GDP multiplier, therefore.

But beyond these oddities, the fact that in the face of expectations for 7.5 million fewer seats, an increase in the number of employees of 2.5 million units was revealed has also turned up the nose of many of the protagonists of the market, including SouthBay Research, whose note ends with a decidedly sibylline phrase: “The employment figure confirms what we already knew: we go back to hiring. What is surprising is the fact that a similar return roar occurred BEFORE the lockdown ended. ” All jobs concentrated in states like Iowa, Wyoming and Utah, where Covid-19 is so unknown that it is mistaken for a microwave oven model? Likely. Indeed, almost certain. One fact remains: why publish data with attachments in real time i disclaimers for calculation errors and the classification variations, when was the convict survey conducted between 10 and 16 May, therefore with sufficient time for a reworking or a compensatory model compared to the official publication of 5 June?

An apparently malicious answer to this question could paradoxically be offered by this graph

which shows how the return to the field all-in of the Fed at the end of March triggered a real race for corporate bond issues, so much so that it brought the new debt put on the market to finance itself for 1.1 trillion dollars in value only in the first five months of this year, double the same period of 2019. Concentrated then, above all, in the last two. In fact, money at zero cost and guaranteed by the central bank that companies could use for investment and staff but which, instead, has often and willingly ended up in share buybacks and dividend payments, as reported by Bloomberg in a long and merciless article. And that’s not enough, because net of mal-investment of that money, many companies that benefited from the Fed’s issuance window simultaneously laid off thousands of workers. This is the case of the giant of the canteen Sysco, who a few days after the announcement of the Federal Reserve on March 23 regarding the purchase of corporate debt, issued new bonds for 4 billion dollars. But that’s not enough, because the following week announced the cut of a third of the total workforce, about 20 thousand people and the simultaneous payment of a dividend to the shareholders.

And the same was true for Toyota Motor, the marketing giant Omnicon Group and for Cinemark Holding, owner of 554 cinemas and theaters in the United States, all closed on 17 March in accordance with the lockdown. Two days after that date, the same company paid a dividend already agreed to the shareholders and on April 13th it gave rise to a 250 million dollar junk debt issue, effectively guaranteed by the Fed shield. And how it celebrated the success of the operation? On the same day, he communicated the dismissal of 17,500 workers and reduced the wages to the middle level managerial staff. On the day of the employment record, Cinemark itself announced that from 19 June it will reopen all its cinemas and theaters. In short, a nice internal restructuring by Covid-19 sponsored by the Fed.

And that’s not enough, because always Bloomberg he denounced how the famous Treasury plan for the financing of small businesses turned out to be a fiasco, given that JP Morgan – the country’s first bank – out of 300 thousand requests received, only granted loans to 18 thousand. Obviously, for the higher amounts in respect of the commissions and with the best ratings, just to be careful about the provisions. Moreover, of those lucky 18,000, most of them turned out to be corporations and not small and medium-sized enterprises, which are in fact preparing for a class action against the institutions most exposed to these discriminatory practices, including Wells Fargo. Perhaps this is why, net of the protests in the streets of half America, the June 5 figure of the Bureau was important for it to come out in its “botched” version and despite the obvious misclassification errors?



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