Private payrolls increased in August by 152,000 vs. the previous month, a gain that was unexpectedly low. Once again the latest macro data point dispensed a surprise, which is typical. This time it disappointed the crowd, and by more than a trivial degree. Some analysts will jump on the news as a dark sign. It may prove to be… in time. But the fact remains that private payrolls continued to rise by 2%-plus on a year-over-year-basis through last month. That’s in line with the annual pace we’ve seen in recent months. In fact, each of the last three monthly updates for private payrolls show annual growth rates of 2% or better—the best consecutive trio of annual changes since last year’s fourth quarter. In other words, nothing much has changed. The private sector is still creating jobs on a net basis and at the rate that’s prevailed for much of this year. If anything, the rate has improved a touch.
Daily Archives: September 6, 2013
The Past-Performance-Is-Bunk Warning Isn’t Quite Right
The topic of past performance, and how to think about it, requires some clarification. There are a lot of folks who advise us that we should ignore historical performance. It’s worthless, they argue. Case closed. I understand the motivation to embrace this extreme form of skepticism since it springs from a crucial problem in the wider world. Indeed, many investors look at a hot hand for a mutual fund manager, for instance, and blindly assume that they can easily join the party and reap the rewards. All too often that’s an assumption that’s destined for disappointment. But that’s not the same thing as saying that historical returns provide no value for projecting, analyzing and modeling expected returns.