What Will Tomorrow’s Unemployment Data Mean?

The unemployment figure that will be released tomorrow is fake. It leaves out so much data, such as discouraged workers and underemployed workers. According to shadowstats.com the real unemployment rate is well over 20% and the broadest measure of unemployment out of the Bureau of Labor Statistics is over 15%. Yet what all of these numbers have in common is that they all change at a relatively similar rate. So, while the number is misleading, the important part to watch is the change in unemployment number.

The expectation for tomorrow is a 0.1% increase in the unemployment number. If we get any significant change, I believe that it will be a significant decrease in unemployment. Looking historically at the data release, during times of rising unemployment the forecasts are consistently too low while during falling unemployment forecasts are too high. The current trend is for falling unemployment so I am expecting the forecast to be too high. Does this mean we will get a boost to risk appetite? Not necessarily, the numbers have to come in low enough for that to happen. A reading 0.1% lower than expected would not be market moving but if it is 0.3% or more off from the expectations, look for the markets to start buying risk.

On releases that differ by a large amount, we have seen the markets run with the news throughout the trading day, so it is not recommended to trade the event itself as the low liquidity makes the market very erratic. Instead wait for the release, and if it is a big enough surprise then look to follow the momentum.