What The Jobs Report Really Means

All the anxiety over the ramifications of accelerating growth in the U.S. economy was washed away today by a lower-than-expected growth in jobs in March.

But, let's look at what might be behind those numbers before we fully hop on the bandwagon. By now, the legendary winter of '13-'14 in North America has left an indelible impression on our memories. While the 192,000 jobs the Bureau of Labor Statistics cites in its current release do not seem overly impressive, it is a number that nonetheless should be reckoned with.

The retreat of Old Man Winter was scarcely begun even two weeks into March. And, lest we forget, Europe suffered a terrible winter as well. Additionally, China's slowdown of the last two months also affects American job levels in the form of shipping, distribution and even bookkeeping. No goods = no shippers, distributors and no keeping track of the inventory.

As April wears on, the weather-related issues will have stopped altogether (unless something freakish occurs). And, it is but a short putt from 195K to 230K in job growth. Further, it's very close to 250K per month, which puts the U.S. on track to form 3 million jobs per year, a kind of magic number.

Yet, the unemployment rate remains elevated still at 6.7%. Many experts say this is because more people are again "looking for work." That is probably true. But we need to go more granular.

It's long been a media trope that Baby Boomers will be retiring in droves as they reach roughly 67. This does not seem to be happening in the numbers predicted.

In fact, research is showing that Boomers, instead of retiring at the rate of 10,000 per day are retiring at the rate of only 3700 per day. And, many of the jobs they are leaving do not immediately open up for, say, a junior level person, or even an intermediate. On top of that, most of those Boomers who are retiring right now are business owners, positions that are estimated by the BLS typically, and not surveyed directly. Naturally, many simply shutter their businesses and do not sell them.

However, probably more key to the continuing high unemployment rate is the now-emerging trend that many Boomers are "un-retiring." What's really happened is that Boomers - of all ages and not just those over, for example, 62 - are taking a "sabbatical" year or two. This happens for a variety of reasons. Regardless of the reason, these folks are back in the job market.

We discuss all this in depth because one of the mandates of the Fed is to get unemployment under control - promote job growth. If job creation has four gears like a car, we'd say that the American economy is right at the verge of going into third gear.

The Fed's other mandate is to keep inflation around 2% (by current, misguided standards).

Because of the unique nature of the Great Recession and the current demographics of the country, the Fed has not succeeded in the first task. It has succeeded all too well in the second task,

As you have probably thought by now, this affects the price of gold. A reassurance that the interest rate won't rise is very helpful to gold bulls.

As always, wishing you good trading,