The Federal Reserve, much like a corporation, simply examines jobs, unemployment, and participation pools as mere numbers. If 113,000 jobs were actually created in January, not just the seasonal adjustment, high-fives would be given all around and Janet would truly be the hero of the day. However, even if we put faces on those jobs and realizing that making a latte, flipping a burger, or declaring “welcome to Walmart” is not exactly what the job market was all about in our country for decade after decade, the numbers still looked really good. Congratulations, Janet.
In 1991, the beloved Eastman Kodak Company — headquartered in my former neck of the woods, Rochester, NY — implemented a program designed to make their workforce feel good about themselves. The employees were not to be fired or discharged; the workers were simply being “downsized.” That word had a much softer feel and I’m sure that some psychological numbers cruncher somewhere said it would do a lot for the morale for those who had just lost their jobs. Unfortunately, bottom line corporate decisions and Federal Reserve policies are predicated only on numbers and words — humanity tends take a back seat.
For corporations today it’s all about the share price of their stock, essentially driven by earnings per share. Thus, company buybacks, reducing outstanding shares, is certainly one technique that comes into play. The other method, and most obvious, is reducing head count, applying tactical strategy, and downsizing, but of course it’s never simply “firing.” Dell recently “let go” 15,000, Texas Instruments “reduced” by 1,500, and fast food chains simply “cut” their employees work schedules to less than 30 hours per week, but there is simply no “firing” here.
While they watch the unemployment rate plummet, central bankers are encouraged to open entire cases of Dom Pérignon, but when we look closer and see long lines at the food bank, we realize that we’re only viewing the numbers and there’s a definite separation from reality. Moreover, the number crunchers will attempt to tell you the economy is continuing to roll and that the “faceless” economy is steadily getting much healthier.
Janet Yellen, along with the rest of the Federal Reserve and corporate number crunchers, will continue to scrutinize their daily numbers without any clue that behind those numbers are actual people. Indeed, real individuals who are vitally dependent on the decisions made, and regrettably, these number crunching conclusions are based not on blood, sweat, and tears, but only on the bottom line and the most recent numbers.