In 1969, The Rolling Stones gifted us their 10th studio album, Let It Bleed. Tucked away as the final track, “You Can’t Always Get What You Want” started life as a B-side to “Honky Tonk Women” before becoming an anthem for an entire generation. Here’s the kicker: this iconic track never actually hit number one. In fact, four years later, when it was finally released as a standalone single, it peaked at a rather humble #42 on the Billboard 100. And yet, even in my bourbon-addled state, I maintain it’s one of the greatest songs ever written by one of the greatest bands of all time.
My own initiation into this masterpiece came at age 13, during The Big Chill‘s famous funeral scene. “You Can’t Always Get What You Want” was a profound exploration of loss, disillusionment, protest, drug use, and the bitter pill of acceptance. Idealism meets reality. Growing up. Oh, and there was some fella named Mr. Jimmy at a Chelsea drugstore.
Mortgage-land’s groundhog day
For the past three years, those of us toiling in Mortgage-land have been singing a slightly less rock ‘n’ roll version of that very same tune. We’ve been slogging through a housing recession with no particular end in sight, clinging to every inflation report, Fed meeting, and bond auction in hopes they will lead to sustainably lower rates and improved affordability for our clients. To that end, the disillusionment created by recurring monthly government reports has led me to blow a 50-amp fuse more than a few times. Which brings me to last Thursday’s labor data.
Mortgage rates had finally seen some sustained improvement, having reeled for months in the wake of April’s jumbo-sized tariffs. It took a grueling three months just to claw our way back to April 2nd levels, and we stood poised to launch into the best rates of 2025. Optimism in our hearts, a healthy dose of cynicism in our heads. Then, 8:30 AM ET on July 3rd, the nonfarm payroll report dropped.
All hope for lower rates evaporated faster than a politician’s promise. Affordability returned to its usual uninspiring levels as we slunk off into Independence Day weekend, feeling decidedly less independent. Meanwhile, bond traders shut down early and slid into their BMWs for the holiday.
The government’s job creation… “miracle”
As you’ve probably figured out by now, the prime suspect in that payroll report was government job creation. The irony is so thick, you could spread it on toast. Private sector employment managed a measly 74,000 increase, falling well short of the 110,000 forecast. But then, voilà! Government jobs, particularly in state and local education, magically lifted the total to 147,000. That’s right, roughly half of the total nonfarm payrolls number was courtesy of the public sector. Thumping the consensus estimate by a whopping 33% doesn’t exactly scream “recession,” does it?
Or does it?
The truth behind the numbers: Seasonal shenanigans
A quick dive into Table B-1 of the BLS’s raw, “not seasonally adjusted” data paints a completely different picture. It turns out, state and local government education didn’t actually contribute meaningfully to that 73,000-government job increase in June. In fact, these categories managed to subtract a staggering -542,400 jobs in a single month! Yes, you read that correctly. More than half a million jobs vanished from just these two categories. So, what in the h*** is going on?
Seasonal Adjustments. Ah, the beloved statistical wizardry employed by the BLS, derived from the US Census Bureau, designed to “smooth out the data” during predictable, recurring fluctuations. Turns out, June is a known period for teachers and other education employees to, well, disappear from payrolls. And just like that, our half-million-job disappearance miraculously transformed into a respectable +63,500.
The unemployment rate experienced a similar, albeit less dramatic, bit of statistical misdirection. The headline number ticked down from 4.2% to 4.1%. Cue the predictable headlines: “Unemployment improving! Labor strengthening! Pop the champagne and cancel those recession calls!” But here’s the inconvenient truth: the ranks of the unemployed only count if they’re actively looking for work. And in June, the Labor Force Participation Rate decided to take another dive, hitting 62.3% – a figure we haven’t seen since December 2022.
Had that rate simply held steady, unemployment would have risen to 4.25%, which, by the laws of rounding, would have been reported as 4.3%. Now imagine the headline: “Unemployment rises as labor softens.” How would stocks react? Bonds? Mortgage rates? Affordability? I’d bet on a very different, far less celebratory story.
The economic crystal ball: Cracked and cloudy
We get the data we get. I understand. I can join the “demonstration” and take my fair share of abuse. I also understand this statistical sleight-of-hand is a long-standing practice, an art form of deception. And I know my anger alone won’t change the data… until it does.
The absurdity of Owner’s Equivalent Rent (OER) in the CPI number, the ridiculous notion of counting part-time gigs as equivalent to full-time jobs, abysmal survey response rates, and the baffling inclusion of government employment data as a true measure of labor strength. There’s so much distortion in our economic reporting that no one can definitively say if we’re expanding, contracting, recovering, or simply withering away. It’s spin over truth. Anyone remember truth?
So, consider this piece for what it is: a humble attempt to shine a light through the shadowy manipulation (whether intentional or not) of our nation’s economic reporting. I never cared so much before, because frankly, it never mattered so much.
Mark Milam is the founder Highland Mortgage.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
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