Expert: Job Reports Missed Troubling Trend

Crossmark Global Investments, the Texas money management team, said last week’s jobs report had a giant hole in it.

Victoria Fernandez, the company’s chief market strategist, said the numbers failed to include the fallout from surging coronavirus cases.

“The data was collected through the middle of June,” the firm’s chief market strategist told CNBC’s “Trading Nation.”

“It was really the second half of June when we saw states like where I am here in Texas start to reverse their opening up plans,” she told the network. “That did not get captured in this number completely.”

Fernandez, whose company oversees $4.8 billion in assets, told the cable station that’s a big reason for investors to cool their expectations.

“People have to be prepared that we could see something that’s maybe a downside surprise when it comes to the July number,” she said.

Weakness in the economy will start showing up in the weekly data, Fernandez added.

Last week, President Donald Trump touted that the U.S. Labor Department reported that the nation’s economy added a record 4.8 million nonfarm jobs in June and that the unemployment rate fell to a lower-than-expected 11 percent.

“There’s not been anything like this, record setting,” Trump said at a White House press conference.

But as several states are putting reopenings on hold, Fernandez said there could be danger ahead.

“We look at jobs that are coming back, and yes, we had great gains in leisure and hospitality, in retail, in health, all of those were really strong numbers,” she said. “But those are all the same jobs that are going to be affected in states like California, Texas, Arizona and Florida as they all turn around their plans.”

As a result, the recent uptick in consumer spending could be derailed. “If you look at the four states … they’re about 30 percent of the U.S. GDP (gross domestic product) and some of the states that are opening up in the northeast are about half of that,” Fernandez told CNBC. “So, we’re going to have to see a lot more positive numbers in new states that are opening up to counteract the decline that we’re seeing elsewhere.”

Also, last week, the ADP National Employment Report found that private-sector employment increased by nearly 2.4 million jobs from May to June.

In June, the International Labour Organization, an affiliate of the United Nations, reported that COVID-19 shutdowns deprived the world’s workers of 480 million 40-hour-a-week jobs during the past three months.

The uncertainty has led Fernandez to caution investors. “You can be opportunistic in some of your holdings, but you have to be careful,” she said. “That consumption and that demand is really key.”