Are jobs really coming back or does the labor data not make any sense?

The U.S. economy is roaring again now that states reopening. As a result of many people going back to work and businesses trying to return to some semblance of normalcy, the coming labor reports are going to be bullish.

In June, the U.S. economy created 4.8 million new jobs, lowering the unemployment rate to 11.1 percent. Both figures beat the market forecast.

So, is it all sunshine and lollipops? It is if you 100 percent believe the data and never question anything beyond the headline.

Zero Hedge has an interesting story that suggests the employment data could be broken.

The website writes:

Consider the continuing jobless claims time series, also also referred to as “insured unemployment”, and represents the number of people who have already filed an initial claim and who have experienced a week of unemployment and then filed a continued claim to claim benefits for that week of unemployment

By its very definition, insured unemployment is a subset of all Americans who are unemployed. In a Venn diagram, the Continuing Claims circle would fit entirely inside the “Unemployed” circle, which also includes Initial Claims, Continuing Claims, and countless other unemployed Americans who are no longer eligible for any benefits.

Alas, as of this moment, the definitionally smaller circle is bigger than “bigger” one, and as the DOL reported today, there were 19.29 million workers receiving unemployment insurance. And yet, somehow, at the same time the BLS also represented that the total number of unemployed workers is, drumroll, 17.75 million.

If you said this makes no sense, and pointed out that the unemployment insurance number has to be smaller than the total unemployed number, then you are right. And indeed, for 50 years of data, that was precisely the case.

This comes one day after the Federal Reserve’s Neel Kashkari noted that the headline unemployment rate does not spell out the reality of the situation, which is something contrarians have warned about for years.

But Wall Street has never been one to comb through the minute details of the data. Just how many jobs were created and give it to me.

This was apparent in the 400-point rally earlier in the Thursday trading session.