Saved By The Revision?

This week was supposed to be all about the inflation data, but the payrolls revision was just as revealing about the state of the economy. The data saved dovish investors who

now expect a rate cut by the Fed next week. This week's inspiration for the musings is the surprise hit T.V. show, "Saved By The Bell." Here’s some trivia about the show:

• The show aired in 1989 in prime time (reruns were aired on Saturday mornings) and ran for 4 years. The show was actually cancelled after each season, but syndicate shows on Saturdays were extremely popular with teens. In fact, at its height, it had more teen viewers than the number one show on television at the time - "The Cosby Show."

• Most viewers didn't know that the show is actually based on a Disney Channel show called "Good Morning, Miss Bliss." Only four cast members transitioned from the former Disney show to "Saved By The Bell" - Dennis Haskins (Mr. Belding), Mark-Paul Gosselaar (Zack), Dustin Diamond (Screech), and Lark Voorhies (Lisa).

• At different points in the run of the series, Mark-Paul Gosselaar dated all three of his female co-stars - Elizabeth Berkeley (Jessie), Tiffany Thiessen (Kelly), & Voorhies. Of the three, Voorhies was his steady girlfriend for at least three years. At one point, producers had to sit down and talk to the girls because there were times the three were not on speaking terms during shooting.

• Zack and Slater (played by Mario Lopez) were written as bitter rivals. Off-screen, the two actors were very close friends and remain so to this day. After season one, the writers sensed a good chemistry between the two actors and had the re-written as friends instead of rivals on the show.

• Famous cameos or appearances on "Saved By The Bell" include - Tori Spelling (Screech's love interest), Scott Wolf (recurring student at Bayside High), Casper Van Dien, & Denise Richards. Actors who read for a part or various parts of the cast include - Jennie Garth, Jaleel White, Jonathan Brandis, and Brian Austin Green.

• During episodes set in the Summer, the cast worked at a club called "Malibu Sands." Zack's love interest was Stacey Karosi, played by Leah Remini.

Here's what we've seen so far this week..

So Excited - So Scared. In a famous episode of "Saved By The Bell," Jessie Spano becomes dependent on "caffeine pills." She is confronted by Zack as she sings "I'm so

excited, I'm so excited, I'm so scared." Just prior to shooting, Berkeley was told her dog had just died, which helped her make the scene a little more realistic. Speaking of realistic, the September revisions to payrolls was eye-opening to say the least. More than 900,000 jobs were removed from the payroll data in the largest revision in history. Together with 2024, that's more than 1.7 million jobs that never existed. This caused futures on the next Fed rate decision to move even higher toward a 93% probability of a rate cut next week. However, it does underscore concern about the labor market - not to mention the Bureau of Labor Statistics. A revision of a couple thousand jobs per month (i.e., 24,000 per year) in an economy with more than 160 million workers is understandable. But, with this large of a revision over the past couple of years it's easy to see how the competence of the BLS would be in question.

With the revision in mind, the next question is should the Fed have been cutting rates all along in 2025? Had the Fed known about the disparity of jobs, it's easy to see how they should have cut rates. But, the job market overall, while weakness is evident, is not falling off the cliff. While Initial & Continued Jobless Claims have crept up a little, those metrics are still not at recession warning levels yet.

Saved By The Bell. The inflation data was a little mixed, but taken with the consumer data and expected GDP data for the 3rd quarter, the picture is set up well for a potential

rate cut next week. On Wednesday the Producer Price Index for August was released at a much lower rate (-0.1%) than what was expected (+0.3%). That pulled the year-over-year number for PPI down to 2.7% and last month's reading was revised lower from 3.3% to 3.1%. However, Thursday's release of the Consumer Price Index saw the August data higher than expected (+0.4% vs +0.3%). Most of the monthly increase was in the services components, airfare, and gasoline. Regardless, the year-over-year number for CPI is 2.9% - exactly where it was in December of last year (2.9%). While inflation has moved over the last 8 months, it still has not surpassed the historical average of 3.5%. This should provide a path for the Fed to cut next week.

Consumer spending remains strong as the Consumer Credit report released this week showed more than $16 billion in spending versus the expectation of $10 billion. In addition, Redbook Sales continue to be strong with +6.6% growth on a year-over-year basis (much higher than the 4.4% average). The Atlanta Fed moved their GDPNow estimate for Q3 back above 3% this week. The Unemployment Rate is at 4.3%, which is below the historical average of 5.7%. The pundits advocating for "stagflation" were disappointed this week. In order for stagflation to exist you need slow growth, high unemployment, and rising prices. Two of the three are still not present in the economy. That doesn't mean we will avoid stagflation, but for the time being the economy is on solid ground.

Enjoy the intro to the show, which I know some of you actually still know the words...

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