As the impact of the 2008-2209 crash subsided the ‘mainstream media commentary collective’ created new buzz words and phrases to be contained in the revised popular lexicon. This list has seen the addition of anachronisms such as “TARP” and the writing into popular culture of “credit crunch” and “quantitative easing”. A “jobless recovery” duly took its place in the lexicon, heralded as a new paradigm as the equity markets, in Europe and the USA, began their massive recovery in 2010-2001, whilst the jobs market remained in tatters as circa nine million jobs were lost in the USA from 2007-2010.
The equities market recovery, some calling it a secular bear market rally, stalled in 2011, due to the huge sell off experienced in October 2011 as a consequence of the Eurozone debt crisis. Since December 2001 many indices have subsequently recovered their losses, in fact certain indices, such as the NASDAQ, have recently been printing eleven year highs.
Witnessing a genuine jobs recovery in the USA would be testament to the success of the various: bailouts, rescues and quantitative easing measures put in place since 2008 and on Friday the latest NFP figures suggested a fall in unemployment numbers. Unemployment has now fallen from circa 9.5 to 8.4 bolstered by the creation of circa 245,000 new jobs in December/January. This jobs news, combined with the upward correction in the main indices and markets in the USA, has been heralded by some market commentators as the USA finally turning a corner. But how much store can we put behind these latest job numbers and is the stock market rally everything it seems?
Let’s take a few minutes to put the latest jobs numbers under the microscope in order to test their validity, then tomorrow we’ll analyse the rise in the equities market in order to establish if there is a recovery and if so whether or not it’s genuinely underpinned by a “jobs recovery”..
The headlines screamed “USA unemployment falls to 8.4%” on Friday 3 Feb., with circa 245,000 jobs added in December. This was a huge discrepancy, over and above the circa 130-150K anticipated by the likes of Bloomberg and Reuters, and many commentators had been suggesting that the addition of circa 40,000 temporary courier jobs over the Xmas holiday period should be taken into consideration when analysing the new figures, therefore a figure of 100K couldn’t be ruled out.
It’s fair to say that the job print announced on Friday took everyone in the mainstream media by surprise and from a human perspective who couldn’t fail to be delighted if circa 250,000 American adults, in a population were circa 46,000,000 receive food stamps*, had found employment in a one month window.
*October 2011, 46,224,722 Americans were receiving food stamps. In Washington, D.C., and Mississippi, more than one-fifth of residents receive food stamps. Recipients must have at most near-poverty incomes to qualify for benefits.
Projecting that new jobs figure forward the circa nine million jobs lost since the onset of the great recession, with apparently three million jobs added since, would see the recent 2007 jobs ‘peak equilibrium’ restored inside three years. However, the numbers do not hold up to a thorough examination. What’s worse many analysts, these are serious analysts who aren’t the ‘churnalists’ seduced by sound bites and press releases, are now beginning to question the probity of the figures. Some are now dismissing the jobs figures as thinly veiled government propaganda, suggesting that the BLS, (the Bureau of Labour Statistics), has been ‘got at’ and is now exposed as an Orwellian ‘ministry of truth’ govt. apparatchik ridden propaganda machine..
In order for Obama to get the unemployment rate to negative by election time, all he had to do is to crush the labor force participation rate to about 55%.
The Labor department, the BLS has done just that, as of Friday’s jobs’ report the people not in the labor force exploded by an unprecedented record 1.2 million. That’s right, 1.2 million people have simply dropped out of the labor force, disappeared “off the grid” inside one month. So as the labor force increased from 153.9 million to 154.4 million, the non institutional population increased by 242.3 million, meaning that those not in the labor force surged from 86.7 million to 87.9 million. The civilian labor force in America actually tumbled to a fresh 30 year low of 63.7%, the labor department is systematically eliminating nearly half of the available labor pool from the unemployment calculation. As for the quality of jobs, as the withholding taxes number shows year on year, the US is replacing high paying jobs with low paying jobs.
Unemployment In The USA
Total population in the USA is 311.59192 million, 46.7 million people are over 65, 74.8 million are under 18, 11.5 million are at college, a total 133 million.
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- Working age population – 178.59 million
- Number employed – 140 million
- Unemployed – 38.59 million
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The percentage of unemployed is therefore circa 21.6%. This does not take account people over 65 who are still working and those working part time. There’s also a growing ‘class of workers’ whose working conditions and data isn’t showing in the statistics, part-timers. The great recession has forced millions of full-time workers to accept the second-class status of lower pay and near-zero benefits. Indeed, involuntary part-time employment has doubled in the past five years to 8.4 million, while the total number of part-timer workers has swollen to 27 million.
But perhaps the most scandalous data (and glaring fault) contained in Friday’s job figures emanating from the BLS were in the numbers employed month on month.
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- Numbers employed December 2011 – 140,681,000
- Numbers employed January 2012 -139,944,000
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There are 737,000 fewer people employed in the USA than a month ago. yet the headline figure suggested that circa 250,000 and found jobs. Adjusting the numbers using the seasonal adjustment trick won’t wash in future, not when there’s many analysts who’ll immediately look past the headline number to attempt to establish the truth. The danger for the BLS is that if they continue down this road their data may quickly become regarded as useless, and once that credibility is destroyed it’ll never be recovered.
“Comment is free but facts are sacred.” – Charles Prestwich Scott (26 October 1846 – 1 January 1932). British journalist, publisher and politician.
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