An Analysis of Friday's Jobs Report
Let's take a look at the numbers from Friday's jobs report.
The chart reveals the following points. First at the end of last year and the beginning of this year the economy was bleeding jobs. Four months ago the rate of job losses decreased from roughly 610,000 on average to about 225,000 on average. In other words, the pace of job losses is still decreasing which is good. However,
The unemployment rate increase .3% to 9.7%. The unemployment rate comes from the household survey which shows in increase in the civilian labor force of 73,000 and an increase in the number of unemployed of 466,000.
In addition,
The number of discouraged workers (persons not currently looking for work because they believe no jobs are available for them) appears to be topping out, as does
The number of people working part-time for economic reasons. However,
The number of marginally attached workers (individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months) is still increasing.
Now let's break down the length of time people are unemployed.
The number of people who are unemployed for five weeks and less has been decreasing since the beginning of the year.
But the number of people unemployed for 5-14 weeks increased. However,
The number of people unemployed for 15-26 weeks decreased and
The number of people unemployed for 27 weeks and longer increased but at a far slower rate.
Putting all of this together, we get the following picture.
1.) The rate of job destruction has decreased since the beginning of the year. Remember that at the end of last year the beginning of this year, the economy was losing 600,000 jobs per month. To expect that figure to turn around and print a positive number within 6-9 months is highly unrealistic. In fact, it is most possible that we'll see job losses through the next 3-6 months. But the pace of job losses is decreasing which is good news.
2.) The increase in the unemployment rate is bad news, plain and simple.
3.) The steady size of the number of people working part-time for economic reasons along with the possible topping out of discouraged workers is also good news as it indicates a possible topping of two categories of labor under-utilization.
4.) Two of the four time periods of unemployment showed improvement last month and the worst category (people unemployed for 27 weeks and longer) showed a far slower rate of acceleration.
5.) The increase in the marginally attached and the number of people unemployed for 5-14 weeks are bad developments.
Overall, this report showed improvement. The rate of job destruction is increasing, the number of people working part-time for economic reasons and discouraged workers appears to be topping, and the number people unemployed for two time periods decreased while the worst category showed a far slower rate of decrease.
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The question must always be: "Is the economy (economic system) going up or down?" It is going down. I question any serious stabilization of the economic system at any stable level of equilibrium. The banks are doing nothing except losing monies. Some of the big banks are playing big with risky loans and bets in the stock market, that has bought in some big money for Goldman Sachs. But the rest of the industry is not loaning monies because there are no qualified borrowers.
The fail-safe American economic system has failed. No amount of pump priming in the present colonial position of our economy will be of any permanent value. Our coordinated policy must be Federally created jobs in the millions (at minimum wage), graduated tax policy, and tariffs and corresponding industrial revitalization. Without such a program our country faces receivership and foreign dominance and management.
Shh and talk positive. The economy will hear you.
Finally looking at jobs, quite a few "howevers".
One of your previous blogs stated that we hit a bottom in the recession and you cited reasons why.
I still can't see any kind of a recovery with unemployment headed for or probably in double digit land.
The four week moving average remains at a level that is higher (!) than the peak of prior recessions. How green is this? I posted long ago that this recession would not be like prior recessions and it is indeed different. I stated that traditional recession fighting tools would be ineffective and/or inadequate. The lowering of interest rates and increased deficit spending in 2008 was ineffective. Now with a large stimulus and quantitative easing we get what I feel will be a temporary stabilization. Indeed it has taken $2.6 trillion in deficit spending over 21 months and the printing of at least $2 trillion dollars to bring us up to zero. The GDP owes at least 4 points to the stimulus and other accelerated spending and this is on top of the Governments’ normal 30% of GDP (States and Federal). The Government’s debt balloon has replaced the household debt balloon which replaced the dot com equity balloon which replaced Reagan and Bush One’s debt balloon.
The next few months will determine whether the economy can gain traction on its own. For now it’s being propped up with $5 billion per day of deficit spending. All of this merely goes into bandages and plasma to keep the patient alive. Nothing has been done to remove the bullets of one way trade policies, military imperialism, Wall Street’s corruption, labor’s death march or National solvency. Our problems are not being solved just kicked down the road and by such, made worse.
Ole-
"The GDP owes at least 4 points to the stimulus and other accelerated spending..."
This on top of 8 years of a bogus gdp that was propped up by massive borrowing (that Bush called income, not debt) and government spending on the wars, the Iraqi reconstruction, the Katrina mess, that was a level of Federal expenditure that would have made FDR cringe, all with lower levels of income due to the tax cuts for the wealthy.
The gdp is not a number we can believe anymore, and I think that Hale fails to recognize that.
In May of last year in a posting concerning Government numbers I questioned inflation and GDP. Spurious inflation data also “inflates” GDP. Using the non-seasonally adjusted inflation data I calculated GDP to be 1.8% lower than published. The revision this year of last year’s GDP numbers in that quarter showed it to be 1.6% lower than originally published. There are inputs that are used that seem to be illogical. For example, in 2009 Q2 imports fell faster than exports. The way these inputs are factored caused an increase in GDP of 0.9% (as I recall). Now falling exports and falling imports show an economy that is contracting; at least by simple intuition. However it translated into an expansion of 0.9%. The owners’ equivalent rents (that’s what homeowners would pay themselves if they rented their houses to themselves) account for 70% of the rental input into GDP. Imputed incomes (the fees that are waived on your checking account if a certain balance is maintained for example) also are added to GDP. I could be misinformed but I think the numbers are padded.
I'd say that until people get jobs, there will be no recovery because 17% of 67% of the economy will not buy anything. In most businesses, that 12% is the entire profit that keeps the business afloat. You take that profit out and the business will not survive.
Couple of items....You fail to mention the BLS' U-6 number, though you referred to its componenets. the U-6 went from 16.3% to 16.8%; hardly a good trend.
let's look at other details in the BLS report that the cnbc-ers (Hal, you're becoming one of them) don't talk about. In the BLS Household survey, the "population and payroll-adjusted household number" sank by over 1 million jobs...this has never happened before.
from BLS, manufacturing jobs printed a minus 63,000 which is the lowest since 1941 (not a typo).
This is particularly interesting in that the ISM finally printed a 50+ number, which indicates expansion. There is a huge disconnect here.
Lastly, the initial claims for unemployment insurance continue to hover around the mid 500,000 mark, currently at 570,000. For about the 20th time or so in a row, the prior period revisions were adjusted downward (seems the Labor dept is at least consistent in this regard), this time june and july were adjusted for an additional 49,000 claims. For the past several weeks we have heard the green shootists proclaiming that the 4 week rolling average has been decreasing: well, that changed and the 4 week average for initial unemployment claims is now increasing.
i wish this mess was over . sad to say, we are in for a multi year mess and any "recoveries" will be short lived and we will see more of a depression scenario than an expansionary one.
There would have been higher jobs losses in August than in July had not the July job numbers been revised down. The household survey showed 392,000 job losses.
Looks like Bonddad missed that the Household Survey showed that "wage & salary workers (the ones that work at companies, big and small) plunged 637,000 — the largest decline since March." The job gains were in the self-employed category, and those folks are probably not making any money either.
Bonddad says, "Remember that at the end of last year the beginning of this year, the economy was losing 600,000 jobs per month. "
January showed the largest job loss because the birth/death model subtracted 356,000 jobs that month. The birth/death model always subtracts a large amount of jobs every January then adds them for every other month in the first half of the year. This is like a seasonal adjustment. Next January will be horrible too, so watch out.
This is also very bad: "..manufacturing employment fell 63,000 in August, to its lowest level since April 1941 (!), despite the inventory replenishment in the automotive sector and all the excitement over the recent 50+ print in the ballyhooed ISM index."
"the Bureau of Labor Statistics also publishes a number from the Household survey that is comparable to the nonfarm survey (dubbed the population and payroll-adjusted Household number), and on this basis, employment sank — brace yourself — by over 1 million, which is unprecedented. "
dugan...please give Dave Rosenberg (best...economist....out there) credit as you quoted directly from him thanks.
From the BLS the jobs lost in August were 216,000 which includes an input of plus 118,000 from the B/D adjustment. The prior two months saw adjustments totaling additional losses of about 50,000 jobs.
The household survey indicated employment fell by 392,000 jobs in August.
The total number of unemployed increased by 466,000 in August while the labor force increased by 73,000 yielding an unemployment rate of 9.7%.
If three different numbers compiled by three different methods describing the same event in August wasn’t confusing enough then how about adding the “adjusted household survey employment” for August at minus 1,044,000. That’s seasonally adjusted of course.
http://www.bls.gov/web/ces_cps_trends.pdf
Pick a trend, any trend and I can find something to support it, refute it or just say that more data is needed. Next month I wouldn’t be surprised if the B/D adjustment was 350,000 yielding a positive jobs number while the household survey indicated that unemployment increased by 350,000 and the labor force increased or decreased by 500,000 yielding an unemployment rate of either 10.2% or 9.2%!
I believe the payroll survey counts each job, while the household survey counts each person. So the payroll survey could register two to three part-time jobs for each person who finds work. Some guy, for example, could get hired by Pizza Hut for 15 hours a week, by Denny's for another 15 hours per week, and for a morning paper route, and the payroll survey would add three jobs while the household survey would add just one.
Thanks for the charts and analysis.
Unfortunately, the businesses are still sending jobs overseas and cutting workers to maximize profits. This is a perfect time for the greedy to do more to sabotage the American people.
I wish there were charts for that.
Time to get serious about the new, green economy.
"Sending jobs oversees" is having no effect on employment. That number is absolutely tiny compared to the size of the labor force. About companies cutting workers, many are doing so to stay in business, while many are doing so because the employees have no actual work to do. About the "green economy", right now there is a green glut. Natural gas prices are so low that I find it hard to believe that wind and solar will see much growth going forward. The only game changer would be a move to natural gas vehicles. Cap and trade will damage the economy, not help it.
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