August 2013 Jobs Report: "Good" News That Isn't

Well the August Jobs Reports are in, and, as usual, the numbers were not as expected. From Reuters:

U.S. employers hired fewer workers than expected in August and the jobless rate hit a 4-1/2 year low as Americans gave up the search for work, complicating the Federal Reserve's decision on whether to scale back its massive monetary stimulus this month.

Nonfarm payrolls increased by 169,000 jobs last month, the Labor Department said on Friday, falling short of the 180,000 Wall Street had expected and adding to signs that economic growth may have slowed a bit in the third quarter.

CNN points out that the growth for June and July was revised downwards by 74K jobs but they also highlighted:

Meanwhile, the unemployment rate fell to 7.3%, but the decline came for the wrong reasons, as 312,000 people dropped out of the labor force. Only 63.2% of Americans now participate in the labor force -- meaning they have a job or are looking for one. That's the lowest rate since August 1978.

My bold

Reuters also notes the drop in participation in the workforce in a sidebar article here:

The share of Americans aged 25 to 54 who had jobs or were looking for work dipped to 81 percent in August, the lowest level since 1984, a time when fewer women were in the workforce. In another worrisome sign, the share of these prime-age workers who actually had jobs has stagnated at around 76 percent since early last year, well below its 2003-2007 average of around 79 percent.

Most of the reports in TradMed outlets have also commented on the impact of the (lack of) jobs reports on the Federal Reserve "stimulus" (from McClatchy):

The Fed has been purchasing, at a pace of $85 billion a month, government and mortgage bonds in a bid to drive down lending rates in the economy and force risk taking by investors. They must seek better returns than they have been getting on bonds, thus juicing the stock market and commodities such as crude oil and a range of farm products. Fed Chairman Ben Bernanke, who is concluding his term, wants to begin weaning the economy off of this support before his successor takes over.

Of course, this "stimulus" has not really helped the millions of long term un and underemployed, even though a large part of the Federal Reserve "mission" is maximizing employment.

The stock market continues to show its disconnect with most of the economy as it has gone up in response to the jobs report number (via Bloomberg):

U.S. stocks rose to a two-week high as slower-than-forecast jobs growth eased concern about reductions in Federal Reserve stimulus, overshadowing an escalation in tension between America and Russia over Syria.

So, because the Fed may not be able to stop its "stimulus" (read: easy money for the banksters and Wall St), stocks are going up in celebration. Yeah, that makes sense. After all, the casinos always like to show their appreciation for the marks customers.

Bloomberg has an opinion piece up by a Justin Wolfers, who says to concentrate on the revisions. Of course, he also seems to think public sector jobs are not "real" jobs when it comes to the economy:

There is one further detail worth emphasizing. While there were 74,000 jobs revised away this month, more than half were in the public sector, suggesting that we shouldn't be too hasty in marking down expectations of ongoing private-sector employment growth.

Now, I am one of those who refuses to give up my search for full time employment, preferably in my chosen field of Software Quality Assurance. I am a stubborn SoB and even when I keep receiving discouraging results, I will not fold. I'm sure many people would claim that I am being unrealistic in my desires to find work in my field. But am I any more unrealistic than the CEO of Morgan Stanley who declares:

...there’s almost no chance of another financial crisis like the one that endangered his firm five years ago.

Am I any more unrealistic than Cass Sunstein who sings the praises of a recently deceased economist who:

... has also helped reorient thinking about regulation in general, in part by emphasizing the importance of private flexibility, cost-benefit balancing, and careful, dogma-free empirical analysis (for which Coase made many pleas).

Ah, good ol' "cost-benefit balancing." Make the earth uninhabitable, pay a "cost-of-doing-budiness" slap on the wrist fine and everybody's happy, right?

I have a headache from the stupid we ALL display. It's just that some folks' stupid has a wider audience than others and their wrongness impacts millions whereas my stupid affects me and my cat.

And because I can:

It Still Sux to be Correct

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Well, today's Jobs Report from the BLS for June 2011 is out and the news is not good. In this post from Tuesday (July 6), I had predicted:

My guess is that the private sector jobs (the ADP number) will be in the 50K range while the overall economy will be 20K to 25K max.

As I admitted in this post from yesterday (July 7), I was off fairly badly on my prediction for the ADP number. Unfortunately for the economy, I was a hell of a lot more accurate on the BLS number than the supposed expert economists (via Reuters):

U.S. employment growth ground to a halt in June, with employers hiring the fewest number of workers in nine months, dampening hopes the economy was on the cusp of regaining momentum after stumbling in recent months.

Nonfarm payrolls rose only 18,000, the weakest reading since September, the Labor Department said on Friday, well below economists' expectations for a 90,000 rise.

Many economists raised their forecasts on Thursday after a stronger-than-expected reading on U.S. private hiring from payrolls processor ADP, and they expected gains of anywhere between 125,000 and 175,000.

The unemployment rate climbed to 9.2 percent, the highest since December, from 9.1 percent in May.

I Was Right, the "Experts" Were Wrong, So Why Am I the Underemployed?

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Yesterday in this post, I predicted today's Jobs Report from the BLS would show a far smaller increase in jobs for May than was being predicted by the 'economists' interviewed by the various media organizations. The 'experts' were predicting 170k private sector jobs with 150k increase overall. My prediction was for 42.5K jobs overall. Guess who was closer to being correct? (via Reuters):

The U.S. economy may be in for a prolonged period of soft growth as employers hired the fewest number of workers in eight months in May and the unemployment rate rose to 9.1 percent.

Nonfarm payrolls increased 54,000 last month, the Labor Department said, fewer than the most pessimistic forecast in the Reuters survey and just over a third of what economists had expected.

...snip...

The private sector, which has shouldered the burden of job creation added just 83,000 jobs, the least since last June, while government payrolls dropped 29,000.

Adding to the gloomy labor market picture, about 39,000 fewer jobs were created in March and April than previously estimated.

...snip...

Payrolls had been expected to rise 150,000, with private employment gaining 175,000.

This is not the first time I have been more accurate than the "experts". How is it possible for someone like me to be more accurate in predicting the numbers than the so-called expert economists? Well, I'll take a WAG and say it might be because I'm not trying to force reality into a pre-conceived computer model designed to reinforce an ideological position based as much on wishful thinking as anything else. Plus, I am actually living the life of the long term un and underemployed.

More Jobs Yet Falling Further Behind

I am afraid I may be starting to think like an economist. Now why would I be afraid I'm becoming an economist? Because I was surprised when the March Jobs Report came out from the Bureau of Labor Statistics and showed 216K new jobs for March, an increase of 15K even over the ADP report from Wednesday. From Reuters:

(Reuters) - U.S. employment recorded a second straight month of solid gains in March and the jobless rate fell to a two-year low of 8.8 percent, underscoring a decisive shift in the labor market that should help to underpin the economic recovery.

Nonfarm payrolls rose 216,000 last month, the largest increase since May, the Labor Department said on Friday. The gain built on the 194,000 new positions added in February.

David Dayen at Firedoglake News has done his standard excellent job of dissecting this report. And as he does, he manages to puncture the coming cheereladers, even before they get started:

And where did these new jobs come from? About 1/2 of the total came in the service sector. 29,000 hires came from temp work. Professional and technical services increased by about 35,000, and manufacturing and mining increased slightly. Health care was also a continued strong sector.

The public sector continues to be a drag on growth. It edged downward again, as $10 billion in budget cuts for the year, enacted in two stopgap spending bills, took effect. Since the peak in September 2008 (notice the time frame), public sector jobs have decreased by 416,000. And with expected cuts coming at the state and federal level, more layoffs are on the way.

I would like to reinforce a couple of his points here. Out of 216K new jobs, nearly half are in the services sector. 29K are in temp work. It is the expected cuts in public sector jobs at all levels that had me anticipating a far lower number of new jobs for March. The complete BLS News Release is here.

Results of Middle Class Destruction

I would like to start today by pointing out an error I made yesterday. I assumed that since March was not finished with us, that the ADP jobs report for March would not be issued until next Wednesday. I guess ADP figures the last few days of the month don't matter so long as they get a report out two days prior to the BLS report for the overall economy issued on the first Friday of the new month.

From Reuters on today's (Wednesday, March 30) ADP report:

(Reuters) - Private employers added 201,000 jobs in March, while February's figure was revised down slightly, a report by a payrolls processor showed on Wednesday.

The data was largely in line with expectations. Economists surveyed by Reuters had forecast the ADP Employer Services report would show a gain of 203,000 jobs. The report is jointly developed with Macroeconomic Advisers LLC.

February's figure was revised down to 208,000 from 217,000.

"Basically the number was very much in line with expectations and shows that the labor recovery continues at a reasonable pace," said David Katz, chief investment officer at Matrix Asset Advisors in New York.

Of course, Mr Katz is not accounting for the loss of jobs in the public sector. And there have been job losses in the public sector this past month.

But there have been a few articles I've seen during my daily surfing of the toobz, from today and earlier, that tell us a bit more about the state of the economy than the ADP report and the words of Mr Katz can tell us.

First up is this article from today's Hartford Courant on New London, CT schools that are now providing free suppers (to go with free breakfasts and lunches) for students from low income families. From the article:

While many schools across Connecticut provide free or reduced lunch and breakfast to students from low-income homes, New London was the first to provide supper, too. Bridgeport recently launched a similar program, and Norwich is considering it.

In New London, where 85 percent of students live in poverty and 60 percent come from homes with single parents — some working multiple jobs — the free supper has already proven popular. Since it started a month ago, the number of diners has doubled to as many as 120 on some days.

...snip...

Besides Connecticut, the federally funded program is offered in 11 other states and Washington, D.C. It is aimed at schools where at last 50 percent of students qualify for free or reduced lunch programs. In Connecticut, 33 school districts have schools fitting that description.

My bold. Note that these are children where parents are working - and still not making enough to be considered above the poverty line. From the 2011 HHS guidelines, for poverty, a family of three (a single mother and two children), the poverty line is $18.5k per annum. This works out to $8.90 per hour for a 40 hour week, 52 week year. The current federal minimum wage is $7.25 per hour (Connecticut's minimum wage is $8.25) for the math challenged. Since New London, CT is also the home of the Naval Submarine Base New London, I wonder if there are any active duty families affected here?

January Jobs Report(s) Part II

The official Department of Labor Bureau of Labor Statistics employment numbers for January 2011 are out and guess what? Same shit, different day.

According to the report (via Reuters) the jobs increase for January 2011 is 36K. This is compared to Wednesday's report from ADP (from my post on Wednesday), that the private sector created 187K jobs in January. Since the BLS number includes public sector as well as private sector, it looks like governments at all levels shed approximately 150K jobs. The same thing as happened last month, where the number of private sector jobs was initially reported as 297K (later downgraded to 247K) while the overall number from BLS was 103K.

Of course, what will be reported heavily is that the "unemployment rate" has "dropped" to 9% from 9.4%:

There was some good news in the employment report as the jobless rate fell to 9 percent from 9.4 percent in December. The household survey from which the unemployment rate is derived showed the number of unemployed dropped by about 600,000 last month.

The unemployment rate had previously declined largely as a result of people giving up the search for work, but in January the labor force was unchanged, even after adjustments for updated population controls.

The reality appears to me to be that all the numbers are probably fudged and no one in any position to do anything or comment on it has a clue. As I said, same shit, different day.

January Jobs Report(s)

Well, the January Jobs Report that is issued by ADP each month, detailing the number of private sector jobs created the month before is out. Last month, the ADP report had this number at 297K new jobs. When the official Department of Labor Bureau of Labor Statistics report came out a couple of days later, the real number of jobs was pegged at 103K new jobs for the month. Of course, the difference is because ADP only evaluates private sector jobs while the BLS report details all jobs, including those in the public sector where a lot of state and local governments have been cutting jobs.

Today's ADP report (via Reuters):

The private sector added 187,000 jobs in January, compared with a downwardly revised 247,000 jobs in December, a report by payrolls processor ADP Employer Services showed on Wednesday.

The ADP figures come ahead of the government's more comprehensive January labor market report on Friday, which includes both public and private sector employment.

But ADP figures for December -- both initial and revised -- turned out to be much stronger than the government report showed, adding to doubts about the reliability of ADP as a predictor of payrolls.

Sometimes I Hate It When I'm Right

Last week when the Jobs Reports for December 2010 came out, I was a bit skeptical:

But you will pardon me if I'm a bit skeptical about this wonderful news. December is a time when there are a lot of short term hires due to the holiday season. I assume that ADP does make some adjustment for the seasonal factor and while 297K new jobs is definitely a good start, as I (and others) have noted recently, even if those jobs are something more than short term, minimum wage positions for the holidays, the odds are good that a lot of them are of the Perma-Temp fashion, with limited to no benefits. So I guess I'm going to hold off on the cheerleading the report.

Well, today (January 13) Initial Jobless Claims Report seems to bear out my skepticism. From CNN:

NEW YORK (CNNMoney) -- The number of Americans filing for their first week of unemployment benefits jumped sharply last week, two weeks after hitting a 2-1/2 year low below 400,000.

There were 445,000 initial jobless claims filed in the week ended Jan. 8, the Labor Department said in a weekly report Thursday.

That's up 35,000 from a revised 410,000 the previous week -- when jobless claims climbed back above 400,000 after falling below that mark for the first time in more than two years.

Last week's rise was bigger than expected. Economists surveyed by Briefing.com had forecast initial claims to edge up to 415,000 in the latest report.

Why Are Economists Always "Surprised?"

There I was doing my usual surfing of the news sites after my daily disappointment in the job search when I saw that the Weekly Report on Initial Jobless claims had been released as usual. And as usual, the "Economists were surprised":

NEW YORK (CNNMoney.com) -- The number of Americans filing for their first week of unemployment benefits unexpectedly fell for a second straight week last week, according to a government report released Thursday.

The number of initial claims fell to 420,000 in the week ending Dec. 11, down 3,000 from 423,000 claims filed the week before, the Labor Department said. It was the second lowest level of the year.

Economists surveyed by Briefing.com were expecting 425,000 new claims.

Now realistically, the difference between 425K initial jobless claims versus 420K initial claims is 1.2% which is probably within a statistically margin of error on the reporting. And I assume the faithful stenographers reporters are faithfully reporting and transcribing what they are told by the always faceless and nameless "economists," after all, we know they would never try to shade the facts on anything, right?

Trying to Make Sense of it All

Where to begin? Wednesdays seem to have a dearth of stories on Jobs, Unemployment, Underemployment and all the various ramifications of these.

But Thursday seem to bring an overabundance of articles on these topics.

First off was this little gem of a story from the AP via MSNBC on an Indian IT firm outsourcing Call Center operations to a prison. I'm just not real sure how to deal with these issues (outsourcing in general and outsourcing to prisons in particular) without sounding like a racist or xenophobe. So, we'll set this aside for a while and return to it on a later day.

Then there's the Weekly Job Report. This from Reuters probably offers what I consider the best presentation (Best being most true to reality, that is):

The number of U.S. workers filing for jobless benefits fell only slightly last week, highlighting the challenges facing the labor market, while import prices pointed to tame inflation, according to government data released on Thursday.

Initial claims for state unemployment benefits slipped 4,000 to a seasonally adjusted 444,000, the Labor Department said, though the number was still slightly above the 440,000 expected by analysts in a Reuters poll. The prior week's figure was revised up to 448,000.