Latest US Jobs Report ... disappointing despite 'sleight of hand'
a couple of different 'takes' ... beginning with 'upbeat' MarketWatch ... from
(snip)"WASHINGTON (MarketWatch) — After three straight months of pretty good job growth averaging nearly 250,000, the weaker-than-expected March employment report was certainly disappointing, with just 120,000 net new jobs created.
Seemingly the best news in the report -- the decline in the unemployment rate to 8.2% -- wasn’t good news at all, because the decline was entirely due to people dropping out of the labor force. The labor-force participation rate fell back to 63.8%, just a tenth of a percentage point above a 29-year low
The report shook up investors a little. U.S. stock futures lost ground, as did the dollar. Bond prices rose. Talk about the Federal Reserve riding to the rescue resurfaced, as it always does with each glint of economic weakness. Read our coverage of the bond market.
And, as always, the politicians milked the report for everything they could.
Despite the weaker tone, however, the March jobs report wasn’t a game changer. By itself, it wasn’t weak enough to push the Fed into action with another Operation Twist or a new round of bond buying. It didn’t signal that the economic recovery has derailed. It doesn’t guarantee Mitt Romney’s election.
We can’t repeat it enough: Looking at one month of data in isolation is foolish. It’s the trend that matters, not one data point. Context is crucial.
Here are a few reasons to think the March report, while stinky, wasn’t a total disaster:
— The weather. Payrolls in December, January and February were boosted by unseasonably warm weather across much of the country. Fewer layoffs in January mean fewer people rehired in March.
— Most industries are hiring. Of 266 different industries, 60% were adding jobs in March. There were large losses in just a few industries: General merchandise store jobs fell by 32,000, building construction jobs fell 11,000, and temp-help jobs dropped by 7,000.
— Government hiring. After losing 265,000 jobs in 2011, layoffs in the public sector have slowed. In March, government employment fell by just 1,000 after a 7,000 gain in February.
— The trends are still positive. Over the past three months, payrolls are up an average of 212,000. Despite a drop in March, employment growth as measured by the separate household survey is even stronger, at 415,00 per month over the past three months. And despite the drop in March, the labor force has grown by an average of 273,000 per month over the past three months.
— The broadest measure of unemployment is down. The U6 unemployment rate, which includes all those who are actively looking for work as well as discouraged workers and those resigned to part-time jobs, fell to 14.5%, the lowest of Barack Obama’s presidency. Read the full report on the BLS website.
The March jobs report was weak, no doubt, but we’re used to disappointing jobs reports by now. All in all, it wasn’t terrible.(snip)
Followed by the more 'look under the hood' oriented Mike Shedlock ... from
(snip)"Nonfarm Payroll +120,000, Unemployment Rate Fell .1 to 8.2%, Record 87,897,000 "Not in Labor Force"
Quick Notes About the Unemployment Rate
•US Unemployment Rate dropped .01 to 8.2%
•In the last year, the civilian population rose by 3,604,000. Yet the labor force only rose by 1,315,000. Those not in the labor force rose by 2,289,000.
•The Civilian Labor Force fell by 164,000.
•Those "Not in Labor Force" increased by 310,000. If you are not in the labor force, you are not counted as unemployed.
•Those "Not in Labor Force" is at a new record high of 87,897,000.
•By the Household Survey, the number of people employed fell by 31,000.
•By the Household Survey, over the course of the last year, the number of people employed rose by 2,270,000.
•Participation Rate fell .1 to 63.8%
•Were it not for people dropping out of the labor force, the unemployment rate would be well over 11%.
Over the past several years people have dropped out of the labor force at an astounding, almost unbelievable rate, holding the unemployment rate artificially low. Some of this was due to major revisions last month on account of the 2010 census finally factored in. However, most of it is simply economic weakness.(snip)
(snip)"In the last year, the civilian population rose by 3,604,000. Yet the labor force only rose by 1,315,000. Those not in the labor force rose by 2,289,000.
That is an amazing "achievement" to say the least, and as noted above most of this is due to economic weakness not census changes.
Decline in Labor Force Factors
1.Discouraged workers stop looking for jobs
2.People retire because they cannot find jobs
3.People go back to school hoping it will improve their chances of getting a job
4.People stay in school longer because they cannot find a job
Were it not for people dropping out of the labor force, the unemployment rate would be well over 11%."(snip)
(snip)"The official unemployment rate is 8.2%. However, if you start counting all the people that want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.
U-6 is much higher at 14.5%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.
Grossly Distorted Statistics
Given the complete distortions of reality with respect to not counting people who allegedly dropped out of the work force, it is easy to misrepresent the headline numbers.
Digging under the surface, the drop in the unemployment rate over the past two years is nothing but a statistical mirage. Things are much worse than the reported numbers indicate.
Note the drop in U-6 unemployment this month as the Civilian Labor Force fell by 164,000. This is beyond statistical noise, to the point of pure statistical bullsheet."(snip)
Re: Latest US Jobs Report ... disappointing despite 'sleight of hand'
Not to mention all the people who are continuing to look for jobs but have exhausted unemployment and aren't counted. or those who are underemployed. I know several former professionals working at McDonalds and Wal-Mart and jobs like that.
Re: Latest US Jobs Report ... disappointing despite 'sleight of hand'
Maybe we're turning into France?
I do think, on a personal level, people are being more generous with their resources with friends and family, to the point where, like France, we can actually sustain a higher level of structural unemployment. Sure, in a Darwinistic utopia, unemployment would be economically fatal, but maybe in this "new normal," it shouldn't be viewed the same way.
If that twenty-four year-old from a rich family who used to be forced to go get a job so she can experience "real work" is now allowed to "find herself," do volunteer work, or seek a greater purpose in life, I'm not sure that's such a bad thing? Call it "individual socialism."
I refuse to believe the world is just going to collapse on the basis of data alone. Last time I checked, the highways were still crowded, Starbucks still had long lines, etc. Even U-6 is down from its peak.
If there is a silver lining in all this, I believe it is this.
Re: Latest US Jobs Report ... disappointing despite 'sleight of hand'
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If that twenty-four year-old from a rich family who used to be forced to go get a job so she can experience "real work" is now allowed to "find herself," do volunteer work, or seek a greater purpose in life, I'm not sure that's such a bad thing? Call it "individual socialism."
True for those from a rich family, but what about the other 99.9% ?
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people are being more generous with their resources with friends and family, to the point where, like France, we can actually sustain a higher level of structural unemployment.
Again, true in cases where 'private' resources are actually being shared. Obviously this does not apply to the nearly 20% of French or Americans where the shared resources are provided via gov't wealth transfer i.e. food stamps, extended unemployment benefits, subsidized rent and utilities, medicaid etc. Indeed this gov't wealth transfer can sustain a higher than average rate of unemployment. However, the gov't wealth transfer itself can only be sustained as long as A. foreign lenders are willing to provide new funds at 'affordable' interest rates for the gov't to spend in excess of actual tax revenues, and /or B. the most productive members of the French or American economies are willing to 'sit still' and pay ( much ) higher taxes.
Re: Latest US Jobs Report ... disappointing despite 'sleight of hand'
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Originally Posted by
Melonie
True for those from a rich family, but what about the other 99.9% ?
Again, true in cases where 'private' resources are actually being shared. Obviously this does not apply to the nearly 20% of French or Americans where the shared resources are provided via gov't wealth transfer i.e. food stamps, extended unemployment benefits, subsidized rent and utilities, medicaid etc. Indeed this gov't wealth transfer can sustain a higher than average rate of unemployment. However, the gov't wealth transfer itself can only be sustained as long as A. foreign lenders are willing to provide new funds at 'affordable' interest rates for the gov't to spend in excess of actual tax revenues, and /or B. the most productive members of the French or American economies are willing to 'sit still' and pay ( much ) higher taxes.
Poor families and friends can still share, but they do have less to share. We're already seeing trendfs of people moving back home, etc. Prior to the crisis, we were very spoiled relative to now. There's a decent amount of wealth to go around. Some people value people more than they do money or things. Cutting someone out of your life because they happen to be jobless is a good way to grow old alone with your money.
As for the government providing the benefits, it's the same thing but on a societal level. If the rich want to hoard money and not hire people, they should expect the ranks of those receiving government benefits to swell. Cut these people off, and you get class warfare (the equivalent of a family member refused help disowning the family), and the primary alternative is to just HIRE them or maybe SPEND some of that money. Many of the social niceties that the wealthy take for granted can disappear if they disenfranchise the poor. Start counting every dollar, and cting superior to the less fortunate, and those people can turn around and put price tags on everything, down to just saying "hello."
If you want an "economic sparta," you can talk about self-reliance, moral hazards, or whatever, but unless they're prepared to become a social outcast, it's probably best for the wealthy to lighten up a bit on the "tough love," or they might find it directed back at them in ways they did not foresee.
Tell me to get a job and I don't deserve help or a "handout" and I will heed your lesson. Call me back in a month to tell me you admire my having fixed my situation, and I'll say "no thanks to you" and just hang up. Is their money really a substitute for all the friends and family they'll lose touch with over wanting to keep every last dollar? Obviously most people think the answer is "no."
You seem to have moved to Costa Rica for financial reasons. Do you like being separated from everyone in your life in America? Is it really worth not having to pay a few extra dollars in taxes? Grow old, and even your nest egg can be wiped out quickly due to eldercare expenses, while some "poor, lazy bum" has a network of other "poor lazy bums" to make things like expensive nursing homes unnecessary..
I agree with you in theory a great deal, but only to the point where the state continues to serve the individual, rather than the individual serving the state.
Re: Latest US Jobs Report ... disappointing despite 'sleight of hand'
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Do you like being separated from everyone in your life in America? Is it really worth not having to pay a few extra dollars in taxes?
No I don't particularly like this situation in regard to not seeing very much of family members still living in New York. However, I am increasingly seeing more New Yorkers in general down here ... from newly relocating ex-pats to vacationing 'rich' gentlemen ( using their vacation as an excuse to stop at a non US financial information sharing local bank to deposit sizeable amounts of cash ! )
Yes it IS really worth legally not having to pay US taxes since that 'foreign income exemption' on my passive investment earnings is effectively providing me an additional $40,000 per year in disposable income !!! That is more disposable income than I could possibly earn after taxes if I returned to my former career as a licensed Respiratory Therapist in the NY / NJ area, working nights / weekends / holidays, and exposing myself to TB, HIV and a host of other hospital nasties !!!
Re: Latest US Jobs Report ... disappointing despite 'sleight of hand'
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Originally Posted by
Melonie
No I don't particularly like this situation in regard to not seeing very much of family members still living in New York. However, I am increasingly seeing more New Yorkers in general down here ... from newly relocating ex-pats to vacationing 'rich' gentlemen ( using their vacation as an excuse to stop at a non US financial information sharing local bank to deposit sizeable amounts of cash ! )
Yes it IS really worth legally not having to pay US taxes since that 'foreign income exemption' on my passive investment earnings is effectively providing me an additional $40,000 per year in disposable income !!! That is more disposable income than I could possibly earn after taxes if I returned to my former career as a licensed Respiratory Therapist in the NY / NJ area, working nights / weekends / holidays, and exposing myself to TB, HIV and a host of other hospital nasties !!!
I actually heard Vicki Gunvalson from Real Housewives Of The OC's daughter who is a nurse just got hospitalized with a nasty disease she caught from working in a hospital as a nurse. That's so scary and not worth it! I know personally, I had thought about nursing as a career when I was in my teens and I'm sooooooooooooo glad I didn't go through with it! Soooo not worth it! Its like playing russian routlette with your life. Especially if you don't have a strong immune system naturally (I don't). You could not pay me enough to work in any healthcare field. Not even for 6 figures.
I think people have to do what's best for themselves. Even if Melonie wanted to move back home and find a job, she probably couldn't unless she networked and knew someone that could get her a job. And would it be worth it? All the stress for low pay?
Re: Latest US Jobs Report ... disappointing despite 'sleight of hand'
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Even if Melonie wanted to move back home and find a job, she probably couldn't unless she networked and knew someone that could get her a job. And would it be worth it? All the stress for low pay?
If I was interested, I could easily turn up a Respiratory Therapist position in NY / NJ with little more than a few phone calls. The larger financial point is that, at best, these jobs pay $60k a year ... which after US Federal and State taxes I would be lucky to be able to keep $40k. And on top of that, by giving up my foreign residence, I would wind up paying out something like $40k per year in taxes on capital gains, dividends, interest etc. earnings on my investments which are currently ( and legally ) tax exempt under the US 'foreign income exclusion'.
So in exchange for a net NOTHING in terms of after-tax income difference ( i.e. my $40k after tax hospital income would merely replace the $40k in additional investment taxes that I would again have to pay ) ... plus going from catching rays all day to working full time again ... and exposing myself to hospital nasties ( and potentially contracting TB again from a patient that could sideline me from working for 3+ months again, thus putting me in the 'hole' financially while unable to work and collecting disability checks during those 3+ months ) ... plus having the privelege of paying much higher NY/NJ prices for just about everything, I could spend what's left of my time with NY family members and old friends. Of course I would also be able to stop paying my present $550 a month ( utilities included ) rent on my ocean view house down here way south of the border, which might possibly cover the difference in NY food and energy costs ! But then again, if I moved back into my NY house I would have to 'kick out' the younger family members who are presently living in my NY house for 'free' in exchange for performing basic maintenance, meaning that his family would start having to pay $550 a month rent on a crime ridden NY apartment instead.
I wonder if the BLS has already counted me as having 'dropped out of the labor force' ? At least I'm not 'burdening' the US federal and NY budgets in any way while residing down here way south of the border. But then again if I 'kick out' the younger family members who are presently living in my NY house, THEY will start 'burdening' the gov't budgets for subsidized rent, subsidized utilities etc. Of course, the extra $40k per year in taxes on my investment income plus $20k in income taxes on my hospital income that I would be forced to pay as a NY resident would easily fund those gov't benefits ( along with funding a couple of other families I do not know who are collecting similar gov't benefits ).
So the net result of all of this would be that I get to give up retirement and go back to work full time, putting my health at risk, with zero change in my current standard of living etc. in order for my additional income taxes and investment taxes to 'subsidize' two NY families that I do not know ! From where I'm sitting, I'd much prefer to remain unemployed / retired, and allow those two NY families that I do not know to try and support themselves instead of allowing me to support them ! However, the very generous gov't benefits available to low / no income NY families, plus the high state income tax rates that apply to NY worker paychecks, provides a strong 'Moral Hazard' situation where those two NY families that I do not know also have little or nothing to gain by ( returning to ) work full time ( and sacrificing eligibility for gov't benefits they are currently receiving ). And that latter point arguably brings us full circle back to the topic of the USA ( or at least certain US states ) now having a 'new normal' high unemployment rate.
Re: Latest US Jobs Report ... disappointing despite 'sleight of hand'
Melonie,
If you save 40k a year in taxes by living in Costa Rica, and the capital gains rate is 15 percent, wouldn't that mean you'd earn well into six figures in America? If so, why would you need a job here?
You are not living under the protection of the American government, you're in a country where wealthy "Ticos" (or Ticas) generally have to move around with bodyguards, and would you like to share the wonderful stories about the drinking water down there? Once you are old enough to truly need your nest egg, how quickly will the healthcare system go through it? Typical nursing home costs 72k a year, and that's without any specialized medical care. One illness, one operation, one setback can wipe out even a millionaire.
Your remark about your relatives kind of addresses my point: in practice, you are "socializing" their living expenses, much as you seem opposed to governments doing this on a larger scale. That seems to be the new reality with the higher unemployment rate, and I don't think it's a bad thing. I do think it skews a lot of what seem to be awful statistics into something...different than what we had before.
Re: Latest US Jobs Report ... disappointing despite 'sleight of hand'
wow, you're full of ( incorrect ) assumptions !!! While it's not directly relevant to this thread, I will point out that a comparatively small percentage of my 2011 investment earnings fell under the 15% 'long term' capital gains tax rate. None of my long term holdings of physical gold, shares in certain natural resource related corporations etc. were actually sold in 2011. What WAS traded in 2011 were primarily shorter term stock shares, ETF shares, options etc. - with the resulting earnings falling under a ~28%US + ~6%NY 'short term' capital gains tax rate had I not been able to exercise a 'foreign income' exclusion by residing outside the US for 330+ days in 2011.
You're also incorrect on my actual location ... although I'm fairly closeby ! The 'natives' in my adopted country are far less 'restless' than those in Costa Rica. But even so, the lack of local restrictions in regard to firearms etc., and the proximity of a community of US / Canadian / European ex-pats, goes a very long way towards maintaining an element of 'respect'.
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Your remark about your relatives kind of addresses my point: in practice, you are "socializing" their living expenses, much as you seem opposed to governments doing this on a larger scale
Perhaps from one viewpoint ... but I'm doing it voluntarily, and arguably for mutual benefit vis a vis a family member. My younger relative gets to live in my NY house without paying rent ( which I would only have to pay US taxes on if I charged rent ). In exchange, my younger relative contributes his skilled labor to make repairs and improvements to my NY house as a de-facto 'barter' arrangement ( which I would have to pay to someone else to do, and they in turn would have to pay US/NY income taxes on, if the 'barter' arrangement did not exist ) .
In contrast, if I moved back to NY and paid all applicable taxes, I would also be IN-voluntarily supporting two families whom I do not know, in exchange for absolutely no personal benefit.
Re: Latest US Jobs Report ... disappointing despite 'sleight of hand'
Veering away from Mel's PERSONAL life and back to the original point of the thread, new jobless claims were UP this week. 380,000 vs. an estimate of 355,000. Plus last week's jobless claims were revised UPWARDS by an additional 10,000 new claims.
Re: Latest US Jobs Report ... disappointing despite 'sleight of hand'
^^^ no surprises there ... the BLS 'fudge factors', from seasonal adjustments, to 'those not in the labor force' reclassifications, to the ever popular black box 'birth-death' model for businesses, have consistently resulted in factually unwarranted 'Rosy' Page 1 unemployment headlines of late. And these have been consistently followed with after-the-fact Page 20 'revisions' which usually detract from the original 'Rosy' estimates.
This time we also have a host of 'new' excuses ... from teachers claiming unemployment benefits due to Easter 'break', to unusual weather causing a change in typical seasonal hiring patterns. But at the bottom line, even the Washington Post / AP 'admits' the following ... from
(snip)"After steadily declining since last fall, applications have leveled off in recent weeks. The four-week average is essentially unchanged over the past two months.
The increase “doesn’t ring any alarm bells,” said Ryan Sweet, an economist at Moody’s Analytics. “Applications can be choppy.”
But the trend bears watching, he said.
“If claims continue to climb, it would be strong evidence that the job market is weakening,” Sweet added.
When applications fall below 375,000, it generally suggests that hiring will be strong enough to lower the unemployment rate. [ vs 380,000 first BLS estimate - sic ]
The figures come after a disappointing employment report last week that showed that employers added only 120,000 jobs in March, half the average pace in the preceding three months. But many economists downplayed the weak March figures, noting that a warmer winter may have led to some earlier hiring in January and February.
The economy has added an average of 212,000 jobs per month in the January-March quarter, well ahead of last year’s pace. And the unemployment rate has fallen from 9.1 percent in August to 8.2 percent in March. One factor is that some people have given up looking for work. People who are out of work but not looking for jobs aren’t counted as unemployed."(snip)
There is also some pundit discussion that the bulk of the jobs that WERE created last month fell into two categories ... very high specific skills required positions, and low skill near minimum wage service industry jobs. The same pundits also point out that the number of 'those not in the labor force' continues to climb at a rate that is much higher than that explainable by population growth alone, with the two most likely underlying reasons being the expiration of extended Federal unemployment benefit check eligibility, plus an increased number of ( student loan financed ) college students ! Also, some small number of additional 'not in the labor force' reclassifications are due to expatriation, with the adjective 'small' based on 'head count' as opposed to the amount of money they are taking out of the country !
Re: Latest US Jobs Report ... disappointing despite 'sleight of hand'
Sorry about the personal detour there, Melonie. I was more intrigued by the housing setup, since this is what I was talking about as a practical measure taken by many to deal with the "new normal" in unemployment. I think it's a good example of how we can function with seemingly impossible numbers in that area.
You're far from the only one doing this, either. I know many people who are helping others/being helped in a similar fashion. Humans are adaptable!
Re: Latest US Jobs Report ... disappointing despite 'sleight of hand'
^^^ Yes humans are adaptable. With official 'youth' unemployment levels in Greece, Spain etc. at scary high levels, there is no way that these seemingly impossible numbers can exist without a whole lot of 'unofficial' employment i.e. 'barter' arrangements, working 'under the table', the selling of illegal goods and services etc. Of course such 'unofficial' arrangements bypass the collection of needed tax revenues, legally or illegally.
But the USA is not Greece or Spain ... the US is passing laws right and left to insure that incomes are reported and that taxes are collected ... with the latest being the transfer of additional money to the IRS for the hiring of 16,000 new agents !
Re: Latest US Jobs Report ... disappointing despite 'sleight of hand'
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Originally Posted by
Melonie
^^^ Yes humans are adaptable. With official 'youth' unemployment levels in Greece, Spain etc. at scary high levels, there is no way that these seemingly impossible numbers can exist without a whole lot of 'unofficial' employment i.e. 'barter' arrangements, working 'under the table', the selling of illegal goods and services etc. Of course such 'unofficial' arrangements bypass the collection of needed tax revenues, legally or illegally.
But the USA is not Greece or Spain ... the US is passing laws right and left to insure that incomes are reported and that taxes are collected ... with the latest being the transfer of additional money to the IRS for the hiring of 16,000 new agents !
Agreed that tax-evasion is more difficult, but humans adapt there too. I was thinking more of just people helping each other out a bit more, with places to stay, food, resources in general, etc.
Re: Latest US Jobs Report ... disappointing despite 'sleight of hand'
The latest numbers : New jobs created in April - 115,000 ; far below expectations.The unemployment rate went down to 8.1 %. Huh ? How can that be ? Because hundreds of thousands of people have stopped looking for work and are no longer counted.
Re: Latest US Jobs Report ... disappointing despite 'sleight of hand'
^^^ actually, the gov't is starting to acknowledge what 'job' many of those leaving the labor force now hold ... from
(snip)"The civilian labor force shrank in April by 342,000 workers, and remains below where it stood when the economic recovery started 34 months ago, according to data released Friday by the Bureau of Labor Statistics. Had the labor force not declined, unemployment would have been 8.3% in April, instead of the 8.1% reported.
That same month, more than 225,000 workers applied for Social Security disability benefits, and nearly 90,000 were enrolled, according to new data from the Social Security Administration.
Compared with June 2009, the month the economic recovery officially started, the labor force has shrunk by 365,000, a trend that has never occurred in any post World War 11 recovery. Those saw the labor force climb by the millions by this point in their recoveries, even as unemployment rates were driven down.
The decline in the workforce combined with the growing population has pushed the labor force participation rate — which compares those working or looking for a job the working age population — fell again in April to 63.6%. That's down from 65.7% in mid-2009, and is the lowest it's been since 1981.
Economists note that the shrinking labor force has masked the true size of the unemployment problem, since people who quit looking for a job are no longer counted as unemployed.
In fact, had the labor force participation rate had stayed where it was in June 2009, the unemployment rate would be around 11%.
Many of those who've quit looking have instead signed up for disability benefits.
So far this year, nearly 1 million workers have applied to get on the disability program. According to the Social Security Administration, more than a third will eventually be enrolled in the program.
Almost 90,000 workers enrolled the program in April, pushing the total for new enrollees over 333,000 in the first four months of the year."(snip)
Think about that for a minute ... 115,000 actual new jobs created in April, plus 90,000 additional Americans now 'working' at collecting disability checks ... which, depending on previous income level, typically amount to a ( tax free ) $250 to $400 per week.