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Behind the Dismal Employment Numbers
Behind the Dismal Employment Numbers
Lee Adler looks behind the terrible employment numbers and sees trouble on the horizon - a shattering house of mirrors, a rogue wave crashing down on our ship, and a black hole ready to suck us into oblivion. - Ilene
Courtesy of Lee Adler of the Wall Street Examiner
In the Treasury Update that I posted yesterday in the Wall Street Examiner Professional Edition. I warned that regardless of what the government numbers would show, the jobs situation was deteriorating badly. Based on real time Federal withholding tax data, there have been no job gains since last year.
Here’s an excerpt from the July 7 Professional Edition Treasury update:
Month to date withholding taxes as of the end of June were down 4.6% from last year. Some of that was due to a calendar anomaly of a payment date for a biweekly and semimonthly pay period last year coming on June 1. That resulted in June receipts last year being inflated, making this June look worse than it was. A 4.6% drop would imply an economic collapse. In actuality it’s more of a stall, although I expect it to spiral down from here.
As shown on the chart below, tax receipts over 2 week rolling periods have again opened a lead versus last year, although the monthly averages are about even. In view of the fact that tax receipts were consistently running well ahead of the same point last year from February through May, the sharp drop in June suggested that the US economy may already be in recession. That becomes a little clearer when looking at the comparison in real terms, adjusted for wage increases (though small) as shown on the next page. Given the ending of POMO and government spending cuts ahead, I expect this comparison to soon go negative.
Chart data through July 5(6/24/11) Normal seasonality shows a flat period through Q3, with a final low in September/October. If this graph drops below last year’s level from here, then the economy probably is in free fall. That would be very bad news for the levels of debt the Treasury must float in the months ahead.
I have not been able to isolate a strong correlation between this data and the government’s headline employment numbers. Regardless of what the Labor Department releases say on Friday, a zero gain in withholding over the past month is clear evidence that there are no more people working today than there were a year ago, at least in terms of paying jobs. If the numbers come in positive I would only guess that there are plenty of “self employed” people out there, not subject to withholding, who aren’t earning any money at all, let alone a decent living.
I was a little surprised that the propaganda machine at the BLS (Bureau of Liar Statistics) was willing to admit this fact today, but I must have had brain-lock, because it should have been obvious that it would want to trumpet bad news. The gummit has $66 billion in new long term paper to sell next week, and the name of the game is to get those yields down by whatever means necessary. I have observed repeatedly through the years that the government would sacrifice the stock market on the altar of the Treasury market whenever necessary, and it proved that again on Friday.
By now, you have heard all the gory details of Friday’s employment report.
- Nonfarm payrolls up by just 18,000 (seasonally manipulated) against a consensus of 125,000
- Job gains in May revised down
- Unemployment up to 9.2% (again seasonally manipulated)
- Average hourly earnings flat.
- Average workweek down, with factory workweek down sharply
- Household survey showed employment down 443,000 (seasonally manipulated)
All of those numbers were truly terrible. But they don’t begin to tell the whole story.
Other horrendous numbers include the U6 unemployment rate (which includes discouraged workers and others not counted in the headline number) which rose to 16.4% (actual not seasonally manipulated) from 15.4% in June. Admittedly, this number always goes up in June, BUT the 1% jump was the biggest since 2001. Total employment, not seasonally manipulated, rose by 101,000 in June according to the household survey. Of course this number includes self employed real estate sales people, eBayers, and “professional” bloggers, none of whom actually earn a living even though they are employed full time. Even with these people included as employed, this was by far the worst reading for any June since 2001. The average gain in June for the previous 10 years was 784,000. The worst year before this one was 2010 when the gain was 385,000.
Not seasonally manipulated actual nonfarm payrolls rose by 376,000, which is somewhat above the 10 year average. But this figure is manipulated by the business birth-death adjustment and is almost certainly wrong, or at least misleading, because it includes both part time and full time employment in addition to the birth-death adjustment.
Here’s what I feel is the most important government number released today, one that I haven’t seen reported anywhere else. The total number of persons employed full time, according to the household survey, had its worst June performance in 43 years. And it’s that good because the government only started collecting this data 43 years ago. Total full time employment has increased in every single June since then. This year’s increase was reported to be 637,000. That sounds impressive until you consider that the worst prior year was at the bottom of the first leg of this depression in 2009 when full time employment rose by 931,000 in June. The average gain in June for the 42 years prior to this was 2.3 MILLION. The AVERAGE!
Total full time workers in June was 113.3 million, the lowest number of full time workers since June of 1999.
Do you want to get even more depressed? How’s this? The employment to population ratio was unchanged from May at 58.2%, its lowest June level since 1984!
Since 2001, this measure has always increased in June by two to four tenths of a percent. Not this year. The government has been keeping this statistic since 1948. This is the first year, EVER, in the past 63 years, when the employment/population ratio did not increase in June. The employment to population ratio is now as low as it was during the 1940s, 50s, and 60s, when far fewer women were in the labor force. And don’t give me that “baby boomers are retiring” crap. The vast majority of baby boomers are still employed. Most boomers haven’t hit retirement age, and of those who have, relatively few have willingly retired. That’s not a significant factor contributing to these numbers.
How could all of those phd egonomists and Wall Street paid government shills have been so wrong, when all they needed to do was follow the government’s own daily budget data to see what was going on? Even without that data, it was apparent from the long term charts of the not seasonally manipulated data that there had been no material improvement in these trends, and therefore no reason to expect real improvement in the current numbers. Yet somehow these brilliant strategists continue to misunderstand and misrepresent the facts. Unfortunately, that includes the members of the FOMC and Dr. Bernankenstein himself, among the worst offenders.
Other numbers have also been screaming of trouble. I have reported in the Professional Edition Treasury updates since February that government stimulus spending has been collapsing versus last year. The entire illusion of recovery was based on that spending and Fed propping. Without those cash flows, the house of mirrors shatters. On Thursday I reported that the combined drop in tax refunds and government outlays in June had reached $30 billion on a monthly basis versus June 2010. I have also reported that since February that the banks were socking away virtually all of the QE2 cash from the Fed back in the Fed’s vault rather than redeploying it in the economy. That was another factor behind the economic stall. This trend will only get worse now that the Fed has ended its propping of the financial markets. Additional budget cuts will exacerbate the downtrend. The economy will spiral down into a black hole.
We’ll need to watch the Treasury market technical indicators closely for any sign that the fear trade driving cash from stocks to Treasuries is reviving. Or will both sink with the ship? We’ve seen this rogue wave coming for a long time. Brace yourself, because it’s about to hit us.
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It may be that productivity gains will be the undoing of capitalist society. As long as we can make more goods and do more with less labor input, we will put people out of work. There is no business owner who hires just for the social good. But those unemployed bodies don't disappear, they still eat and walk and talk.
We may have been better off as a society when we were blissfully unproductive. At least there were "jobs" for all of the levels of intelligence and aptitude. Now, the few can provide for the many, but the few don't want to share with the many. The system we had to facilitate sharing, by job creation, has broken down. Usually, in the past, money creation led to job creation, as natural resources were exploited and "growth" occurred. Growth really doesn't need to happen now. There are enough goods to go around. The problem is how we distribute the goods in a way that keeps social order....
gh
We've had productivity gains since the beginning of civilization. It used to take an entire tribe of hunters to kill one buffalo to feed the tribe. Someone invented the gun and then it only took one hunter to take down a buffalo.
The problem isn't so much productivity gains, but population growth. Nature used to keep the population in check. When a population could no longer feed itself, nautre culled the herd. Now we ship food and medicine around the world from one region to another. The population of Africa is expected to double in the next 20 years. They can't even feed themselves now. Normally, nature would not allow that to happen. Eventually, we will hit the point where we can no longer afford to feed the planet and billions will die in wars and famine
Hit the boat again.
US citizens again trying to propagate that non consumers are the issue in a consumption problem.
The US world order really bears a culture of death.
People are losing their jobs because the multinational corporate elite have shafted ordinary working people. The banking sector brought the American economy to its knees with their unregulated speculative trading practices, many of them amassing personal fortunes of $billions, often by betting against the dodgy financial products they themselves were selling. Over the last 30 years of neo-liberalism this bunch of crooks have become so powerful that they have gained complete control of US economic policy.
As the system was falling apart in 2008 the federal reserve poured $100s of billions into the banking sector to keep it alive. Most of the economists and banking experts that the American government have appointed to oversee the recovery and implementation of their so called reforms are the very people that were up to their eyes in the banking scam in the first place.
Obviously this cabal of bankers-cum-regulators-cum-government economic advisers decided that instead of curbing the excesses that allowed them to build up their fortunes and confiscating some of the ill gotten gains they would make ordinary Americans pay back all of the debts.
It seems that the selfish idiots that created the crisis haven't even realised that lumbering ordinary people with the cost of the crisis is reducing their disposable income to nothing. As more and more people find themselves with no money to spend on luxuries like a new car every year, new sofa, nights out, vacations etc the faster the economy is going to contract, creating higher unemployment and accelerating the downward spiral.
Perhaps the banking elite have realised that lumbering ordinary Americans with these astronomical debts is bound to have this effect on the economy, but they just don’t care. After all they already have their 100 room mansion in the Hamptons, their apartments in Manhattan, London, Paris, their luxury yachts and private jets, assets and cash stashed all over the globe. Why should they give a damn if the rest of America goes down the toilet?
looks like it is stacking up to be a very interesting fall 2011.
re "phd egonomists"
So a typo, or purposeful brilliance?
(sorry,working from an iPad, they do have their limitations....)
re "phd egonomists"
So a typo, or purposeful brilliance?
(sorry,working from an iPad, they do have their limitations....)
phd egonomists So a typo, or purposeful brilliance?
@ Sudden Debt- Great ideas, the issue here is we cant the Chinese would foreclose. It doesn't matter anyway there is no way around the GREAT RESET.
LUDWIG VON MISES is not wrong, anything else is can kicking and window dressing.
Following the Path
Rome’s working class, the plebeians had little individual power. Grouped together, however, they became a Roman mob and had to be handled carefully.
By the first century AD, plebeians comprised a formal class, which held its own meetings, elected its own officials and kept its own records. The term plebeian referred to all free Roman citizens who were not members of the patrician, senatorial or equestrian classes.
Some plebeians, who were doing reasonably well, might try to save enough money to join the equestrian class. For many, however, life was a daily struggle. But although individual plebeians had little power, there were a lot of them. In bad times, or during political unrest, there was always the risk of the Roman ‘mob’ rioting or rebelling against the upper classes.
The Emperor Augustus was well aware of this risk and was keen to keep the poorest plebeians happy enough and reasonably well fed so that they would not riot. He began the system of state bribery that the writer Juvenal described as ‘bread and circuses’.
Free grain and controlled food prices meant that plebeians could not starve, while free entertainment – such as chariot races and gladiators in amphitheaters and the Circus Maximus – meant that they would not get bored and restless. Bribery it may have been, but it often worked.
they are doing the same thing to us. with unemployment checks, social security checks, medicaid, welfare, etc. and government "jobs".........amerikans are bought off and bought off cheaply. they wear their chains proudly.
the job less recovery is working just fine for banks and wall st.
the plan per CFR and our bought pols was to off shore jobs and business.
both above are working fine..there is no crisis for the elites.
global integration (NWO) is on track.(see mexican truck deal this week)
until traitors are arrested and hung the side show of american politics in DC is just that.
just curios. on this plan to offload manufacturing to china ,etc. ok, seems like they have done this. now the chinese are making everything , and with slave labor. my question is. the parasite kills the host. then how does the parasite continue living? no jobs, no buying of chinese junk? correct? maybe they don't really care.
New Jobs in the Oil Independence strategy.
Report: Getting Off Oil - A 50-State Roadmap for Curbing Our Dependence on Petroleum
http://sufiy.blogspot.com/2011/07/peak-oil-getting-off-oil-50-state.html
From the charts and figures its clear the usa has chronic unemployment over 10%.
This is the new normal. Get used to it - the elite dont care.
And people aren't hungry, in fact they are fat fucks.
So nobody is gonna do much 'cept grumble.
Sudden Debt has it right. Its the Global Free Trade Economic Model that no longer works to the benefit of developed nations, and in fact makes Nations irrevelant that do not utilize Strategic Planning as does China. All the rest is a stage show of denial, finger pointing and poitical/keynesian economic dodging.
As far as America still being a large manufacturer, for how much longer? Consider the strong outsourcing trend by multinationals, mobility of technology , loss of application technology, higher educational trends and loss of energy self-sufficiency.
All signs point to decline. Last and only remaining advantage is reserve currency status of US $, but that may change suddenly--possibly by Aug 2
This is the plunder and pillage phase of the globalists dream of world domination and control thru monetary and trade manipulation. Perhaps the federal reserve charter ends in 2013 (hundred year charter?) and they plan to move to the Shanghai World Financial Center
This is the plunder and pillage phase of the globalists dream of world domination and control thru monetary and trade manipulation. Perhaps the federal reserve charter ends in 2013 (hundred year charter?) and they plan to move to the Shanghai World Financial Center
big manufacturer? of what? all we make now, is military toys and supplies for continuous war.........
The problem is simple...people just don't want to work when Sammie has his hand out. I went to Craigslist to find anyone who was willing to work a half day on a demo job in Upstate SC. After three tries, a man responded saying he really needed the $$$ ($50 for 3-4 hours work).
Guess what? No show, baby. And this is not the 1st time for this to happen.
Another phenomenon that I expect is going on (but can't verify) is that the full-time employed are reducing their withholdings in order to maximize their "now" income relative to deferring it to tax return season.
It's that giant sucking sound! Thank You Nixon, Reagan, Bush Crime Family, Clinton, and his protege, Hopey. Hopey is the cruelest of all. Grant Park Rally People...Speak Up Now!
In econ 101, first thing my professor said is that economics is lies and staticstics, then went on to teach us how to calculate GDP by filling in a pre algebra equation with made up numbers.
What's the point of econ 102?
I took micro and macro economics with the idea of becoming an accountant. The bullshit was so thick, I left college and went back with my rock and roll band. Later on the band broke up (lead singer got one of our groupies pregnant and decided to marry) and I went back to school to study engineering, was a curve blower in most classes (large well known university) and later worked as rocket scientist ('atmospheric research' wink, wink). I'll never forget what a crock of bullshit was being taught in economics... it drove me to leave college. Been an engineer ever since but could have been a physicist or chemist as I loved all the science courses .. economics is not a science but does have some stuff that makes sense like supply/demand curves for price discovery or actuarial type calculations. Its based on mostly unprovable academic theories that are mapped into equations as window dressings to dress it up as a scientific endeavor and then promoted by those economists who are willing to be PR shills for the bankers and various 'funds'
Reminds me of when I was a Equities Broker. With each new issue, or limited partnership, we had a prospectus. There was also a sales brochure. In sales meetings we were shown the information in the sales brochure and taught how to sell the product. While the prospectus contained audited accounting information and warnings, the brochure used "Pro forma" illustrations and projections etc.
In a similar way, the Gov't down plays the audited accounting information, and puts out "Sales Brochure" type Economic information that makes a much more appealing to the public.
I knew a stock broker who used to brag that he had never read a prospectus. Reminds me of some politicians...Rufusbird
Society has advanced considerably. Now to be a fortune teller, one should have a degree. But fortune telling it still is.
Well, well, same song as usual.
Economics is windows dressing for the recipe used by the US since its inception.
Yes, extorting the weak works.
Yes, farming the poor works.
Known for three millenia now.
As the US is duplicitous and can not admit in public the recipe and has come with window dressing, guess what? The predictions based on economics are irrelevant.
It does not mean that the US is not aware of what is going on and can not predict reliably based on its true nature.
It only means that the US cant not speak about itself sincerely.
Move on, nothing to see, save good ol' eternal US nature.
It is clear that the Economic theories in place are outdated, just look at the unemployment report, 99.99% of professional economist were completely wrong and are all wearing their rose coloured glasses rather be realistic. The US economy is in huge trouble, that’s a fact.
Check out the latest from the Capital Research Institute (CRI): Creative Destruction – A New Economic Order www.capitalresearchinstitute.org
Reading the comments on this serious article just makes me dizzy.
The Dems did it, the Republicans did it, Obama did it, them Mezzkins are to blame, Palin can bail us out, Bachmann can fix it good, etc.
I feel like I just entered The Twilight Zone.
Cue the music...
Palin killed a moose therefore the logical conclusion is that she would save us and restore America to its former glory.
DOO doo Doo do Doo doo do (twilight zone theme)
When SuddenDebt declares open season on fat people, that skill will come in handy.
heavy finger oops
Right-on Rocky... the red/blue programming runs too deep, even here at ZH.
You would think partison indoctrination would be obvious to even the average joe.
Indeed. The programming of political ideology has been highly successul ... all the while presidents and house members go golfing with each other and the top 1%rs and laugh their asses off at the people who believe there is a difference between the parties when it comes to the most important needs of the nation.
Well RR, it's the politicians who will need to come up with a solution.
When we're looking at China, all we see is a subsidized industrial complex. Their biggest threath is actually:
1. Logistics
2. Energy supply
3. Lack of raw materials
And any sollution to rebuild a industrial base will need to take advantage of these 3 key points in the US.
1. Logisitics: To become competitive the US needs a rehould of it's domestic logistic net to become as efficient als possible.
2. Cheaper energy for the industry
3. Stop importing raw meterials from abroad which can be mined in the US.
Second: trade protection. They need to calculate standard construction prices of products. Any product that is imported and subsidized by foreign governements needs to be taxed accordingly.
Third: And this is the most important: Stuff in the US is way to cheap! Foodprices need to go up, taxes on imported products need to go up. Americans love the cheap stuff. Just compaire it to the EU prices.
And let's face it: if US foodprices won't go up (at least X2) you'll stay the country with the most fat people on earth.
For the rest of all consumer products, the supply of cheap stuff needs to stop. How lack the need of quality products. You lack the quality standards products need to meet. Raise the min. standards and prices will go up and US products will be able to compete because they don't have the shipping and logistical costs the chinese have.
Fourth: be proud about US products. Anything else need to have a extra import tax making them more expensive.
All the extra tax revenue will help the US with it's debt problem. Americans will become fitter people again instead of fat blubs. It will make sense again to produce again in the US.
There also needs to change something about the US attitude: To many people whine and complain to much without realizing what they have. You don't need cheap food like you have now, IT MAKE YOU FAT.
You don't need cheap crap which you have to throw away after 6 months because it brakes down because it's crap. Buy something that lasts at least a few years!
All you guys want the cheap stuff, don't want to pay taxes, have high paying jobs but don't want to really work.
Your education system, especially with the "no child left behind programm" IS A JOKE.
Indeed RR, people like to blame everybody because it's easy, but first they have to start with themselves.
Sudden Death you are correct.
Globalism is not good for the average US citizen but they have been brainwashed into thinking so.
We need to make what we use. Multinational corporations pushing globalism is the root cause.
America should make quality products at quality prices which will result in quality wages.
If your ideas were embraced the multinationals would lose profits and control of the government.
I fear critical awareness of what you state falls on brainwashed ears.
i don't think the american people really understand globalism. they don't necessarily agree with it per se. i mean you go around and you never hear anyone talking about it. you listen to talk shows and nobody talks about it. i get the impression the american people just really don't have much of an opinion on it. they are sold the bill of goods on the free trade argument and capitalism by the "conservatives" . even though thieves are stealing their money, in a way, they feel that it is ok for the rich to get richer, because they feel that it possibly could be them one day. they simply do not understand that in order to achieve the american dream, you have to be asleep, as george carlin might say....
It was both sides that screwed the American people with the free trade balogna. NAFTA was passed by a Democrat congress and Bill Clinton signed it into law. Most of the globalist trade laws were passed in the mid-1990's. The bankers and elites were behind it and they paid off the right people to get it done. Why is there not a peep from the Teamsters over Obama's decision 2 days ago to allow Mexican trucks access to US highways? US taxpayers are paying to upgrade all of the Mexican truck fleet to meet safety and EPA standards at an average cost of $8,000 per truck. American truckers have to pay for their own upgrades. WTF is happening to this country?
Im with you on the cheap food as long as you raise the quality along with the price. It is not the low cost of the food, it is the huge amounts of sugar, starch,salt and chemicals that make you fat.
It's the hughe amounts of everything that make you fat.
A 13 OUNCE HAMBURGER ISN'T NORMAL.
And then you hear all those people about: I have heavy bones and blabla...
HAHA! NO IT'S NOT, YOU EAT LIKE A PIG!
I've never seen more people in wheelchairs then I did in the US, not because they had a accident
BUT BECAUSE THEY WHERE TO FAT TO WALK!
There's nothing to be proud about that FACT.
Why do you think Europeans live 10 YEARS LONGUER THAN AMERICANS?
Because Europeans smoke more?
Because Americans all eat like pigs?
Because Europeans have the better looking woman?
WHAT DO YOU THINK?
Oké, there will be plenty of fat bastards junking this post yet again, but before you do, think about this:
YOU'RE FAT! STOP EATING! IT'S YOUR OWN FOLD!
NOBODY REALLY CARES UNLESS THEY HAVE TO PAY YOUR HOSPITAL BILL!!
There should be fines and extra taxes for Fat people.
Anybody above 300 pounds should be put in a prison camp until they drop below 200 pounds.
Fat people shouldn't be allowed to buy food that contains fat.
I usually enjoy your comments, Sudden Debt, so I'll assume you have turned on the <sarc> switch for your comments about fat folk and such. You've advocated a "War on Obesity" that the gov't can implement. That has worked so well for drugs, terror, and all the rest, eh? So, with that in mind, I'll say, "Yeah, lose weight or you get to the cattle car -- now!".
I've never seen more people in wheelchairs then I did in the US, not because they had a accident
BUT BECAUSE THEY WHERE TO FAT TO WALK!
No, it's because that is the only way they can get a decent parking place these days.
I suspect much of what you said was tongue in cheek, there is a lot wrong with societies all over the planet, and certainly sloth and gluttony with all the rationalizations in the world are part of that, but another large part is demographics, the population is aging, people are living longer though not as slender athletic 28 year olds. And we would be fooling ourselves if we did not acknowledge that part of it is that disability is a growing "employment" category, but then we have had structural unemployment (underemployment and ridiculously underpaid jobs) and growing poverty in America for a long time now, it is sad when the only way some have to support their families/selves is by gaining so much weight they are considered disabled. Weight control, or lack of it, like smoking, is a function of education more than any other factor so if the nation is pigging out and ballooning up try educating people. Stop glorifying it, how many TV programs are there now that are centered on fat people and eating till you burst? Mike and Molly? Come on, why don't they just have a sitcom revolving around meth addicts?
I don't hate big people but it's about proud.
A man should be able to see his dick without holding a mirror under his belly.
And when I hear this stuff that even here now, 1/3 of all kids is severe overweight I fucking hate it.
Then you hear that kids these day spend 75% of all their spare time online? WTF?
When I was a kid, my parents almost needed to put me at gunpoint promissing I'd be home before dark.
Disabled people should get all support we can give them. I truely believe this. But if you're overweight, you're not and will never be disabled.
Unfiltered Lucky Strike wafting fine 100% Maryland/Virginia tobacco and the husky edged voice of Rod Serling "Welcome..."
"Things aren't as happy as they used to be down here at the unemployment office. Joblessness is no longer just for philosophy majors. Useful people are starting to feel the pinch." -- Kent Brockman
Our new national anthem, hats please.
http://www.youtube.com/watch?v=8uKbIkYGsIg
Good reporting and analysis.
this party never began. The President's father was a brilliant economist...and hence why we are in trouble. Republicans blabbering on about "government's too big" doesn't help either. We've become a game of one-upmanship over who can do less for the economy. LISTEN TO YOUR FED CHAIRMAN MR. PRESIDENT. Here, maybe this will help focus the mind on the current debate:
http://www.youtube.com/watch?v=Xe1a1wHxTyo&feature=player_detailpage
Brilliant economist? HAHAHA you stupid tool
How many companies moved their manufacturing base to Asia in June? Whatever that number, it is probably the highest in 43 yrs.