This page has been archived and commenting is disabled.
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.
_______________________________________________
Stay up to date with the machinations of the Fed, Treasury, Primary Dealers and foreign central banks in the US market, along with regular updates of the US housing market, in the Fed Report in the Professional Edition, Money Liquidity, and Real Estate Package. Get the research you need to understand these critical forces. Click here to try WSE’s Professional Edition risk free for 30 days!
Pic via Jr. Deputy Accountant
»
- ilene's blog
- 8566 reads
- Printer-friendly version
- Send to friend
- advertisements -
contrary to popular belief, the USA is still the largest manufacturer in the world.
True, China has faster manufacturing GROWTH, but you have to ask what is the USA doing to KEEP that manufacturing edge?
The answer is nothing, as Catepillar is discovering in Illinois and as Boeing discovered in Washington. The government (in this case the states, for a change, not the feds) has a habit of killing the golden goose.
It's not only labour costs that are preventing manufacturing jobs from being created here, its all the bureaucracy.
The bureaucrats need to justify their jobs by writing ever more regulations. The result is that they are killing the tax base and will end up hanging themselves. Congress can pass a law that is 2,000 pages, but the bureaucrats will write another 20,000 pages of regulations.
The bureaucrats in the State govs & the Feds are not doing anything to encourage manufacturing to grow. The small businesses & entrepreneurs face stronger head winds as they dont have the option of going to another country. The manufacturing base is eroding here slowly but surely. The chinese have figured out how to get the American companies to jump ship.
A sinking ship does not instill any confidence in the sailors, no matter how hard working they are or how patriotic they are.
"Egonomist..." LOL.
"How could all of those PhD egonomists and Wall Street paid government shills have been so wrong"
The question contains the answer. It's because they're not eco-nomists. They're ego-nomists.
Does that 18,000 number include illegal immigrants? If not, then it looks like NObama will have to hire/add a couple 100,000 minorities to the Federal payroll, again.........if not, then he'll go into the 2012 election a Lame Fucked President. or something like that anyway....
We're right back where the colonists were, fighting the bankers for survival. A lot of people don't realize thats what the Revolutionary war was about. But make no mistake, this is no game, this is serious business & a lot of people are going to have to die before it's over. I for one am ready to die for my grandchildren's freedom from rule by bankers & the bought & paid for panjandra.
I am so glad the Republican Party has put forward a real jobs program for the country(USA) and left that supply side bullshit in the dust!!! Me For Bachmannnn 2012!!!!!
GEE, maybe Timmy will stay on just as Sheila Baer did. That way she'll have TWO boobs on her back as well as her chest.
Indeed. They've been singing the song of a 'service based' economy for at least a decade, they just left out the word military before the phrase, conveniently
TPTB had better rev up the soup kitchens and put MRE and bottled water production to double-time; this shit will make the L.A. riots and Katrina look like a dress rehearsal.
A debt forestalled great depression simply magnifies to a greater depression.
They cannot dodge this bullet indefinitely and only increase eventual misery with their Keynesian bullshit and lack of taking ANYONE to task for the lies, vampiric leverage, and financial genocide.
Nuremberg II needs to start for Wall Street NOW!
That's the long way. There's a nice little short cut over by the guillotine.
Soup kitchen is sooo 1931, it's "feeding station" now.
How could they be wrong? Easy... groupthink and bias fueled by propoganda. And toss in a measure of "gaming the system" since this is the new "productivity" right? Go against the grain and get marginalized, which is bad for business of course.
How could they be so wrong? I saw a clip yesterday where an 'economist' made a point by saying 'even a Republican economist agreed'!! How can an 'economist' be a Republican or a Democrat? Would we have scientists who were Rs or Ds? I thought 'economist' was some sort of scientific designation - not a political designation. Oh well...
they need to maintain the illusion of a difference between the parties and that one is somehow responsibile and the other not.
Exactly. The perception of a Rep and Dem agreeing on something must mean that the thing they are agreeing on is true.
Professional wrestling could do the same thing; if the "good" ones agreed with the "bad" ones, then the mutual conclusion must be free from reasonable dissent.
18,000 jobs is an embarrassment for sure, and these are massaged numbers also. So in reality they could have had negative numbers. That was the reason he didn't take any questions in the Rose Garden, because he didn't want to explain himself. I knew 2011 was going to be the year of economic disaster.
2012 will be even worse
yep, that Mayan calendar thing
I also knew that 2011 will be a time of mobilizing and getting prepared. If we don't do it this year, we never will.
Obama is not going to explain anything, he is just going to go golfing or whatever perks of the Office to enjoy while he can. History will show three words for this President.
"We got Him."
Now the next person who wants to be President is going to have to reach deep, grow a pair and start tossing the lazies out of the Garrision and make things right.
There's at least one chick out there that has the brass to do it and is not beholding to any of TPTB.
She's also got the brass to drop and field dress a moose.
I like that in a politician.
She might have a good heart but the problem is she is ignorant about economics and foreign policy.
Yes, she is the canidate that has taken on TPTB and that is the reason they have been pulling out all of the stops to keep her from running. How about p2 for the race, the two biggest energy states on hte ticket?
Perception: The GOP likes America and dosent like illegal aliens
Truth: The GOP cant ship jobs overseas fast enough and loves wage suppressing illegals competing for the few service jobs left.
Perception: The GOP hates terrorists.
Truth: The GOP loves terrorists and any other bogeymen they can use to transfer wealth to the upper class. In fact the GOP dosent mind practicing a little terrorism itself (freedom fighting) to keep emerging markets buying American products made in China.
Perception: The Dems hate banks and rich folks and love the poor.
Truth: The Dems are rich themselves and love banks and wall street and give them the poors money.
Perception: The Dems hate war
Truth: The Dems love war, like all politicians, so long as they are on the winning side and their families dont have to fight. Mr "hope and Change" promptly started bombing Libya soon after winning a nobel peace prize.
The real truth is that America has the most natural resources, easily defended borders and so on as to naturally be the most powerful nation on earth. We could all be making 50 bucks an hour and own multiple homes by simply giving the world the finger and exploiting our own potential free from the GOP and DEM leeches who care more about foriegn nations than our own.
Sarah Palin might shoot a moose, but will never fail to do exactly as the GOP party tells her to do, which is to maintain the status quo of the current corrupt system.
She has a lot in common with Obama, a bright perky figurehead of a sock puppet they can sell to the populace as another version of "hope and change".
"not beholding to any of TPTB" How sure are you about that assumption?