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May Jobs Report Is 'Disappointing'
From The Daily Capitalist
President Obama has now become a professional economist, because like most professional economists his unemployment forecast was wrong.
While the headline from the Wall Street Journal this morning was "Census Hiring Bolsters U.S. Payrolls," nothing could be farther from the truth. Private sector job growth in May was anemic, coming in at only 41,000. The total number of new jobs was 431,000, but temporary Census Bureau hiring accounted for 411,000 of those jobs. Note that the difference between the two numbers doesn't add up because net government employment was less than that because state and local governments shed jobs. [I now see that the latest online edition of the Journal has re-entitled their story, "US Private Sector Added Few Jobs In May."]
The consensus among economists surveyed by the Journal and Bloomberg expected 515,000 and 536,000, respectively.
“Job growth is going to be anemic,” said Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co. in Newport Beach, California.
“Remember, it requires 150,000 to 200,000 jobs in order to reduce that unemployment rate, which is a key focus for the administration,” he said in an interview with Bloomberg Radio’s Tom Keene on “Bloomberg on the Economy.”
These numbers are disappointing considering that April showed modest private employment growth of 218,000 jobs in April and 230,000 jobs in March. Overall the unemployment rate dropped from 9.9% to 9.7%. The broader "U-6" index dropped to 16.6% from 17.1%. This is not what was expected. It is discouraging to see the Employment-population ratio decline YoY from 59.6 58.7 (May 2009 to May 2010).
The U-6 report is interesting in that while it fell, it is likely that the fall was a result of people dropping out of the labor force because they can't find employment. The civilian labor force participation rate decreased by 0.2% to 65.0%. About 6.8 million people have been out of a job for more than 27 weeks, or 46% of the unemployed. This has to be considered in light of population increases: while the population grew 170,000, 322,000 dropped out of the labor force.
Some of the BLS report highlights: manufacturing +29,000, temps +31,000, mining +10,000, health care +8,000, construction -35,000. These numbers well under the levels seen for the last several months. Temporary help services has risen by 362,000 since September 2009.
Mrs. Romer, the President's chief economic advisor was on Bloomberg TV this morning, smiling broadly, and saying that we have to look at the trend which is positive and that any month with jobs growth is a good thing.
Even she was not saying that Census hiring created real jobs. As we all know, government jobs are not real "jobs" in the economic sense. The government produces nothing and it pays its workers with our money. Every dollar taken by the government out of the economy reduces the private economy's ability to create real jobs.
Here's an interesting graphic from the Journal:
The labor workweek has increased from 34.1 hours per week to 34.2 hours; hourly wages increased by 0.3% ($22.57) in May versus zero percent ($22.50) for last month. Which means employers are pushing existing workers to make them more productive rather than hiring new workers.
These data are consistent with a flattening trend in the economy. We are not seeing job growth because employers are not yet conceding to the popular notion that we are in a recovery. While it is true that employment increases at the mature end of the recovery cycle, the present recovery is not in line with past recessions. Generally I tend to ignore data related to past recessions because (i) every cycle is different, and (ii) this cycle is more different than previous cycles. We need to keep an unclouded eye on what is happening in this cycle and I believe it is clear that the economy is stagnating.
There can never be a recovery based on fiscal and monetary stimulus. It hasn't happened in the past and it is not happening now, despite Mr. Obama's claim yesterday that "his" policies are working. What we are seeing with an unclouded eye is that the "recovery" cycle is a mirage.
Left to its own devices, the "economy," that is the actions of millions of business folks, do what they need to in order to survive. First to happen in a down cycle is that retailers and wholesalers get rid of inventory. That has been done. Then, because the other 80% or so of us have jobs, businesses then restock to service ongoing business, albeit reduced. That is almost complete. This part of the cycle induced manufacturers to step up production to meet the resumed demand. Without real consumer demand reviving, manufacturing will stall out and maintain a modest level of production to meet modest demand. That is happening now.
There is another factor to consider and that is the impact of fiscal stimulus. At some point the money the government spent to "revive" the economy runs out. Since it was used for mostly useless projects, the effect is temporary and when the money is spent, the empty shells of these projects produce nothing and all that is left are the debts incurred to pay for them.
As I discussed in my article, "What Will Drive Manufacturing":
The only thing that will drive a recovery is the liquidation of overvalued assets, the write down of bad debt by banks and consumers, and increased savings by consumers. The government is doing everything they can to prevent that from happening.
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Why shouldn't Obama be happy about the jobs report? It shows 95% of the hiring is public-sector workers. News like that will warm the heart of any Marxist.
Updated DOW charts:
http://stockmarket618.wordpress.com
http://www.zerohedge.com/forum/latest-market-outlook-1
The fact that only 41.000 got hired in the private sector should be attributed to "health care reform".
Too much extra cost and too much confusion.
Thanks, Obama for killing the recovery for good.
Well, I'm not sure if I want a pessimistic leader, but I'd prefer one the sees the problems and shows concerns. There is massive unemployment and its not getting better. What so hard about saying, hey, this is better than when were losing 750k jobs a month, but this is not good enough to get us out a great recession. We have a big problem on our hands, but hey we won WWII, we made to the moon, we recovered from the great depression, we are in an amazing time of technology development...we can make it thru this....
I think this depression is more spread out than past one, for better and worst. Money that rich and middle class investors alike should have lost was backed by govt, which took money from taxpayers. People in the depression that just became hobos are now collecting UI, old people on SS...which the employed taxpayers pay for..so we are going down, rich are getting richer, but poor, jobless not as quite as bad off as they were in the Great Depression.
Many people know in their gut (conservative, libertarians, progressives) what we need to do...write off the debts, suffer the consequences, and move on with our lives. We can argue about how much of a safety net we should have people in during the collapse, but its not a big point, as once things cleared, economy would be humming again. So what stays in the way? Dems, Repubs? I think the biggest blockade is Wall Street/Govt connection and the protection of banks...as they would be all completely wiped out by jubilee.
You are accepting Progressive = Marxist behavior and propaganda at face value, little one. Marxists ALWAYS operate by deception. And sophisticated deception, baby, deception that is a few levels beyond what the average person can grasp. THESE GUYS ARE PROS. The reason is obvious. Perhaps 25% of voters in any country at any time want any part of a Marxist revolution.
And Marxist deception ALWAYS morphs into force over time. "Power flows from the end of a gun" = "you can now go to jail for refusing to buy health insurance". Over time, you will go to jail if the Federal Green Home Inspector determines your bedroom temperature is 2 degrees above mandatory regulations, baby.
"The only thing that will drive a recovery is the liquidation of overvalued assets, the write down of bad debt by banks and consumers, and increased savings by consumers. The government is doing everything they can to prevent that from happening."
give this man the nobel peace prize in economics!!!!
you guys can't have it both ways. the obama stimulus has done nothing to create jobs because most of the money never made it to employers and #2 it wasn't targeted right
again, no one will miss the so called stimulus because its not really even there today
Correct. It is exactly what one would expect of a government program. So where did $787 billion go?
The real goal was to create a massive Executive Branch Slush Fund. Chicago on Steroids. That is sooooo illegal, baby. You'll see dozens of Special Prosecutors unleashed in January 2011.
And these are the best numbers that the govt. can put out too. Then the real ones must be horrible.
+10
The story isn't even on the Communist News Network's (CNN) web page.
I heard Bama on the radio today, he gave a speech sayin about how the NFP was NOT disappointing. The economy added tons of jobs for the 4th straight month...it was HYOOGELY good.
You mean he was lying? Or is he just basically Teddy Ruxpin and they put the "say it's good" tape in his back?
Teddy Ruxpin. Wow. You're old.
Do they count commercial bloggers?
I like Leo. He's wrong, but he does good work regarding the pension fiasco. He's just a believer. When he comments, then go after him, not before. Not fair.
What exactly are you saying Leo is wrong about... if he hasn't commented? ;-)
Leo adds zesty spiciness to ZH, just not a flavor most people can stand.
great post, but clarification question on U-6: I understood that the U-6 figure still accounts for people that have stopped looking for work, meaning those that dropped out of the labor force. Perhaps I'm wrong so please explain.
Not to say this makes for a rosy report, I just wonder what other reasons could explain the drop in U-6. It's an odd outlier in this report, that's for sure.
Since 1994 I think U6 doesn't count discouraged workers that have been unemployed more than a year. I believe with them included the U6 rate is nearly 22%.
kind of like leo ..
It was particularly telling on Wednesday when the prognosticator-in-chief made his pronouncement at CMU that several prominant politicos were noticably absent.
Well it seems then that deflation is the only way out then innit? But it is going to be awhile before dropping labor and increaing energy costs conspire to make manufacturing in the U.S. viable again...unless the Government steps in with protectionist mearsures... Well, well... Depression 2.0 here we come.
Hopefully the suffering and despair will fuel a return to real family and community values as people must turn to each other for support. And from these strenghtened communities a new economy based on stakeholder wealth can emerge... art and music should improve drastically as well for people will not only have more time on their hands...they will also have real pain to inspire them. Expect blues and jazz to make a huge comeback!!
And this from Dave Rosenberg's page. With no sarcasm, I hope you read this, Leo my friend:
NFIB SAYS JOBS MARKET STILL WEAK
The National Federation of Independent Business (NFIB) came out with some preliminary data points for May’s survey. Here are the comments — definitely not aligned with the Obama-Biden view of the labour market backdrop:
"Since January 2008, the average employment per firm has been negative every month, including May 2010, which yielded a seasonally adjusted loss of negative 0.5 workers per firm. Most firms did not change employment in May, but for those that did, 8 percent increased average employment by 2.4 employees and 20 percent reduced their workforces by an average of 4 employees. Small business job creation has not crossed the zero line in over 2 years. Government (including healthcare and education) and manufacturing (a large firm activity) are providing what few jobs are created. The number of owners with unfilled (hard to fill) openings fell two points to 9 percent of all firms, historically a weak showing.
Overall, the job creation picture is still bleak. Poor sales and uncertainty continue to hold back any commitments to growth, hiring or capital spending. As can be seen in the chart below, job creation plans have been running far below comparable quarters in the recovery from two other major recessions. The May figure is 1 percent, it’s above the ‘0’ line but still weak."
By raising taxes, the gov. might be well able to avoid people from saving money.
YES THEY CAN!
Yes, there are no jobs -- neoliberalism's 30-year credit bubble is busted for good.
But please lose the anti-government tirades.
Education, science, technology and regulations are indeed productive and necessary expenditures. But no private firm will undertake most of that spending, so governments have to step in.
What is unproductive is our $1 trillion annual Pentagon porkbarrel, our $1 trillion failed colonial wars, and our $12 trillion bankster bailout.
"neoliberalism's credit bubble"
Have you noticed that "conservatives" were president for 20 of the last 30 years?
Look where their policies got us. Every time there's a Republican president, a financial crisis/recession/depression follows.
It can hardly be called "neoliberalism." It started with Reagan and continues today. It's Reaganomics in its purest form. Steal from the poor to give to the rich, while the rich get richer sending the poor's jobs offshore...
Utter failure in 'education (70% dropout rate?), science (toxicity?), technology (viagra?) and regulations (captured) on top of that add '$1 trillion annual Pentagon pork-barrel, our $1 trillion failed colonial wars, and our $12 trillion bankster bailout'.
can you really call a captured governemnt that? No I'd call that a Kakistocracy.
a government that has an official assasination policy of its citizens if they happen to be subversive political dissidents?
a governemnt that fails to carry out its basic reason for existence, that is, protecting its own citizens?
Was it really necessary to shoot the Dugan kid, a 19 year old teen, a baby, four times in the head at close range, with our tax revenue, equipment and training, while our government is silent in its complicity?
was this kid an such an 'existential threat' to our ally that our government would green light the end of his life?
Barney Frank on Spitzer a couple days ago called the kid a Hamas supporter and a Terrorist by extension.
Our government reflects our morality all the way through.
Which is why even on this site we have fools making inane statments such as ' there is no good and evil, just beneficial and non-beneficial'!
and still act exceptional!
and subtracting the 19000 temp. workers BP hired for the cleanup... or will they be able to hold that job for the next 10 years to come?
The growth industry down here on the Gulf is disaster recovery. First Katrina, which shielded us from the worst of this depression, and now BP's debacle. We're gonna be rollin in jobs down here, until the place becomes totally unlivable, which looks like will be sometime this summer.
+1!
That's a GREAT quote! You and Tyler are really outdoing yourselves these days!
Our Dear Leader:
http://s.wsj.net/media/060410pow06_J_20100603184756.jpg
where is that sack of shit liar LEO? ism at 60, strongest sector jobs 29k in manu, where are the monster jobs you fellating zero credibility statist fellator?
WHERE ARE YOUR FUND-A-MENTALS NOW YOU LYING SACK OF SHIT?
HOW CAN YOU EVEN SHOW YOU FACE IN HERE AGAIN?
its not a lie from leo
just looks at rose colored glasses ,, still believes in the Keynesian lie .. would not touch gold even with a ten foot solar panel
many are in that.. camp
its because the brain washing and Pavlovian hold has tinctured the brain cells , and his audience needs the feel good remarks ,
Leo in a year will cry uncle. and see the reality .
like sinclair said today ,, as the european currency falls.
the best place to be is in gold ,, except for those that can not afford it.
coming to a usa shore soon ,
will it effect canada probably .
retirement funds would be smart to get gold ,
as the european nations go forward with gold backed currency.
and either these folks are looking through a welders mask ,, or smoking the green pill
\
"still believes in the Keynesian lie" ..I have been reading Minsky:"stabilizing an unstable economy"
my understanding is that we don't really have keynesian policy. it is a systhesis of neo classical and keynesian He calls it "the after Keynes" synthesis. I have to read more, but it does appear the keynesian aspects that were adopted also includes things that weren't. So industry and banking decided to ignore the things they didn't like. He implies our current understanding of what he said is actually wrong. So I wonder if maybe he doesn't deserve all the grief he gets.
He says this guy Hansen simpliefied Keynes concepts to give a flawed forcasting model. But this theory ignored financial and monetary factors (something keynes would not have done). Another guy named Hicks also ignored what Keynes
\Pg. 146 "ignoring everything Keynes wrote about the way in which the money supply of a capitialist economy is created in the process of financing activity"
I don't know if I am right or wrong, but could it kind of be an issue of interpretation.
or as williams shadow statistic show
leo would rather believe the government horse manure
williams
Early Signs of an Intensifying Downturn? This morning’s (June 4th) employment and unemployment reporting for May showed renewed underlying weakness in nonfarm payrolls, after two months of statistically-significant monthly gains (although payrolls have risen monthly since January, only March and April’s gains were significant by Bureau of Labor Statistics standards). While the reported May payroll surge of 431,000 was statistically meaningful, the gain was just 20,000, and not significant, net of temporary census hiring. After revision and birth-death model gimmicks, jobs contracted by 31,000 for the month. The secondarily-headlined private payroll gain of 41,000 was above the 20,000 net-of-census-hires figure because of a decline in other government employment.
That's just it. He believes it himself! "Party of the Nile".
Biggest private sector increase was temps!! Recovery on the way!!
Hey, what do Census workers and "temps +31,000" have in common?
Wake up Amerika! They'll be hiring for FEMA camp correctional officers soon if you don't...
Excellent post. On the one hand, we all want reality to finally creep in because by taking the pain sooner rather than later, we can perhaps begin to fix what is wrong. However, the pain does indeed hurt. I can assure you, as someone who was out of a job for 18 moths and could not collect unemployment benefits, it is not fun being out there and these supposed benefits and this supposed stimulus is all a bunch of crap.
Amble on over to Douchinger's site and read the General thread about how Ericsson doesn't want to hire anyone unemployed and all of the asskissers over on TF all agree with Douchinger that no you SHOULDN'T hire one of those UE people.
Great huh? They want to cut benefits so as to force you lazy slobs to get work NOW but agree that nobody should probably hire anyone UE anyway. What a bunch of sick mfers
what is the rationale of not hiring UE people? More than anytime in decades there are hella good UE people available to an org needing to hire...while many orgs that have done better in certain geographies sectors still employ losers....I would say, instead of not hiring UE they should lay off 5 percent of the lowest performers and hire the best of the UE they can find.