Just in case anyone needed confirmation that the DOL data is just a little, how should we say it, cooked, here comes Gallup with their March 15 undermployment number, which just hit a 2010, and series, high of 20%. This is obviously worse compared to both the beginning of the year (19.5%) and February (19.8%). Unlike the Dept of Labor's arcane voodoo which lately is based more on executive confidential memos and snowfall observations, Gallup's underemployment measure is based on more than 20,000 phone
interviews collected over a 30-day period and reported daily. Furthermore "Gallup's results are not seasonally adjusted and tend to be a precursor of government reports by approximately two weeks." We wonder if the abnormally hot March weather will used as an excuse for a deterioraiton in the most recent NFP numbers.
A summary of underemployment trends as per Gallup:
A profiling of the two components of the Underemployment index indicate that while Gallup's unemployment rate declined marginally from February and was at 10.3%, the percentage of those emplpoyed part time and seeking full time work surged to 9.7%.
Here is how Gallup interprets this data:
Focus on Underemployment, Not Unemployment
Even with historic healthcare legislation under consideration,
Congress passed and the president signed a new jobs creation bill on
March 18. No doubt, national attention will shortly shift to
unemployment and anticipation of the government's April 2 report of the
March unemployment rate. In this regard, Gallup's mid-March
unemployment rate is likely indicative of the not-seasonally adjusted
unemployment rate the government will release in April, as is Gallup's
broader underemployment rate.
The danger associated with focusing on unemployment is reflected by
the recent statement of Morgan Stanley economists suggesting that the
U.S. may add as many as 300,000 jobs in March owing to an improvement
in the weather, economic growth, and the government's hiring of
temporary census workers. If anything close to this number of new jobs
is announced by the government in early April, there is likely to be an
enthusiastic, possibly even celebratory, response. Government officials
are liable to tout the continued benefits of last year's stimulus and
the future benefits of the new jobs bill. Many Wall Streeters will
likely argue that the surge in jobs is simply another confirmation of
the strength of the overall economic recovery.
However, before policymakers celebrate too much, they should note
Gallup's recent findings involving its new, more inclusive measure of
underemployment. To be sure, there are some benefits associated with
the unemployed getting part-time jobs, no matter the source. For
example, Gallup's self-reported spending data show that part-time
workers who want full-time work spent on average 24% more per day ($51)
during the past 30 days than did the unemployed ($41). While this
represents an improvement and is good for the economy, it is not nearly
as good as the 85% higher daily spending of those having full-time jobs
It is also often suggested that a growth in part-time jobs may
indicate future growth in full-time work -- that companies hire
part-time workers before committing to hiring new full-time employees.
While this is sometimes the case, it may not be so at this point in the
U.S. economy: Gallup data show that one in three part-time employees
who are wanting full-time work are currently "hopeful" about finding a
full-time job in the next 30 days -- not much of an endorsement of the
idea that today's new part-time work will progress to full-time jobs.
Regardless of how one interprets the shifts taking place between
part-time and full-time jobs, it is important that policymakers focus
on the broader goal of reducing underemployment, not just unemployment.
Part-time, temporary jobs like those associated with census-taking are
far better than no job and may reduce the unemployment rate, but they
do not represent the kind of job creation needed for a sustainable
We can't wait to see how much extra liquidity the Fed will be required to pump into the market to compensate for a possible microdip in markets should this bad data get the 15 seconds of fame it so wrongfully deserves.