Households On Foodstamps Rise To New Record High: More Americans Live In Poverty Than The Population Of SpainSubmitted by Tyler Durden on 09/08/2013 13:17 -0500
There was much discussion of Friday's "disappointing" non-farm payrolls goal-seeked, seasonally adjusted, X-13-ARIMA conceived jobs "number."The conclusion was that it showed an economy which one year after the start of QEternity was growing nowhere near where the Fed has projected and hoped it would be at this time. But in addition to the BLS jobs number, there was another just as important number that was released on Friday: the monthly foodstamp (SNAP) participation update. There was no discussion of this particular number and for good reason. If the NFP number was at least meant to show some economic stability, if subpar, the monthly foodstamp update shows month after month that the greatest depression is nowhere near ending. To wit: in June, the number of households receiving foodstamps rose to 23.117 million, an increase of 45.9k in one month, and also a new record high. As for the average monthly benefit per household: $274.55, just off record lows.
Frequent readers are well aware that in addition to having broken the story about America's conversion to a part-time worker nation nearly three years ago, another topic we have been closely tracking over the past year has been its conversion to a gerontocratic worker society (from October 2012: "55 And Under? No Job For You"), which confirms that contrary to yet another urban legend that old workers are retiring in droves, it is the old workers who are getting the bulk of the jobs, at the expense of everyone else (those 55 and younger). Which brings us to today's chart of the day which shows the August job additions broken down by age group, and as tracked monthly by the household survey. The additions, or rather job losses, need no additional commentary aside from what we have provided so far.
While we already have the quantiative components of today's jobs number (horrendous), here is the qualitative breakdown. For the time constrained readers we will jump to the conclusion: absolutely abysmal, to a degree perhaps not seen in years. Of the 169K jobs added, the vast majority, some 144K or 85% of the entire August gain, consisted of the lowest paying jobs possible:
- +44K jobs added in Retail Trade
- +43K added in Education and Health
- +27K added in Leisure and Hospitality
- +17K added in Government (looks like sequester effect has finally "tapered")
- +13K added in Temp Help services
As frequent readers know, for the past three years we have compiled data looking at the US unemployment rate assuming a realistic labor force participation rate, which is the trendline average of the past three decades, or in the mid-65% area. Using such an approach allows us to estimate what the true unemployment (U3, not U6 underemployment) rate is. We can report that as a result of the latest monthly collapse in the labor force whose only purpose was to lower the unemployment rate from 7.4% to 7.3%, the actual implied unemployment rate just rose from 11.2% to 11.4%. This can be seen on the chart below. Also can be seen that the spread between the reported manipulated unemployment rate and the real rate accounting for a realistic labor force participation, just hit a record high 4.1%. In other words, unemployment data manipulation by the BLS was never been greater in the history of the US than in the past month.
The highlight of today's economic releases will be the 8:30 am non-farm payroll data, expected to print at 180K jobs, up from July's 162K, and result in an unchanged 7.4% unemployment rate. The "most important jobs number ever " is neither, because even if it comes as a wild outlier to the good or bad side, the Fed is unlikely to change its tapering intentions this late in the game. Still, it will provide fireworks in a very jittery market and if the number is far stronger than expected, expect the 10 Year to finally blow out from below the 3% range which it breached briefly overnight, and never look back, at least not until there is an August 2011 wholesale risk revulsion episode and stocks tumble. Speaking of jittery, overnight the WSJ reports that if picked as Bernanke's replscament, Larry Summers' faces an uphill battle to get the votes of three key democrats on the Senate Banking Committee (Jeff Merkley, Sherrod Brown and Elizabeth Warren). It would be only fitting that the dysfunctional Democratic dominated senate now lashes out against the president, and in the process scuttles the market's only hope of maintaining its Fed-derived gains over the past five years... And there is, of course, Syria which is becoming increasingly problematic for Obama whose support in Congress is looking ever shakier. Will he go it alone in the case of a no vote?
With ADP out of the way, and providing no guidance to an extreme NFP print one way or another, we once again turn to Gallup. As a reminder, a few days ago we showed that things are bad and getting worse for America's job prospects following direct polling land as relates to unemployment on a seasonally unadjusted basis. Today, the polling group has released its seasonally adjusted unemployment number and how it compares to the BLS' own estimation of the labor market. In a word: it is not pretty (which, again, is good for those who are hoping and praying St. Ben will keep the monetary Kool Aid running for a little bit longer): at 8.6% it is over 1% higher than the BLS' reported print, and is the highest since the end of 2011.
Gallup, which every week polls thousands of adults to get an unadjusted, snapshot picture of who has a job, who has a part-time job and who has no job has released its latest weekly results which have some good and some bad news. Good for those who fear that the NFP print on Friday will be so bad Bernanke will have no choice to delay (or reduce) the taper; bad for the economy. Because at 8.5%, unemployment for the week ended September 1 is now near the highest levels it has been in one year, following a spike in mid-August that sent it all the way to 8.8%.
The equity futures euphoria carryover from this weekend, buoyed by sentiment that the Syrian war is postponed if not cancelled, carried over into Tuesday morning despite news that Israel had launched a missile test, which looked at from almost any angle was an attempt at provoking a response from its adversaries. Also the Chinese boost driven by a solid beat in the country's two manufacturing PMIs persisted despite a drop in the August Non-manufacturing PMI reported last night. So once again we have returned to a state where good news is good news and bad news can be ignored. This, even with the Taper announcement just two weeks away. Of note also is that overnight Nokia shares surged 40% after Microsoft announced that it is to buy Nokia mobile business. In tandem, other EU based related names such as STM and Ericsson also gained ground, trading up 3% and 4.5% respectively. Nokia shares traded sharply higher today after Microsoft said it will pay €3.79bln to purchase substantially all of Nokia's devices & services business and will also pay €1.65bln to license Nokia's patents. A fitting farewell present from Steve Ballmer perhaps. Once again, keep an eye on Syria as the president begins his congressional consultations to take the escalation to the next level, with or without provocations from Israel.
The magic was the magnificent illusion that money printing increased wealth. It certainly looked that way, despite all the common-sense interpretation that would have you believe that it doesn't. But that's the beauty of a wonderfully performed magic trick. Something impossible seems to happen. You know it can't happen, but it looks like it did, and what's the harm in letting yourself believe? Assuming that the goal is reducing unemployment... it really was a wonderful 50 years. Pumping out money increased the labor force participation rate from about 59% in 1960 to 67% by about 2000 by creating jobs in military procurement, lobbying, and (as we went through successive bubbles) brokerages and finance, government, home construction, real estate sales, retail, etc. Now the losses in manufacturing and primary wealth creation are overwhelming the jobs created in the FIRE economy, and the US looks to be heading back to the golden era of the 50s, with labor force participation back below 60%. Too bad they'll all be low-paying jobs.
Here’s another depressing list to ruin your day. You can tell a lot about a society by what they value, what they build and what they do. The only new buildings we see being built are banks and medical facilities. That tells us a lot. We look around and see that we value fancy new leased or financed cars, financed McMansions, fastfood, and lots of shopping outlets. And now this list tells us a lot about where this country is headed. Among the ten fastest growing jobs in America, only one can be considered well paying. Only two of the jobs are in industries that produce something. Only one requires a non-liberal arts college degree. Most of the jobs barely pay a living wage. Most of these jobs are non-essential service jobs that add absolutely nothing to society. A society that does not produce is destined to decline. We’re doomed. Based on the list below, we would describe the United States as a service based nation of aging, vain, obese, shallow, financially illiterate boobs with bad skin and muscle aches, who love sports and entertainment, but can’t understand each other, and are addicted to their oil based suburban sprawl debt financed lifestyles.
The latest policy being implemented by Governments around the world consists of simply making data points up when reality doesn’t conform to their wishes.
Gallup tracks daily the percentage of U.S. adults, aged 18 and older, who are underemployed, unemployed, and employed full-time for an employer, without seasonal adjustment. Due to the lack of Arima-X 'magic' the results are specifically not comparable to the BLS data, but, as the chart below suggests, the correlation is high. What is most worrying about the latest data is the rapid rise in both unemployment and underemployment that the Gallup poll finds (to 8.9% unemployment and 17.9% underemployment. Unemployment rates have jumped notably in the last month to their highest in 13 months. Will the Fed 'allow' this data to filter into the BLS data and 'avoid the Taper' or are there non-economic reasons (G-20, deficits, technicals, sentiment) that the Fed needs to SepTaper.
During the NBC Nightly News segment last week about one of the unintended consequences of the Affordable Care Act (ACA), Lisa Myers reported speaking with "almost 20 small businesses and other entities around the country" and that "almost all said that because of the new law, they’d be cutting back hours for some employees." But the Obama administration doesn’t see why there’s such a fuss. According to Myers: The White House dismisses these examples as “anecdotal.” The president’s top economic advisor [CEA Chair Jason Furman] told us “he sees no systematic evidence the health care law is having an adverse impact on the number of hours employees are working.” So, should we take our government’s word and dismiss the examples as anecdotal?
So let's pretend for the moment that the Federal Reserve gets everything it has stated it wants. And even further: that Washington, D.C. gets everything it wants, too. The credit markets are repaired, and massive new loan growth flows out the door. Loans are made to businesses that hire gobs of new people. Consumers borrow and borrow some more to go to school and buy homes, cars, and gadgets. Inflation remains low and job growth explodes. Tax receipts climb and the deficit falls. The stock market goes higher and higher, gold falls and then falls some more, as confidence in the system, its masters, and its institutions grows. The Fed wins and D.C. wins. But in reality, we all lose. It's all just a matter of timing (and un-sustainability).
Another 2 Year Old Zero Hedge Story Goes Mainstream, And A Glimpse Inside The BLS' "Frontrunning" Data RoomSubmitted by Tyler Durden on 08/12/2013 07:16 -0500
Those who did not read Zero Hedge in March 2011 will be shocked, shocked to learn that yet another "news" service, one owned by Deutsche Börse, was merely disguising as an HFT-facilitating, instanews disseminating, speed roadblock removing provider, who just happened to charge $375,000 per year for its frontrunning services. The firm in question, as the WSJ reports today, was "founded by an investment firm and now owned by the Deutsche Börse stock exchange, Need To Know News has operated with an overriding mission: sending data directly from the government through high-speed lines to financial firms that are able to trade on it instantly. Some have paid $375,000 a year for the service." Of course, those who did read Zero Hedge in March 2011 will already know all about Deutsche Boerse's "news dissemination" strategy which was covered here first with "Alpha Flash: For All Your Nanosecond, Collocated, Algorithmic Frontrunning Needs" in which we tongue-in-cheekly asked "Ever feel like your nanosecond algorithmic frontrunning skills are becoming obsolete? Unable to scalp even a few extra pennies from illiterate orphans, widows and kittens armed with REDIPlus 9.0? Despair not, for Deutsche Boerse [and Need to Know News LLC] has Alpha Flash just for you."