Unemployment

Pretty much  precisely what we noted earlier today: "A couple of behind-the-scene facts: from October to February, an epic
700k people have left the work force. If you actually adjust for the
fact that the labour force participation rate has plunged this cycle to a
27-year low the unemployment would be sitting at 12% today. Moreover
the employment-to-population ratio — the so-called “employment rate” —
stagnated in February at 58.4% and is actually lower now than it was
last fall when “double dip” was the flavour du jour."

Total NFP increases in February: +192,000, slightly below expectations of 196,000, and below the Goldman target of 200,000. January revised from 36K to 63K. Private Payrolls increased by 222K on expectations of 200K from 68K, manufacturing jobs increased by 33K from 25K, down from a 53K revised in February. From the report: "Nonfarm payroll employment increased by 192,000 in February, and the unemployment rate was little changed at 8.9 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in manufacturing, construction, professional and business services, health care, and transportation and warehousing." Average hourly earnings unchanged, and average weekly hours declined to 34.2 from 34.3.

In a January 2009 ABC interview with George Stephanopoulos, then President-elect Barack Obama said fixing the economy required shared sacrifice, "Everybody’s going to have to give. Everybody’s going to have to have some skin in the game." For the past two years, American workers submitted to the President’s appeal—taking steep pay cuts despite hectic productivity growth. By contrast, corporate executives have extracted record profits by sabotaging the recovery on every front—eliminating employees, repressing wages, withholding investment, and shirking federal taxes. Washington’s embrace of labor market flexibility ensured companies encountered little resistance when they launched their brutal recovery plans. Leading into the recession, the US had the weakest worker protections against individual and collective dismissals in the world, according to a 2008 OECD study. Blackrock’s Robert Doll explains, “When the markets faltered in 2008 and revenue growth stalled, U.S. companies moved decisively to cut costs—unlike their European and Japanese counterparts.” The U.S. now has the highest unemployment rate among the ten major developed countries.

The Numbers Behind the Middle Eastern and North African Revolts

One would think that the S&P doubling from the March 2009 lows would be indicative of a mission accomplished for the Fed's market manipulation, aka Open Market Operations, team. No such luck. In fact, while the abominable Dr Chairsatan and Messrs Frost Sack are spouting garbage about economic recovery to anyone retarded enough to listen (oddly they have found a great audience in Congress) behind the scenes they are telling banks to prepare for a stress test recession scenario in which unemployment is 11%. And since current unemployment is about 23%, and we continue to be in a Depression, we assume this means that the Fed is actively preparing to make sure banks will be able to handle the explosion in economic growth and, oh yeah, hyperinflation, when the $1.7 trillion in excess reserves as of June 2011, finally flood the market. Although since this statement may be sufficient to get Zero Hedge to issue "unsolicited" opinions on the state of the Great Ponzi, we will go with the party line here... Which we find confusing: why would the Fed force US banks to undergo another stress test: aren't they all massively overcapitalized? Wasn't that the whole point of the first fraud of a stress test back in 2009 which had he same credibility as the upcoming European one? And why not cut to the chase and conduct a Ponzi unwind stress test? So many questions...So many more lies.

Surging inflation? Check. Negative GDP growth? Check. Increasing unemployment? Check. Dropping wages? Check. Looks like we have a stagflation bingo. Per Bloomberg: "U.K. unemployment claims unexpectedly rose in January, underlining the fragility of the labor market a year after the economy emerged from recession and as public spending cuts start in earnest. The number of people receiving unemployment benefits rose 2,400 to 1.46 million, the Office for National Statistics in London said today. The median of 25 forecasts in a Bloomberg News survey was for a 3,000 drop. Unemployment based on International Labour Organization methods rose by 44,000 in the fourth quarter to 2.49 million." And this is just the start of what real austerity means: "Prime Minister David Cameron is counting on hiring at private companies as his government embarks on budget cuts that will cost 330,000 public-sector jobs over the next four years." And more economic humor: "There is a risk unemployment could rise” this year, Philip Shaw, an economist at Investec Securities in London, said before today’s report. “It’s possible that the public-sector job cuts happen straight away and you don’t see a pickup in private-sector job creation.”" Coming soon to every centrally planned regime near you.

Some thoughts on why the Fed's monetary policy is, paradoxically, doing everything in its power to prevent the organic growth of the economy, and to hinder employment growth.

Over the past 3 days America has been battered by one after another apologist explaining just how good the employment data is if one strips out all the "bad", and how all the "bad" can and should be stripped out by all patriots, and attributed solely to bad weather. For those who are beyond sick and tired of listening to this tripe, here is David Rosenberg once again telling it how it is. In summary: "The data from the Household survey are truly insane. The labour force has plunged an epic 764k in the past two months. The level of unemployment has collapsed 1.2 million, which has never happened before. People not counted in the labour force soared 753k in the past two months. These numbers are simply off the charts and likely reflect the throngs of unemployed people starting to lose their extended benefits and no longer continuing their job search (for the two-thirds of them not finding a new job). These folks either go on welfare or they rely on their spouse or other family members or friends for support."

Yesterday, while we were listening to the Chairsatan(^© Bill Gross), we made the following semi-serious realtime translation of Bernank's presentation to the sycophants' club: "Let me explain it to you: 9% unemployment: NFLX $300; 8%
unemployment: NFLX $500; 6% unemployment: NFLX $1000. Kapishe?" And while we were mostly joking in our correct interpretation of the Fed's massively wrong understanding of causality between the market and the economy, Nicholas Colas of BNY today took a comparable idea and analyzed what the level of the S&P should be for unemployment to get to a Fed acceptable level based on empirial data. We quote: "By our analysis of the last forty years of history for the S&P 500 and unemployment rates, in order to get to the Fed’s 8% target in 2012, the U.S. equity market needs to climb another 35% in 2011, putting the S&P 500 at 1755. That’s not our price target, but it just may be the Fed’s." Since this is most likely the entire "sophisticated" plan laid bare of one Iosif Vissarionovich Bernank, expect to see a complete elimination of volume as the mutual fund cartel continues with the never-sell collusion, and the only incremental buying is PDs with taxpayer money and HFTs' bid-bias fully compensated by rebates for providing the PDs with the "liquidity" they need to send stocks up another 350 points. Luckily, few if any care what the joke that is the stock market actually does.

"There is no doubt that the weather exerted a major impact — wouldn’t the consensus have realized that ahead of time? It’s not new news that January was a terrible weather month and that the data would be impacted. Then again, yesterday all we heard on CNBC was how the chain store sales data were unaffected by the inclement weather, but somehow the labour market was! Go figure. Maybe instead of looking for work, people were choosing to stay warm in the malls and spend their extended unemployment insurance cheques and newly received payroll tax deductions. What an economy!" - David Rosenberg

Probably the last chart to bury any doubt about just how truly horrible today's employment data was, comes from a little observed data metric: that showing the number of people who are not in the labor force, but who want a job now. The number just hit 6,643K, a jump of 431K from December, and the highest number in history. These are people that would send the unemployment rate to about 12% if they were in the labor force. Nothing else needs to be said.

Highlights

• Change in Private Payrolls (Jan) M/M 50K vs. Exp. 145K (Prev. 113K)
• Change in Manufacturing Payrolls (Jan) M/M 49K vs. Exp. 10K (Prev. 10K)
• Seasonally adjusted U-6 underemployment 16.1% from 16.6% previously
• Much more importantly, Not-seasonally adjusted U-6 surged from 16.6% to 17.3%!
• The civilian labor force declined from 153,690
  to 153,186
• Government workers: from 20,759K to 20,740K
  
• Labor force participation at 64.2%, the lowest since March March 1984
• Part-time workers for economic reasons: 8,407
• Part-time workers for non-economic reasons: 17,552
  
• Birth/Death adjustment: -339,000
  

We are now all awaiting Snow Lavorgna to appear and explain how January snow is to blame for genital herpes, among every other bad thing in the world.

While everyone is relishing the Fed's third and only mandate these days, namely to send the Russell 2000 to 36,000 and cotton limit up to infinity and beyond, while everyone else is terrified to short stock in advance of what increasingly appears like near certain additional quantitative easing, congressman Ron Paul has announced that the first Monetary Policy subcommittee meeting will focus on one of those two now forgotten Fed mandates, that of creating jobs. “I’m very pleased to hold our first subcommittee hearing in the new
Congress on a topic that could not be more critical, namely
unemployment.  Despite enormous amounts of monetary and credit expansion
by the Federal Reserve in recent years, the nation’s unemployment
picture remains bleak.  While many focus on the impact of fiscal
policies on employment,  the effect of monetary policy often goes
unexamined.  In my view we are now experiencing the bust that inevitably
results from the misallocation of capital and human resources in a
period of artificially cheap credit.  It is important to understand the
Federal Reserve’s role in creating today’s unemployment crisis, while
also highlighting that high unemployment and low economic growth can
persist even in the face of tremendous monetary inflation.” Of course, the answer to all of these problems is simple: no debt ceiling raise. If the Fed can't monetize any more debt and make the Primary Dealers ever richer (now that the PD ranks have just been expanded from 18 to 20 to include SocGen and derivative (!) trader MF Global, and its CEO Jon Corzine) from commissions on indirect debt monetization, its power is gone. But that will mean doing something for less theatrical than a few hearings, and far more responsible: such as preventing rampaging inflation across America (see cotton chart posted previously).

The market limped in to the close today as the dip buyers were somehow distracted by the jump in new claims for unemployment which...

Are we heading for long-term structural unemployment?