Blockbuster Full Time Employment Growth, But An Intractable Long Term Crisis

ilene's picture

Blockbuster Full Time Employment Growth, But An Intractable Long Term Crisis

Courtesy of Lee Adler of the Wall Street Examiner

Over the past week you have heard, read, and seen all kinds of noise about the government’s employment report. I even supplied some of that noise. We’ve seen all kinds of analyses explaining why the data was worse than expected, or better than it looked, etc. To the casual observer, it’s all very confusing. That’s the way Wall Street likes it.

I like to focus on just one major metric in order to cut through all the numerical crap and pundit noise. The number I am interested in is the number of persons employed full time. As usual, I’m only interested in the not seasonally adjusted total, which comes closest to an accurate reflection of reality. It’s not a perfect indicator, but it gives us the clearest picture of the trend both in the short and long run. The seasonally adjusted version is a form of modern impressionist art presenting a smooth line that represent’s the artist’s distorted idealized view of reality. While it attempts to represent reality, it’s a fake number that is not real. It’s completely made up. As with art, it sometimes imitates life. And sometimes the abstraction is pure fantasy.

The best way to view and understand the reality is with actual, not seasonally smoothed data, by comparing the most recent data with the same month last year and in prior years. That gives us a clear idea of whether the trend is improving or deteriorating. We can also look at a long term chart to get an idea of how the current situation stands in the big picture.

I’ll cut right to the chase. The change in full time employment in March was much, much better than the headline data suggested. The seasonally adjusted increase in non farm payrolls of 120,000 was a big miss, and is ostensibly the reason for the stock market selloff. The real reason is that the government and Primary Dealers have a pile of long term Treasury paper to roll over and sell this week, so they needed to shake the stock market tree to free up some dollars for Treasuries.  I covered that story in the Wall Street Examiner Treasury and Fed updates. But the government and the market owners  and managers needed a kernel of a story to kick off the selling of stocks and buying of Treasuries, and the employment data was it. The enabling mainstream financial media shills played their Chicken Little roles perfectly.

But the story was bullshit. In terms of full time employment, March was a blockbuster, gargantuan positive month. Nothing in the past dozen Marches even comes close to last month’s gain. Full time jobs increased by 1.3 million in March versus February. Compare that to March 2011, which was up by 455,000. In 2010, when the economy was rebounding from the depression low, March was up by 777,000. The average gain in March, which is virtually always a positive month, was 300,600 over the 10 years from 2002 to 2011. Excluding the recession figure of -732,000 in March 2009, the average was 421,000. This year was triple that.

OK, so it was the weather, I thought. We all know about the warm weather in March. I figured the best indicator of that would be construction jobs. I checked, and they weren’t up any more than any other year. If the weather were responsible for the jump, it should have shown up in construction jobs, and it didn’t. So, sorry, you can’t explain away this number by the weather.

As good as this number was, the labor market still has a whole lot of catching up to do. We’ll probably never see the bubble levels again in this generation. There were simply millions of fake jobs that aren’t coming back until the next systemic bubble. Full time employment peaked in July 2007 at 122.4 million. Today that the number stands at 113.9 million. There are 9.3 million fewer people with full time jobs today than there were in 2007. That fact is even more negative considering that the civilian non-institutional population over the age of 16  has grown by 10.5 million over the same span.

The seasonal employment peak comes in July or August each year. This year, full time employment is ahead of the year ago level by 2.7 million, which is the biggest year over year gain in March since 2006. At 113.9 million now, this number just below last year’s peak level of 114.3 million set in August. The economy needs to gain just 500,000 jobs by August to break last year’s high and confirm an uptrend in employment. The data already made a higher seasonal low in January.

What are the odds that it will make it? Last year the March-August gain was 3.1 million. In 2010 it was 3.6 million. The average gain every summer from 2002 to 2011 was 3.3 million. Even in the recession years of 2008 and 2009, the gain over that period was 1.6 million. Barring a seemingly unlikely sudden economic collapse, total full time employment will break out to a new high within the next couple of months. That would confirm an economic expansion. Stock chartists will recognize a reverse head and shoulders breakout, very similar to the one in 2004 that kicked off the acceleration phase of the housing and credit bubble economy.

Full Time Employed Chart - Click to enlarge

Full Time Employed Chart - Click to enlarge


What this means in terms of stock prices is an open question. Employment can be a lagging, coincident, or even sometimes a leading indicator of stock prices. In this case, it has been a lagger, and it has not confirmed the bull market in stocks under way since 2009.

That may be a danger sign for the future performance of stock prices.  An indicator of the ratio of the level of the S%P 500 to total full time employment has reached the upper trend parameter where the stock market topped out in 2007 and 2000. If it rolls over here, that could be a bear market signal. On the other hand, a breakout would suggest that this bubble has room to run.  I would not give this indicator a lot of weight without confirmation from other more familiar indicators, primarily those based on the market averages themselves.

The fact that March was a big month doesn’t mitigate the fact that the US has a big problem. The current ratio of full time employment to total non-institutional population over the age of 16 is 47%. This ratio has been below 48% for the past 3 years. That means that 48% of the people or less, are carrying the load for the other 52%.


Full Time Employment Vs. Population Chart -click to enlarge

Full Time Employment Vs. Population Chart -click to enlarge


Only twice before in the past 43 years since data on full time employment has been available, was this ratio lower. That was in 1975 and 1983, both at the absolute bottom of bad recessions. Today, 26 months after the low, this ratio is only 1% higher than its January 2010 low of 45.9%. 26 months after the 1983 low the ratio had rebounded by more than 4%. In 1976, 26 months after the low this ratio had bounced by 2.1%.  In those terms, the current recovery isn’t a recovery. The problem of fewer people earning from and contributing to an economy with an ever growing social burden is not going away.

This is one of those things that, to the stock market, doesn’t matter, for now. The only thing that matters to the market is liquidity. But if things don’t improve significantly in this measure, eventually it will matter, because as the system becomes increasingly top heavy, it will become increasingly unstable. Aside from the ever increasing human suffering the weakness in this ratio represents, it represents an intractable problem for government finances. Government’s need to suck up an ever increasing percentage of available liquidity to support the social safety net, or else enact draconian spending cuts and tax increases, will lead to the next inevitable, financial and social crisis. For a template of what lies ahead for the US, see Greece, Spain, Italy, and Ireland.


Get regular updates the machinations of the Fed, Treasury, Primary Dealers and foreign central banks in the US market, in the Fed Report in the Professional Edition, Money Liquidity, and Real Estate Package. Click this link to try WSE’s Professional Edition risk free for 30 days!

© Copyright 2012, The Wall Street Examiner Company Inc. All rights reserved.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
besnook's picture

this is good news on the surface but it boils down to the kind of economy that is best for the nation. do we want a third world model where labor is employed in unskilled, semi skilled low wage jobs so that a few people can buy a few rolls royces employing a few highly paid skilled workers or do we want an economy where profit sharing(wages) is at a level where millions can buy a new chevy every few years employing thousands of decently paid semi skilled workers AND the same few people can still buy a rolls royce?

walmart is the largest employer in the usa with .gov subsidizing hundreds of thousands of their employees' wages with welfare. this is the bottom line reason why the nation is poor and will continue to become poorer because these people can't afford new cars, tvs, homes. it won't matter much if 10 million jobs are created if this is labor's fate.  adding to that problem is the debt trap millions of kids fell into to get a college education effectively delaying their ability to buy new cars and homes for years because money they would have otherwised saved and invested is diverted to non productive debt service.

so the rich get richer at the expense of expanding the pie to get even richer by taking more of the same or even smaller sized pie. i have come to realize the size of the pie doesn't matter to these folks. it is a larger portion of the current pie they are coveting. if the pie gets larger their portion becomes smaller as a matter of simple math unless they can keep up by enlarging ther portion. it is much easier to enlarge their portion by simply taking the portion from those least able to defend their portion,i.e., labor.

Lee Adler- The Wall Street Examiner's picture

I don't do forecasts. Forecasting is a fool's game. I observe, analyze, and interpret current data in an effort to accurately understand where we are, what the current trend is, and what needs to happen to affirm the trend, or indicate that something is changing. 

Nowhere in the article is there any discussion or depiction of the unemployment rate, which is an irrelevant and fictitious construct. The article is about total full time employment, which may not be the only number that matters, but to me is the most important. Extrapolate that as you wish, but don't attribute that it to me. 

Am I confused or deluded, as the first commenter opined? I will leave that for those who actually read the piece carefully to decide.

The U6 is at the lowest level since December 2008 and is trending down.


<img src="">


TulsaTime's picture

I could not agree more.  We have run out of mights and could, our future bekons with near certainty.  An energy contracting system for the first time in 200 or so years puts a stake in the heart of 'GROWTH' as our great social escape hatch. 

goforgin's picture

Now this is an analytical piece! Ignore at your own risk SHEEPLE. OR you can join the doomers on the other side of this forum. Actually, Adler is a perennial bear, so he has natural tendency to immediately qualify his own bullish findings.

In case you don't know last year Buffet was calling for 7.7% unemployment rate later this year last year. I am in the camp that expects that. So is Adler(look again at his charts) but, he is unwilling to make a rosy longer-term forecast.

CrashisOptimistic's picture

The poster does not seem aware that this March was the BLS recalibration month.

And thus, this poster can be ignored henceforth.

ptoemmes's picture

Since 2007 - make it 2000 - what is the inflation adjusted median income of the "full time employed" over time?



ejmoosa's picture

Just wait for the April Jobs report.  The rest of the year will not be able to be spun into a positive, no matter how hard they try.

skipjack's picture

Now show me the % of those jobs where the possessor is making >= the salary and benefits of their prior job vs. the % that took a big ass pay cut.  If you lost a 50k job and only acquired a 30k job with no benefits, then your economic positio probably still won't allow the average person to pay their bubble-years mortgage and buy food in the same month.

Crisismode's picture

The ONLY government statistic regarding employment you need to look at is Personal Income Tax Revenues.


THAT figure has been going down month by month for the last three years.


You can add all the jobs you want, but if they are minimum-wage serf positions, they ain't contributing shit to the economy.



Shizzmoney's picture

You can add all the jobs you want, but if they are minimum-wage serf positions, they ain't contributing shit to the economy.


In the end, its the income, stupid. You'd think quasi fascist communist central bankers would understand this.

But I wouldn't give a fuck, either, if I was eating Morton's every night.

LawsofPhysics's picture

Precisely why I am long black markets.  two economies becomeing more prevailent every day and the more the political puppets try to "fix" things for their banker masters, the stronger the black markets become.

Personally it looks to me like we have long since passed the tipping point where banks pretend to make loans and the elite pretend to repay them.  In many respects, it is the same as it ever was.

engineertheeconomy's picture

As if employment were a good thing.

The only reason we need to have a fucking job in the first place is so the cocksucking government can tax our labor like in medieval times. If it weren't for the cocksucking government, we wouldn't need to have fucking stupid jobs. We could all just stay home and tend to the homestead instead. I enjoy staying at home and working in my garden and letting my solar panels on my roof work for me. If the cocksucking government would just leave me the fuck alone, I wouldn't need any of their fucking paper monopoly money to pay their dishonest taxes. The game is rigged

 Instead of using the term "employment rate ", we should replace it with the word "enslavement rate"

In other words, if the unemployment rate is 30%, then the enslavement rate is 70%

Wouldn't it be better if we could get the enslavement rate down instead of up?

If you think that low unemployment is good, then you must think that a high enslavement rate is good.

Because its good for the economy?

 Exactly whose fucking economy is it supposed to be good for?

You mean THEIR economy?



LawsofPhysics's picture

It might be nice to have some protection for that "homestead", don't you think, or are you suggesting that all these homesteaders also become their own military?  Might be a bitch for you if another group of homesteaders has significantly more advanced technology.  Either way we will probably end up as homesteaders, whtether we like it or not.  What to see where the world is heading?  Look at India, Pakistan, and Afghanistan - warloads, tribes, massive corruption to do, well anything (this will be your new tax) and a skeleton government for looks.  All matter of paper and PMs will be exchanged and the rest of the world will exploit the situation, much like the U.S. does now.  Blowback is a bitch.

James's picture

@Lawsof Physics - Are you actually suggesting that the .gov gives a rats ass for that engineer and is going to do anything for him?


The ONLY thing the .gov will do for Mr.Engineer is tax his ass until Mr.Engineer drops dead of exhaustion.



obejoyful's picture

Barring a seemingly unlikely sudden economic collapse.  


Seemingly unlikely!!!!!!  I would say seemingly likely. 

Lednbrass's picture

Even if full time employment did break out to a new high as the author suggests, I dont see this changing much in terms of the overall economic health of the country. Sure it might help the stock market, but at this point it seems so disconnected from the reality of the economy that its a bit of a "so what"? for anyone who doesnt make a living off of it.

The far more interesting (to me at least) information is in the lower chart- employment percentage of non-institutional population over 16. its abysmally low, and most job gains being made arent replacing the income people had before this whole mess started. This does not bode well, and I dont see a wave of generally low paying summer service jobs altering our course. As he notes, the market doesnt care- but the inhabitants of the country outside the bubble zones most certainly do.

scragbaker a cape cod clamdigger's picture

"Full time" where ?  From a former executive position making $100 K per year with full benifits to a $10.00 per hour 'full time' position ? 

Peter Pan's picture

Statistics, predictions, announcements are just confetti for the masses to encourage them to dance and sing along to the piper's tune.

The only statistic you can believe in is that unemployment is 0% if you have a job and 100% if you don't have one.

aerial view's picture

Most young people that I know are living at home and paying off student loans. The rest of these employed workers are earning half of what they did during the last 10 years; hence to look myopically at only employment numbers and then make predictions is the type of short sighted, tunnelled vision approach that carries little credibility. 

TruthInSunshine's picture

I won't comment in depth on Adler's opinions, other than to say he's incredibly confused, at best, and delusional, at worst.

The robust gain in jobs 'created' in March that he claims is the result of absolutely tortured calculus that he employs (pun intended).

Adler would be far better off to go back to U6 methodology of calculating unemployment, and furthermore, to break down the mysterious alchemy that is utilized by the Bureau of Labor & Statistics in creating its 'seasonal adjustment' figures, and if he is able to convincingly do what few (if any) have done in terms of that, he should explain how the 'seasonal adjustments' are or are not shoddy/defective/illusory/deceitful to those who suspect that they are incredibly so, but can't prove 100%, as the formula appears to be better protected than the recipe for Coca-Cola or KFC.

As far as interest rates are concerned, I've maintained that the groundwork is being set for 'allowing' interest rates to rise (given that there's not really a choice), and that the Fed is going to be occupied explaining to the unwashed masses how the economy is in sustainable recovery mode or at a dangerous risk of double dip inflection point, depending on what day of the week it is, and who from the Fed is speaking, while reconciling these statements in whatever ludricous way that one can only imagine, against the backdrop of rising rates nonetheless (look to the headline story on floating tnotes for more clues as to how the Fed is going to try to thread the eye of this very sharp needle with some incredibly creative financial engineering).

The bottom line is that the quantity of jobs has barely bounced off of the lows of the past three years in percentage terms, the quality of jobs has deteriorated dramatically through the current period, and the underlying economy is full of rot, with a fractional reserve money printing patch job projecting to the naive that the structure won't collapse at this point, when in reality, the foundation is as weak as it's been since the early 1930s.

As one final point, there's probably never been greater asset price distortion (i.e. bubble in most asset classes) in the history of the U.S. economy, as a result of unprecedented, activist central bank policies on both the monetary AND fiscal fronts.

scragbaker a cape cod clamdigger's picture

Yes -  your paragraphs #4 and #5 say all that really needs to be said, and they express it very well ! I am living proof of the 'job quality deterioration' in both working environment and greatly reduced pay.  Almost everyone that I know personally is in this same boat.  My friends who are self employed are running harder and faster than ever before trying to keep from going bust.  The author of this story has his head in the sand !

engineertheeconomy's picture

read an article the other day about the best way to disassemble the euro.

 now i'm thinkin we need to brainstorm and come up with the best way to disassemble the worlds central bankers into benevolent peoples banks or credit unions or som

Gold dagger in the heart?

How about Gold daggers in the side of their heads?

bulldung's picture

Can't let this data out.It would hamper justification of further printing needed to fund the government.

engineertheeconomy's picture

further printing to fund government rape, pillage and plundering