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Suddenly, a Sharp Deterioration in the Job Market
Wolf Richter www.testosteronepit.com
A hullabaloo broke out on February 3 after the BLS released its jobs report that indicated that a surprisingly robust 243,000 jobs were created in January, and that the unemployment rate had dropped to an even more surprising 8.3%. Cynics, academics, BLS heretics, BLS true believers, hype mongers, and politicians of all stripes waged a veritable media battle over these numbers that President Obama serenely trotted out as validation of his policies. Even Rush Limbaugh jumped into the fray. Rarely, if ever, had BLS numbers caused so much public disagreement—and scorn. But that’s history. Now we're in February, and unemployment, after a year of fairly consistent improvement, is suddenly showing a sharp deterioration.
On Friday, Gallup’s mid-month unemployment reading, which covers the preceding 30 days, jumped from 8.3% in mid-January, the low point since the financial crisis, to 9.0%. An astounding increase. And its Job Creation Index confirmed that trend, dropping from +16 in January to +13 in February.
Worse, 10% of the employees in mid-February were part timers in search of full-time jobs, though down a tad from January's of 10.1%, the all-time worst level in Gallup's history! Underemployment—a combination of the unemployed and part-timers who are looking for a full-time job—jumped to 19% from the mid-January reading of 18.1%. While Gallup’s unemployment reading has improved steadily over the course of 2011, the underemployment reading has simply gotten worse.
Gallup's mid-month reading has been a good predictor of the non-farm payrolls report that the BLS releases two weeks later on the first Friday of the following month. For example, Gallup’s mid-January reading improved to 8.3%, in line with what the BLS would report two weeks later (causing the above hullabaloo). Unlike the BLS, Gallup, does not seasonally adjust its unemployment reading, so some uptick during this time of the year is normal. But that kind of jump is far beyond normal.
Of course, the BLS might tweak its formula to further decrease its utterly confounding workforce participation rate to the point where the resulting unemployment rate will actually, and once again, surprise on the upside, despite the hue and cry that may cause.
And there was another indicator: the Philly Fed employment index collapsed from 11.6 in January to 1.1 in February—a warning shot for Jack Ablin of Harris Private Bank whose concerns on this were published by Politico's Morning Money on Friday. The index reflects hiring plans by employers, and they have pulled in their horns. They're now adequately staffed, though they might add a few people here and there, while they’re waiting for demand to show signs of life. That wait may tax their patience, however: gasoline prices are at an all-time high for this time of the year, and other debacles are tearing into the toughest creature out there that no one has been able to subdue yet. But even that tough creature may have reached its limit. Read.... The Inexplicable American Consumer Takes an Unexpected Breath.
Over the years, the Philly Fed employment index has shown a strong correlation with the BLS jobs report, and Ablin estimated that based on it, only 50,000 new jobs were created, a far cry from the 243,000 in January—fictual or not. This and the nasty mid-month unemployment number from Gallup revive an odd idea: has the ECRI’s much ridiculed recession call been right all along?
Unless the BLS can figure out how to statistically adjust its next set of data and estimates to relegate any negative elements to blissful oblivion, there will be disappointment. And it will slam into lofty expectations—which may cause the stock market to, well, spike because, in these crazy times of ours, QE3 with all its wondrous, illusory, and ineffectual magic will suddenly reappear on the table. Read.... Bernanke’s Rain Dance at the Bottom of the Stairs.
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I too am a snowbird and live between three seprate homes (Canada, NY and Florida).
Look at the age of most of the people waiting in line, look at the social cross setting, who is missing (do you see young families and just starting professional couples)?
What section of town do you "fill your gas tank up"? What is the average value of the cars at the gas pump? Take a few minutes the next time you are at a pump, notice who is "topping up" their tanks and who is putting in just a few bucks to get were they have to go, take a look at the value of the car and the age of the person.
You're at a marina in Bonita Springs, maybe you should chat with the dock master and see how business is? How many open slips are there(most snowbirds don't have boat that are kept in "long term" slips) also ask him how many transient slips he is renting out compared to 2006, look at the conditions of the boats at the slips (see what is growing on the sides/waterline, boats have to be hauled and cleaned routinely and this is the first thing owners defer when things get tight).
Several years ago a marina in Cape Canaveral had a three year waiting list to get a slip, now they "have slashed our dockage rates again". http://www.harbortownmarina.com/
It sounds like you really don't know the community, and are just seeing the surface and other affluent snow birds.
Here is a little awareness test. Did you notice how dry every thing is? How low the levels of the inland lakes are?
February Brings Some Rain After Record-Dry January
Early February rainfall improved water levels in some areas of the South Florida Water Management District's 16-county region following the driest January since recordkeeping began in 1932.
HardCleaeye,
Xzactly - I see people walking up to the attendant window with a $5 bill to pump $4/gallon gas into an old beater.
I met a woman recently. She drives new car with $637/month payment. She lives in a 3br/2bth newer SFR with a $2,200 per month house payment (assume it includes taxes and insurance). She earns $4,000 gross per month; she previously earned $6,000/month. She remarked that she has been running up CC bills every month as she cannot make ends meet. I threw her back into Gen Pop - you know how that ends.
hey man it is hopping down here in S FL like its 2005
There are 300 million people in this country based on the census. Probably 325 milion or more if you count illegals and welfare cases that don't get counted. There are around 110 million jobs. There are around 100 million retired and under the working age. Soon there will be more retired than working as the labor participation rate falls below 50%.
8 out of 10 people are not working. Right now it is 6 out of 10. 5 out of the 6 make less than $30k a year. 3 out of that 5 make minimum wage.
Simple math proves the majority of people are not doing well. Restaurants are filled because it costs nearly the same to eat out, than cook a meal bought at the grocery store. With many families existing on two parents working two or three part time jobs, they don't have time to cook. Let alone the fact that forcing a generation to believe every girl and boy must go to college, has produced a generation that doesn't know how to cook.
If you are speaking about going to a local marina and eating at a restaurant that is always packed, you obviously do not live like 90% of America. You need to take the blinders off and take a drive to middle class middle America and see what people are trying to live off of without gvernment asistance. Ghetto america lives on more disposable income than middle America today.
adr: TEN stars for you. Exactly what I think.
" There are 300 million people in this country based on the census. Probably 325 milion or more if you count illegals and welfare cases that don't get counted. There are around 110 million jobs. There are around 100 million retired and under the working age. Soon there will be more retired than working as the labor participation rate falls below 50%.8 out of 10 people are not working. Right now it is 6 out of 10. 5 out of the 6 make less than $30k a year. 3 out of that 5 make minimum wage.Simple math proves the majority of people are not doing well. Restaurants are filled because it costs nearly the same to eat out, than cook a meal bought at the grocery store. With many families existing on two parents working two or three part time jobs, they don't have time to cook. Let alone the fact that forcing a generation to believe every girl and boy must go to college, has produced a generation that doesn't know how to cook.If you are speaking about going to a local marina and eating at a restaurant that is always packed, you obviously do not live like 90% of America. You need to take the blinders off and take a drive to middle class middle America and see what people are trying to live off of without gvernment asistance. Ghetto america lives on more disposable income than middle America today."
I am a part-time private chef for an executive couple in NYC. In their insular little world, everything is peachy. They earn enough in one week to send one of their offspring to Harvard for a year. They routinely fly off to Europe, China, and elsewhere for business and pleasure. They each have a private car and driver. They cannot fathom that the world is falling apart around their ears. They are clueless about the perils facing the dollar despite being in high-level positions (at banks, no less). I can overhear their dinner conversations, and they are totally clueless. And both of them are big-time dems who proudly voted for Bammy and are personal friends with Timmy G. They think Krugman is wonderful...
Meanwhile, their housekeeper lives in East New York, one of the nastiest places in Brooklyn, where the only "groceries" come from the corner bodega with the bullet-proof glass. They pay me about $600 a week... which ain't great in NYC, but I live in Corona, Queens, where it is a little more sane. Out in Queens, you can go out for BBQ or diners where the food is cheaper than you can make it yourself... and I am a professional cook. Both my wife and I have been self-employed for 20 years with nothing more than part-time jobs in all that time. We have to pay for our own healthcare and neither of us has ever had a paid vacation or sick time.
My wife and I are older, and we cleaned out our IRA's a couple of years ago to buy a little house in upstate New York, just south of the Adirondacks. Every single town up there is horribly depressed. Get off the Thruway at any exit and drive through the little towns. There are dozens of boarded up storefronts everywhere. Restaurants are rare, except for diners and pizza places. You can buy nice homes with an acre of land for less than $100k, and in our case, about $60k. The younger generations are leaving these areas because there is no work for them. Most of the homes are inhabited by people who, like us, are older and have a little money from our earlier lives. Huge areas of fertile farmland are sitting idle, used only for hayKids have no such starting point. There are a lot of people up here who are just going through the motions of life, living with their families, working at Wal-Mart, running out the clock. So much potential, so many wasted lives.
Oh, but things are getting better... riiiiiiiiiiight!
dhengineer
Been through there -- beautiful but short growing seasons, bad winters. Expensive to heat and live. There are better places to hunker down. Why buy when you can squat?
Agree with everything except for the comment regarding restaurant vs grocery store. This is not correct, I can purchase a prime rib roast for about $7 per pound less if I look for sale and freeze, 6 pound roast will feed a family of 5 with left overs for making beef barley soup, so that is $42 for meat, bag potatoes $5, veggie (or less if it came from my garden), $3, salad and homemade pie of your choice, budget $5 per pie (punkin, strawberry whatever,flour, cream etc...), homemade bread, $1, misc ingredients $3, so for about $60 I can feed and feed WELL a prime rib meal for 5 with enough left overs for the next night's meal..... You cannot feed a family of 5 a prime rib dinner at a restaurant for $60 (and have enough leftovers for a second meal), plus my food is better taste and nutrition wise......
And this holds true for other meals, turkey is even cheaper and feeds more, so do other cuts of meat.
Now my time is free, I am retired and enjoy cooking, the equation changes if you have to pay me for my time to cook and clean.
If you are a single working parent, there are not enough hours in the day to be cooking like this, hence the trade of is buying at a restaurant but it does cost more money.
I'm pretty sure your kids will be paying for all this, and their kids, and their kids...
@simple and confused,
I think you are seeing things objectively. As you say, it's not "right", but that's just the way it is.
The problem with TEOTWAWKI is that you can only be right once. There are an infinite number of permutations on the other side of the argument. So the nihilists are fighting odds of infinity-to-1.
The endless worldwide QE is resulting in a kind of pseudo-"recovery", which you have described in Chicago and FL. I have no doubt that, in the fullness of time, those policies will backfire--but it ain't gonna be in 2012.
The critical mistake the nihilists are making is that they see their one shot at success as being right around the corner. It ain't--and they are missing all the other ways to get rich from the system's folly.
OK, peckerwoods: let me have it!
Let's say you are average middle class American with $10k in savings (doubtful for most) and you were incredibly lucky to invest in Select Comfort in 2009. You would now be fairly well off. However to do so, you would have decided to risk your entire savings on a company losing $250 million and heading for bankruptcy. At the time there was no way to see the government throwing trillions of dollars at the stock market in an attempt to prop it up. Or being able to forsee mark to market accounting rules being thrown in the shredder allowing corporatons to show hundred million dollar profit gains one quarter after showing hundred million dollar losses. Sorry, actual business doesn't turn around that fast.
That is why it is no longer investing. You would have the same luck betting the $10k on red 16 on a roulette wheel. Stocks are gambling now, plain and simple. If you went to 100 Autozone stores, you would never see the booming business Wall Street claims that has sent that stock soaring.
Say you placed a safe bet on Apple and bought $10k worth. You'd be sitting on around $40k right now. Not bad, but not enough to bail you out after losing your job. Without a dividend there is no income from holding the stocks.
Your 401k may look decent again if you have one, but you can't access that. The last 20 years have proven you're more likely to lose everything than retire wealthy. The stock market is a scam. If you're playing in it you are either the con man or the mark.
Great post, you'll never be the Mark..
Concur, and this from the local Globe and Mail,
The Canada Pension Plan Investment Board will soon be one of the largest institutional owners of regional shopping malls in the United States after striking its biggest real estate investment ever. These investments are, in large part, a bet on the future health of American consumers. CPPIB now has an interest in 26 malls in major U.S. urban areas, placing it in the top ranks of investors in that area.
.......Sadly shaking head and sighing..........
Much as I don't like what you're saying, I tend to agree with you. Interesting times coming up.
I think you're right. Most folks are more interested in Jeremy Lin than in Ben Bernanke.
I think you're right. Arenas are packed. So too are restaurants of all qualities.
The poor in America have cell phones and cars.
But here's the deal: Anyone over 40 and paying attention knows that Obama is basically Jimmy Carter without the Christian veneer.
Remember that even with his failures, Carter was leading Reagan through most of October!
Right now, people holding UST are losing value by the day. This is not a "sustainable" risk/reward relationship.
But when the bond managers stop buying UST, anyone holding any sort of debt is going to be
in a world of hurt.
So, I read ZH to get a sense of the point at which fund managers are going to dump UST.
Then read a little STRATFOR to see where the next war is brewing....
And as a measure of hope, (yeesh...hope?) I offer you this: When you look at DC and see the insanity, I
encourage you to take a step back, and change focus: Then you will see that 85-90% of the
States in America run in the black and have reasonably functioning civic systems that respond to the
needs of their people.
Obama is no Jimmy Carter. OB is firmly in the pockets of the Bankers, just compare the resume's of the staffing of Carter's executive branch to OB's.
OB is bought and paid for by the likes of the "Vampire Squid".
Carter and Ron Paul are cut from the same bolt of cloth, both have unpopular political platforms of which they will not sell out on. We use to call it integrity and ethics, may not agree with the man but respect him, 'cause he will walk the walk.
Sorry OB doesn't fall in that group.....
Funny, McDonalds will always have lines, it's not really food so they can sell it for less than the cost of real food. Try eating at a restaurant that serves real food. Almost no one sells gasoline anymore, 10/15% ethanol which is subsidized. There are far fewer cars and even fewer tractor trailers on the road. I see more and more bicycles, restaurants that would turn tables 3 times with lines and now half empty.
Sure it's food, airline food... Damp, mushy cardboard. Yum.
Watch CNBC on Tuesday and watch how all is spun into gold.
The economy is booming.
The BLS was created in 1984 per Dorfipedia.
[oops]
If you voted Republican, you have NOTHING to complain about. The Bush tax cuts are in place for 11 years. Where are the US jobs? ALL Congressional Republicans should be out looking for jobs in the US. Take Faux Noise cameras, take the ACORN pimp and prostitute, and film the process.
If they can't, they need to be called liars, to their face, voted out of office and kept out of office. When my unemployment office brought up the topic of volunteering, I said, "Oh, hell, no, I'm not volunteering to do anything else. I'm not putting wear and tear on my car. Calling George W Bush, his dimwit Labor Secretary Elaine Chao, Mitch McConnell's wife, and the Repubicans liars is all I'm going to volunteer to do." I shoved a half a ream of paper across the desk and said, "That goes in my file. Using blogs to call Bush a liar is ALL that I'm doing for my volunteer service. Show it to your chain of command. Anyone who has a question, have them give me a call. I'll settle their ass down for them."
My unemployment checks never stopped coming. We have to get to the point in the US where we call Republicans liars. They have to hear it and understand it. They don't have to like it.
heroic coup:
Yes, tax cuts. Meantime there was spreading economic chaos from housing, caused by government giving in to both greedy bankers and greedy fellow citizens, while congress kept spending spending spending. Tax cuts WITHOUT CREATING MORE DEBT always are the expectation, but that's not what politicians do. Sheeple haven't caught on to that and never will (and don't care) 'cause they're part of the problem, i.e. they want handouts. Those who pay taxes (i.e. pay the bill) are about equal or slightly smaller number than those who want handouts. What do you think will happen?!. Voting solves nothing, never will. After everyone's terms, we're always worse off than before because the gimme system just doesn't work. Let it all collapse, please. Those who advocate the gimme system are the liars -- why should anyone work when others don't and tap politicians for more and more of workers' paychecks. You're one of the problems.
There is *zero* difference between the parties in execution of policy. They are just different flavors of the same sh!t sandwich.
Message to Clueless Idiot on Unemployment Since Bush Administration:
He left office. All the people you mentioned have been gone for years. Perhaps the problem is you heard you might have to take a piss test to continue to take our tax money?
Get your head out of your ass HC.....they're ALL liars regardless of your ill-informed political bias. Didn't you get the memo?
You don't need to say anything else. That remark illustrates to the world (and you are ignorant to it) that you are the problem: you are an unproductive member of our society is any measure that is significant.
Such a clueless ass.
ad hominum attacks are not helpful...
There are so many logical reasons for why his argument fails...
It's a tribute to zerohedge that it gets enough traffic for the paid Obama trolls to post comments here.
I can't tell if you're really dumping on Republicans, or spoofing Democrats that do.
Either way, propagating this whole Us/Them, Good/Evil thing is just counterproductive.
Dude, wake up, writing like that makes me think you were born yesterday, or at least 8 years earlier. Anyway, Bush is not running for president this time, nor was he the last time. You're just a tad bit behind the times here.
I expect George W Bush can be Photoshopped into any campaign ad, including Jeb Bush if Jeb's the Republican nominee; don't know if Obama's team is considering doing that, but it would be hilarious. Does that strike fear into Republicans? How much would Republicans like Bush to remain in his hole in Crawford, Texas?
I heard an interview on Bloomberg radio and I can't remember who it was but he said the
Philly index has beeen spot on for 8 months about the unemployment, so he translated that
Feb. numbers would only show plus 100,000.
The media and government agencies want Obama re-elected. At all costs.
So does the RNC.
Yep. And at some point I hope more people realize that the repubs aren't much better. They both suck.
sessinpo
OKAY SMARTY, WHAT'S THE ALTERNATIVE.
That's the power of bailouts
your recovery is NO RECOVERY AT ALL
What about all of the many people like myself and my wife who were "DOWN SIZED" and are now working harder for less money than we used to make eight years ago with our benefits seriously reduced or eliminated ?
scragbaker a ca...
Seriously, think about squatter's rights somewhere where you can get some crops growing -- that won't be in the north. Remember that there must be water to drink, or access to it.
speaking of squatters' rights (or at least advantages of some kind), when the now forgiven criminal banks get this revised foreclosure deal rolling again, the consumption previously stemming from redirected mortgage payments and home occupancy (utilities and maintenance) will go into bank vaults and stay, judging from recent events.
Why you're both still employed, and your new jobs "count" just the same as your old ones.
To bad the msm won't spend a headline on this matter
why should the MSM cover it? ..if the BLS says there's 8.4% Unemployment then that means the BLS says there's 91.6% full employment
Happy Days
..there is 91.6% employment isn't there BLS ?
Lies Lies and More lies and then there are Sadistics, er I mean statistics. Fuck, I am sure someone believes in this crap.
Almost everyone in the mainstream media takes those reports at face value. I listen to the Motley Fool podcast just to keep tabs on the MSM. They never question the BLS statistics or wonder about the labor participation rate.
That's the problem Jobe. EVERYONE believes this crap. That's what's so scary.
50% believe what they are told (by MSM et al), 25% are unsure what to believe, and the remaining 25% are disbelievers.
With 50% siding with TPTB, the argument is in their favor.
Flow control is what it's called.
Here's a question I'd like to put to the group. Are these MSM reports liars or where they hired because they believe what there superiors tell them? I can't believe so many people are that dumb.