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Guest Post: The Real Employment Situation Report
Submitted by Lance Roberts of StreeTalk Live
The Real Employment Situation Report
This mornings release of the Employment Situation report from the Bureau of Labor Statistics was in truth bitter sweet. On the positive side there were 120,000 jobs created in the previous month and the unemployment rate fell from 9.0% to 8.6%. Furthermore, September and October jobs were also revised higher. That is the sweet part. Unfortunately, while the headlines give us the sweetness the underlying data provides the bitter.
As we discussed earlier this week with the ADP Employment report, which showed a 206,000 job increase, this is the seasonally strong time of year for employment increases due to the retail shopping season. Therefore, it is no surprise that we saw a fairly healthy jump in employment but unfortunately these jobs tend to be very temporary in nature. Secondly, 120,000 new jobs is well below the necessary job creation level to return the country to full, healthy, emplyment. I say "healthy employment" because technically if enough people fall off the rolls into the category of "discouraged worker", where they are no longer counted, we could have a much lower unemployment rate - it just won't be a good thing.
First, let's start by putting things into perspective. If you take a look at the actual number of those "counted" as unemployed that number has dropped from the recessionary peak. However, in reality the number of unemployed is still far in excess of levels normally associated with recessions - not recoveries.
We have pointed out in the past that while the headlines may say one thing it is important to remember that there are several "fudge" factors in the data that must be accounted for. The first is to remember that these are estimates and we will very likely see negative revisions to this years data next year. The 2011 revisions to the 2010 data took nearly 1 million jobs out that were believed to have been created. The second is the "birth/death" adjustment. This is an adjustment to the data for the number of new businesses that are guessed to have been created or closed during the recent reporting period. In more normal times this adjustment is necessary to smooth the data. However, these are far from normal times and the adjustments to the payroll count are somewhat suspect. This is all part of the reporting and is included in all of the analysis - it is just important to remember that these numbers when initially released can ultimately be far off the mark.
However, for todays discussion, it is the third point that is more important today than ever in past history. This is the number of individuals that have "fallen off" the rolls entirely due to running out of the ability to file for unemployment claims. Those individuals not counted as part of the labor force swelled by 487,000 to a record 86.5 million. This in turn led to a drop in the labor force participation rate to 64% from last months 64.2%. This is the lowest levels of labor force participation that we have seen since the early 1980's. This weakness is further confirmed by the duration of those out of work which climbed to a new record of 40.9 weeks.
If, and that is a big "IF", employment was truly improving we would be seeing these numbers begin to reverse course. They aren't and the reason is due to population growth.
Yes, we put 120,000 individuals last month just in time for the seasonally strong shopping period, however, the population has been growing at roughly 200,000 people a month at the same time. This is why the number of individuals of working age, 16 years and over, that are NOT in the labor force has continued to rise. The offset is that while job gains are modest, and primarily located in lower paying temporary employment for the end of year seasonality, the population continues to grow at an unfettered clip. In simple terms the economy is not creating jobs fast enough to keep up with population growth.
This is why I prefer to look at the employment to population ratio as a better means of understanding the real employment situation in the country. In order for the country to return to the long term trend of employment by 2020 we will need to be creating nearly 400,000 jobs each month. This of course is a far cry from 120,000 that we saw this month. With the employment to population ratio remaining at levels not seen since 1984 the real pressure on the economy remains focused on the consumer.
There are two very negative ramifications of this large and "available" labor pool. The first is that the longer an individual remains unemployed the degradation in job skills weighs on future employment potential and income. The second, and most importantly, is that with a high level of competition for existing jobs; wages remain under significant downward pressure.
Business owners are highly aware of the employment and business climate, and regardless of the ranting and raving about the "cash on the sidelines", businesses are not in the business of charity. Business owners are milking the current employment climate for all it is worth in order to maintain profitability. With high competition levels for existing jobs, and the impeding threat of job loss for those working, employers can work employees longer hours at less pay. This is great for profit margins and workers won't complain because there are plenty of individuals that take their job and will take it for less pay.
This impact on wages as inflationary pressures rise hits the consumer where it hurts the most. We have discussed recently the recent declines in wages and salaries and the rising costs of food and energy consuming more of the household income. This bleed on incomes has led to significant slides in the personal savings rate and the ability for the consumer to continue to spend outside of the main necessities to meet their basic standard of living. This pattern is very unsustainable long term and sharp decreases in personal savings rates have historically been precursors to the onset of recessions.
Employment and Recessions
One of the key questions to be answered is whether or not the recent increases in employment potentially negate our recessionary call for 2012. While there are certainly several influences that could postpone the next recession into the end of next year such as further Quantitative Easing (QE) programs in the U.S. and/or a massive bailout program in the Eurozone, employment isn't one of them.
The table details every recession going back to 1948 as identified by the "Start Date" which is the first month of the recession as identified by the National Bureau of Economic Research. The table shows the month-over-month increases in payrolls beginning 3, 2 and 1 month before the actual first month of economic recession.
The first thing to notice is that there are only 4 months in the entire table that actually show job losses. Employers are generally very slow to hire and fire employees which is why employment is a lagging indicator. However, if we look at the net change of employment over a 3 month period what we notice is that job gains were actually quite stong just prior to the onset of an economic recession.
The chart of the 3 month net change in jobs shows this a little more clearly. As you can see the 3 month net change in jobs tends to peak just prior to the onset of a recession. What is importnat to note here is that the 3 month net change in jobs has already peaked at normal historical levels and has begun to trend lower.
This may go a long way to explain the recent declines in the employment sub-indexes in several of the manufacturing releases. With the end of the holiday shopping season fast approaching it is likely that we will see renewed weakness in the employment reports in the coming months ahead.
While today's data was certainly better than a "sharp stick in the eye" the reality is that the economy is currently struggling along at a very anemic pace. Without employment growing fast enough to offset labor pool overhang we are unlikely to reduce the real unemployment problem that persist in the U.S. This bodes poorly for the consumer, the economy and ultimately the markets as this weakness leaves all three very susceptible to unexpected system shocks. While we certianly hope for the best - "hope" is not an investment strategy that we can use.
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FEMA camps recruiting large numbers of guards.
[I feel obligated to post this tidbit of truth in case any noobs to Zero Hedge, having been fluffed & brain-watered by the Main Steam Media Proxy Mouthpieces of the Ministry of Goebbels, stop by and find an opportunity to take their virgin dose of the red pill]
Point A: 350,000 people left the work force (350k more 'discouraged workers' last month alone) and are no longer counted when tabulating employment/unemployment data.
Point B: There was a net gain of 120,000 jobs in the U.S. economy last month, as 120,000 more employees were hired than were fired, based on today's NFP report from the BLS.
Point C: The U.S. unemployment rate, based on today's NFP report from the BLS, dropped to 8.6% from 9.0% a month ago, which is the lowest level of 'official' unemployment since March of 2009.
Point D: By the laws of mathematics, which the BLS can't veto, no matter how hard the CONfidence tag-team trio of The Bernank, BLS & Geithner try, it looks to me as if a rational methodology for tabulating employment/unemployment would have shown A NEGATIVE JOB PRINT & A HIGHER UNEMPLOYMENT PERCENTAGE, all things being equal.
Can you spot the glaring bullshit above that could only be sold convincingly to only the most sheepliest of sheeple, bitchez?
We've not only arrived at Orwell's 1984 moment (consider also the new Defense Bill passed overwhelmingly by the Senate this week, which allows for the indefinite detainment and imprisonment of American Citizens plucked from U.S. soil, without any charges ever having to be filed let alone due process of a trivial trial [/sarc/] having to occur), Orwell, if he were to rise from the grave and visit his nation today, would utter W-T-F, before voluntarily crawling back into his grave.
Ron Paul has taken his gloves off.
Paul Takes Newt:
http://video.cnbc.com/gallery/?video=3000060158
its AWFULLY QUIET today......TOO QUIET.....is everything fine here in the us and over in europe,,,,,cramers recommending jc penney as i type........
what the fuck is going on????????????????????????????????????????????????????????????????///
All CBs have the same interest rate now. They will act coordinatedly on every issue now; when one moves, they all move. This is the eye of the storm.
This is the first squal line. not the eye of the storm. That will be when everyone is so happy that everything seems to be picking up, that jobs and exports and wages are gathering steam - that will be the eye.
Then we will see the eye wall on the other side as everything goes berserk. The printing by all of these assholes will go exponential and chaos will reign.
Touche
ON AN IMPORTANT AND RELATED NOTE:
The 'Republican Jewish Coalition' has declined to invite Ron Paul to their nationally televised debate on Dec. 7th. Apparently, Paul is 'misguided' and'extreme'. More here: http://www.infowars.com/republican-jewish-coalition-bars-ron-paul-from-d...
You can email the RJC here: rjc@rjchq.org
And you can reach their ladies' group here: Women@RJCHQ.org
I am not taking sides, as they're a private group and can invite or disinvite whoemever they feel like (and Ron Paul would be the 1st person to defend their RIGHT to do so), but I will admit my bias upfront and state that I'm a big fan of Congressman Paul, and believe that it's their intellectual stimulative loss that Ron Paul won't be there to challenge the audience confirmation bias (the audience is only deserving of sweet platitudes, and nothing that would bring up painful counterpoints to their accepted dogma, according to those who decide on all matters RJC, apparently).
With that out of the way, I am sure that the fact that Ron Paul would end foreign & military aid to Israel (not to mention Egypt and nearly every other recipient of U.S. taxpayer funded [i.e. debt imposed shackles] 'foreign aid') has much to do with this. When will
Grover Norquist, King of K Street, alleged free market and debt-opposed King of Bobble Head talking point hand out sheets, or the misfit GOP candidates other than Ron Paul (forget Obama or any DemocRAT; they're lost causes and part of the false left-right kabuki theater that is murdering the United States) speak to this issue as only a true free market capitalist would?
The Sheeple need to get the fundamental truth that neither side of the alleged two-party system, which is really an illusion meant to give them the false impression that they have a choice, works to any degree for the betterment of any of their interests, period.
#DeepCaptureCronyCapitalistKleptocracy
The FED passed out tabs of acid and some hash oil.
Markets and acolytes high as a kite.
Have some Doritos while I put on "Dark Side of the Moon".
+1
cramer is a tool, -> bearish on jc penny
I am alarmed that S.1867 was passed by the Senate at a 93% approval , but this is NOT law yet. It still has to go through the House and then in front of the president...
Alarming yes, very much so that this has momentum at all, but again IT IS NOT LAW and has several steps to go yet...
http://www.opencongress.org/bill/112-s1867/show
Whats so alarming about it?
"Official" unemployment rate formula: (LIES/half-truths)(-2) + (-0.5) = Unemployment%
If I am not mistaken, the final summary paragraph would include the following: -350k ceased to be counted + 120k increase in jobs is still a net loss of ......-230k. My math tells me this means that there were 230k more unemployed than were accounted for last month.
Excellent post Mr TruthinSunshine! Will you please run for president? We need someone besides Paul that can understand math....
Pepper spray and nightstick manufacturing sector showing promising hiring opportunities.
Avenge me boys!!!Avenge me!
land has NOT hit rock bottom yet, but, it's getting there.
http://expose2.wordpress.com
what?
If you're over 50 and still gainfully employed, grovel, scrape and slave to keep it.
If you don't, better luck next life.
-That is all.
There are many new job openings in the burgeoning field of revolution. This is your chance to get in on the ground floor of the next big thing, and probably the first chance to do something honest and decent with your life that you've ever had.
Very true- I'm sitting here honing an edge on my damascus steel tomahawk even as we speak. The best vengeance is always medieval.
For what a "standard" Bushmaster AR15 will cost a Bass Pro, I can build a custom tailored AR from parts in about a day, depending on how fancy a scope you want to get...can spend as much as you want to really. Guaranteed to group better than the Bushmaster rifle.
....Ever since Remington bought Bushmaster and moved the factory from Maine, quality has gone steadily downhill (lost a lot of master techs).
It's nice to be an armorer, and it's funny...all of my customers are named Benjamin Franklin.
Bushmaster, DPMS, Remington, Dakota...all owned by Cerberus
http://www.nytimes.com/2011/11/27/business/how-freedom-group-became-the-gun-industrys-giant.html?_r=4&scp=1&sq=freedom%20group&st=cse
The time for talk is over!
Let the traitors swing from the Liberty Oak Trees!
Sic semper tyrannis
"...this is the seasonally strong time of year for employment increases due to the retail shopping season. Therefore, it is no surprise that we saw a fairly healthy jump in employment ..."
Uh...I believe the seasonals expect this and adjust for it.
Look, it was only a few months ago when we had that ZERO print for nonfarm payroll and the whole world was freaking out that we'd go into a double dip. Then add to that the implosion in Europe and how that will affect GDP growth around the world (China as well as US). Then add in the hysteria over systemic risk, with MF Global fanning the flames. We spent a whole month pricing in the worst of all these scenarios. So now when we get a weeks worth of good ISM data, retail sales data, and Jobs data, and we get the long overdue shortcovering snap-back, what the flying fuck is the point of writing a dissertation about how it's "not really that great a number"?? Who said it was?
The point is, we've been killing ourselves cos of an imminent shitstorm that, at least for now, hasn't shown up. The fact that it's merely overcast may not be reason to go crazy with the methuselahs of Cristal, but it could well be enough for a return up to 12,500-12,700 on the Dow. No-one's saying this number should take us back up to 14,000. Get a grip.
It's called "analysis". This "analysis" leads rational citizens to a different conclusion than what the irrational or ignorant citizens assume to be reality. Doing this analysis helps one prepare for when reality can no longer be masked by propaganda or the simple refusal to think critically.
We do have a grip... on reality.
The ZERO print was revised significantly upwards. And this number may be revised downwards.
Let me get a grip next month, when I join the rolls of the unemployed. I will be at home with my partner, who is one of the nearly 87 million people we consider to be "not in the labor force".
In other words, he doesn't exist, other than for statistical purposes.
"George Orwell, paging Mr. George Orwell. You have a call on line 1. Kindly step away from the Memory Hall and proceed to the nearest iCanHearEveryWordYouSayPhone bank."
My partner is invisible too, layed off 3 years ago. Now he is self-employed as a "heating supplier" aka firewood cutter.
If the government won't acknowledge him, he does not acknowledge them... Payment in cash or gold only please...
Is the SPY about to break out?
In foreign currencies?
http://stockcharts.com/freecharts/candleglance.html?$spx:FXE,$spx:FXY,$spx:FXC,$spx:FXS,$spx:FXA,$spx:FXM,$spx:FXB,$spx:FXF|D
Just sayin...........
Chart isn't long enough. Volatility is running in and out of this market like a politician does a whorehouse.
Nice try Robo.
So what was the birth / death laugh...I mean number for November?
Great discussion. But the real point is that the US has envied France and we have mutated into a mega-France.
France Sovereign Debt Downgraded – Debt to GDP Breaks 90%! (But US at 96% Debt to GDP)http://confoundedinterest.wordpress.com/
The criminals have free reign under Obama/Holder; although now just more brazen than previous administrations. Naturally all the numbers are going to be fudged and obfuscated to re-elect this marxist, even though the Repubs cannot find a "real" candidate.
God help us all.
2001 vs. 2011 (in millions, some rounded):
Employed:
136m vs. 141m - gain of 5m
Civ. Non-Inst. Population:
214m vs. 241m - gain of 27m
Not in Labor Force:
71m vs. 87m - gain of 16m
So we have just 5 million new workers to take care of an overabundance in population supply of 22 million.
And of those 22 million, 16 million aren't even in the labor force, and nearly 6 million are unemployed.
Job shmob.
story has been beaten to death today.. we all the BLS (Bullshit Labor Statistics) for what they are.
You people still don't get it.
Unemployment dropped due to Saint B O.
Everything else is George W Bush's fault.
Commenting on last weeks black friday sales data. 12% inflation rate - 6.6% Y/Y gain in unadjusted dollars still leaves 5.4% less real sales than last year. Again, my math says it was a loser deal again.
In addition, my personal observations tell me that margin compression (profit squeeze) has crossed over into margin inversion (pure loss).
Ugly business climate.
seems like I hit a nerve with my unnecessary "get a grip" line. Didn't mean to imply that all YOU readers need to get a grip. Just tired of having 4 or 5 years worth of relentless bad news, and then whenever we get even the slightest little run of 2 or 3 bullshit pieces of pseudo good news, the whole bloody brigade of doomsters is out there picking holes at it & showing it to be far far far from the good news it first seemed to be!
Maybe I need to get a grip...on a cold bottle of Bud!
In the financial, economic and political times we are living in Good News is generally a lie.
If bad news upsets you then i have some really bad news for you, your in for about 10 years or more of bad news.
So get used to it!
Maybe you should get a grip on a case of Bud instead of a bottle, while you can still get it.
http://www.investorplace.com/2011/11/dont-buy-into-these-2-high-priced-b...
ya i'm getting tired of all this bad news can someone please make up some good news for a change .
"Canadian Cavalry Crosses Border with Paint-Ball Guns, U.S. Mobilizes for Largest Non-Lethal War Ever Fought!
"And in other news, gold and silver will now be used to back U.S., Mexican, French, German, Italian, Chinese, and South Korean currencies...."
we need 50k of "X" entry workers -
also needed are 75k of "Y" entry level employee's [*hired temp's] -
lastly, there is a growing need for 125k "Z" entry level {[**worker's/employee's highly skilled][temp's & contractor's status, ONLY]}
undergraduate, graduate,... doctorates colleges/ universities pursue to ramp-up, and create [pump out $$$] "Million's of cloned,... "X" - "Y" - "Z" candidates.
educational system's "ROI" billion's $$$ for total 250k jobs invested in - mean while back at the [breeding ground ranch] "BLS",... time to re-educate neo-programs [repeat,...soak, wash, and rinse cycle]
***Washing[machine]ton needs confirmation of "Status Quo - cherry-pick & proliferate bigger and better "H1-b status filling in gap of u.s. made slackers?
Pathetic!!!
Unfortunately, while the headlines give us the sweetness the underlying data provides the bitter.
The little scroll...?
And I took the little scroll from the hand of the angel and ate it. It was sweet as honey in my mouth, but when I had eaten it my stomach was made bitter. (Rev 10:10 ESV)
The whole game is a fraud. When does this bullshit end?
tyler....can you post the Fitch commentary on today's NFP? It was very good.
The bold is where the proletariat needs to take a stand.
Basically, Wall St+Colleges+Banks+Corporations are all in co-hoots to do one thing: keep you in some type of debt. If you are in debt, and are a good, hard working, decent person who honors your debts.....you can be taken advantage of, ESPECIALLY if you have dependents, espcially with the cost of how much it take sto raise a kid right. Workers with dependents today, basically have almost NO rights, because of the Fed's 12 year war on wages.
Get pregnant? Better come back in 6 months, or your fired. Hell, you might not even get HIRED because spending time with your children is a LIABILITY to time that should be spent working and "being productive". And if you DON'T have children, but loads of debt, and have no knowledge of monetary policy (and its a SHIT ton to handle for most 18-26 yr olds), they can "whip the mules" harder without having to expect a backlash, especially in this tough economic environment.
These entities know for most people who have kids (either in healthy relationships, or child support) must support them with fiscal support. Love is important, but not as important as money, because the powers that be make sure it is that way.
Maybe instead of making asshole deadbeat fathers pay child support as a priority (which the state taxes), they could be sentenced to actually spend TIME with their fucking kids. Maybe then, we wouldn't have so many little assholes expecting everything today and an actual constituency with some balls.
That's why people need to start getting out of debt, refusing to go into debt, and cut your obligations of paying people, that you've never met, each month. This is the "REAL" cutting the fat households must start doing to get those assholes in Congress and their corporate friends, to wake up.
And the MAIN reason to get out of debt? It pisses the government and banking elites, off.
That's why the economists and gov't beaucrats in George Osboure's banking orgy in the UK Finance Ministry were SO PISSED that David Cameron said that the UK citizens need to start paying down their debt. You see, without credit cards and such, you can't get the unlimited growth the bankers need to keep the ponzi scheme going, to inflate the currency to keep exports cheap (yet home costs rising). That is why he did a complete 180 later, because when people start saving, start paying down and becoming more fiscially responsible......the currency strenghens, the constituency has more of a voice, and the price of speculation rises.
What is good for the people, isn't good for the powerful rich (different than the hard working rich), and vice versa. Slaves built the pyramids, not the phraohs, because they were in fear of losing their life. People in FEAR of losing their semi-comfortable way of living is why they submit to a corporate system that drug tests 70% of its workers, they slash and cut benefits, and who get nittier and nitter in pay by the day.
If people start paying down debt, or even better, start rejecting it and not paying it off AND income taxes en masse, then THAT is when they start listening (or start shooting).
Humans are the most important resource on Earth, even before oil.
Sounds like the writer of this article believes the Buerau of Lying Statistics.
Too funny.
Otherwise the article would have started out,"I call Bullshit"
I wanna work for the BLS. Make up numbers, revise numbers, use the programs designed by Hadley CRU, never be accountable for shoddy/outright false figures and projections, and have all the big media folks get all tingly in anticipation of whatever BS you post. Guaranteed job and bennies, and front-run the shit out of the shit you move markets with.
Ya, dat's da life!
unemployment now 0%
10 million left labor pool for good
10 million birth death model expanded to include birth of live cattle
government hires 1 million for digging post holes
news to use in sept 2012 before the election
also social security benefiet increase by a modest 25% ought to do it .
also news network goes wild . a new era ..
fema pushes the get out to clear the streets effort . clearing the way for more workers to sell real change ,, a community based newspaper that sells for 50Cents
also the gas stations with a blow up vote in the senate , to make terror induced flame thrower out of gas nozzels // self serve will now not be an option . an additional work force will be created . The Safe Fuel Fill UP Bill" .
the american gas union movement figures 1 million new workers. To pay for this work program A gallon of gas will be increased a modest 50Cents a gallon .
REPUDIATE YOUR DEBT.
The momentum grows: DEBTORS REVOLT – intentional *default-en-masse* to hasten the collapse of the predatory lending system and the plutocracy into which our country has morphed.
Join us. Simply refuse to play their game, and repudiate your debts – just walk away. The system, as it has transformed over the past 15 years, is simply rigged against you and offers you no mercy. So show no mercy in return; just default. Watch what happens – their power depends upon OUR cooperation, and our continued fear. Reset and rebuild from there.
DEBTORS’ REVOLT — DEFAULT EN MASSE. Our Founders revolted against England over far, far less.
Great discussion.
A Closer Look at Unemployment: Did it REALLY Fall to 8.6%? Actually, Employment Fell By Almost 200,000
http://confoundedinterest.wordpress.com
Let me ask an honest question. Did they fudge the unemployment numbers back in the 1930's? Because if it were the same back then as it is now, when they say 1933 had 25% unemployment it would be more like 65% unemployment. and if it was an honest number when did they start adding the fudge?
The numbers of unemployed in the Great Depression came from enrollment registers in the WPA and CCC job camps as well as from the government food lines and the soup kitchens. The current system has been around since the Social Security Act of 1935,when the federal government of the United States effectively encouraged the individual states to adopt unemployment insurance plans. But as with all systems the government devises it take some time before the overseers implement and learn to twist the information to their advantage.
Our employers cry out that skilled jobs are open (Welding etc and other trades) but no qualified people.
I say to these employers... DUH! Start training these people on your time and dime. You will have a compliant and loyal drone army soon enough.
Lance - let me start by saying that this is a great note. Thank you for sharing it. I share your view that the report today was actually very poor and completely inconsistent with a healthy growing (or even healthily stagnating) economy.
All of that said, I would like to point out an inaccuracy in your note. I don't know where this belief got its start, but the statement that people have "'fallen off' the rolls entirely because they are ineligible for unemployment insurance" is simply not true. See below from the BLS "characteristics" FAQ:
This doesn't change the thrust of your argument: the rise in discouraged and marginally attached workers is a large contributor to the fall in the UE Rate. But it is important when trying to make this point to a, shall we say, less-skeptical and rose colour glasses wearing audience that one's argument is not weakened by inaccuracy.
Again, great note and thank you.
Sounds just as absurd as every anti drugs legalisation argument.
This situation in the US is a complete disgrace, a complete distortion of the facts and an overall farce. The media is lying on a daily basis to the American people, this Muslim clown is a liar and phony and as we self destruct the crime syndication touts this pathetic report as good. What the fuck is good about it. You add in the 315,000 people not counted that are now classified as "unemployed" and you have NEGATIVE jobs of -195,000. What the hell is going on in America and what the hell is wrong with a media hell bent on lying to the ignorant and sheep of this country? Listen to the main stream media and listen to the Wall Street criminals, they are all suggesting this is positive; do they call each other at night to decide on the script? There is not one thing good about this report except the headlines which is completely misleeding. More green shoots to all you idiots who buy this propaganda, ... How did they pan out in the past?