Every month, the Bureau of Labor Statistics releases information regarding the jobs numbers, which shows how the underlying economy is performing. Also called nonfarm payrolls, since they do not include farm-related employment, the jobs numbers are one of the most important data sets for trying to understand the strength or weakness of an economy. If the jobs numbers are improving, this means more people are being employed and the economy is graining strength. If the jobs numbers are weakening, or there are outright job losses, this is an extremely troubling sign for the economy.
Today, the U.S. Bureau of Labor released the November job numbers report…and what a report it was!
A total of 146,000 jobs were created in November and the “official” unemployment rate in the U.S. economy decreased to 7.7% from 7.9% in October (I’m sure politicians will have a heyday with this news—telling Americans they are getting people back to work).
But the devil, dear reader, lies in the details of the job numbers report! This is a classic example of a report looking good on the surface, but when you look inside, you say, “What just happened here?”
The underemployment rate stands at 14.4%– nothing to be excited about. Unlike the official unemployment rate, the underemployment rate includes those people who have given up looking for work and or have part-time work because they can’t find full-time work. The structure of the labor market is still wounded, no matter what you hear on the mainstream media outlets.
Looking at the statistics within the job numbers report, people are finding work in low-paying sectors like retail and healthcare. There have been 140,000 jobs created in retail sector in the last three months and 53,000 of them were created in November! And, while we’re hearing or reading that the housing sector is coming back, the job numbers report says that 20,000 jobs were lost in construction in November!
Now here comes the real kicker in the job numbers report…
The average time a person is unemployed is continuously going up. In November, the average unemployed person in the U.S. economy was without a job for 40 weeks! This number has skyrocketed since … Read More
When the financial crisis hit, U.S. government bailouts became available to many big corporations. Back then, president Obama claimed that the 500 million shares that taxpayers were investing in General Motors Company (NYSE/GM) at $33.00 a share were an investment in the future of the U.S. economy.
That is the problem with governments. They should focus on policy tools to make it easier for businesses to invest and create jobs. Picking winners and losers in a capitalist system is best left to the system itself and not government bailouts. Government bailouts protect the losers, which capitalism weeds out; these are the companies that counterproductive to the long-term health of the U.S. economy.
The government bailout of GM allowed the company to come out of bankruptcy and forget the financial crisis ever happened. Since taxpayers paid $33.00 a share for GM, the stock is now down to roughly $19.50!
The loss to taxpayers—if the shares were sold—is roughly $16.6 billion!
While taxpayers are sitting on losses, there are further benefits that GM was privy to that would never be available to anyone else if capitalism ruled the day and government bailouts weren’t allowed to interfere.
When a company declares bankruptcy, its debts are removed from its balance sheet, but so are the previous years’ losses, which can be used against future gains in order for the corporation not to pay taxes.
However, President Obama allowed GM to keep its past losses to the tune of $45.0 billion, which is a form of another government bailout. (Source: Investor’s Business Daily, July 3, 2012.) This government bailout tax advantage is worth another … Read More
For June, the U.S. created 80,000 new jobs, well below economists’ forecasts of 100,000. The unemployment rate remained steady at 8.2%. (Source: U.S. Bureau of Labor Statistics, July 6, 2012.)
When looking within the U.S. job numbers for June, of the 80,000 new jobs created, 25,000 were in temporary work and 9,000 were in wholesale trade. This means at least 42% of the job numbers are in low-paying sectors of the economy.
The jobs numbers had no help from the government sector, which lost another 4,000 jobs in the month of June.
Many of the job numbers created over the last year were in low-paying sectors of the economy; year-over-year average hourly earnings were up only two percent. When inflation is taken into consideration, this two-percent gain is completely wiped out.
Here are some important facts you should be aware of, dear reader:
In the first quarter of 2012, the job numbers for the U.S. economy went up by an average of 226,000 per month.
For the second quarter of 2012, the job numbers gained an average of only 75,000 per month.
Today’s job numbers report is proof that U.S. employment is on a downward trajectory, which points to an economic slowdown. This will eventually lead to a recession later this year or in early 2013, as pressure from the recession in Europe and the economic slowdown in China yields its full negative impact on the U.S. economy.
U6, as reported by the Bureau of Labor Statistics, is a broader measure of the unemployment rate, because it takes into account discouraged people who are still looking for work, as well … Read More
I have been arguing in these pages for months now that the continued contraction among states and municipalities in the U.S. would keep the unemployment rate high in this country.
The U.S. Bureau of Labor Statistics estimates that the government sector—that is municipal, state and federal governments—has cut 586,000 jobs since December 2008. If the same amount of people would be working in government today, the official U.S. unemployment rate would be 7.1% instead of 8.1% (Source: Wall Street Journal, June 25, 2012).
If the unemployment rate was 7.1% today, the Federal Reserve would be talking about how successful its policies have been, instead of being concerned that the U.S. economy continues to weaken.
The other disturbing trend is that the number of jobs the government sector has lost over the last six months is picking up steam and shows no signs of letting up. With large budget deficits, municipalities and states will continue to cut jobs to balance their budgets.
This trend of greater job losses presents another challenge to lawmakers in the White House. Yes, the job numbers continue to deteriorate in the government sector, but the focus cannot be on the unemployment rate in that particular sector.
The focus instead must be on the private sector. The only area left within the economy that can pick up the slack and hire these laid-off government workers is the private sector.
Unfortunately, the job numbers in the private sector continue to decline as well, making the unemployment rate even worse. And with an election not far off, the focus really is on campaigning, as opposed to dealing with … Read More
You’ve heard the news…
Economists (except for this one) were looking for 150,000 jobs to be created in the U.S. in May, which would have reflected moderate economic growth. Instead, only 69,000 jobs were created in the month of May (source: Bureau of Labor Statistics)—a huge job numbers miss
Worse still, April’s original 115,000 new job numbers were revised lower to just 77,000 jobs created!
The unemployment rate moved up slightly from 8.1% to 8.2%. Many industries reported weak job numbers for May, including the government sector, which I’ve been warning will continue to drag the job numbers lower. Governments in the U.S. laid off another 13,000 employees in the month of May. (In these pages, I have written extensively about job losses at the state level; see: Deeper Cuts Are on Tap for U.S. Municipalities in Distress.)
A close look at the job numbers report for May paints a picture of more of the same; more low-paying jobs created, while higher-paying jobs disappear. For example, higher-paying specialty trade contractor jobs declined by 18,000, while civil engineers lost 11,000 jobs.
Not promising for wage growth and consumer spending when the job numbers are so weak.
U6, often referred to as the “underemployment rate,” as reported by the Bureau of Labor Statistics, is a broader measure of the unemployment rate, because it takes into account discouraged people who have given up looking for work, as well as those working part-time who want full-time work. The U6 unemployment rate rose to 14.8% in May from April’s 14.5%.
An underemployment rate of 14.8% is very high and definitely not reflective of an … Read More
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