December U.S. Job Numbers Disappoint

Don’t be fooled by the U.S. job numbers for December released this morning…

Economists were rejoicing about the job numbers report released by the U.S. Labor Department on Friday morning; 200,000 jobs were created in the U.S. in December, bringing the unemployment rate down to 8.5%.

Below, my dear reader, you will find my contrarian view to the job numbers report released today:

Unemployment rate down to 8.5%: The official unemployment rate is not a true gauge of employment, as it excludes people who have given up looking for work and part-time workers who want full-time jobs but can’t get them. The underemployment rate, which includes the two important categories noted above, stands at 15.2%. That is the true unemployment number. In that respect, the job numbers report does not impress.


U.S. employers added 1.64 million jobs in 2011: After the trillions of dollars the government has thrown at the economy over the past three years, after the unprecedented actions of the Federal Reserve to jump start the economy, only 1.64 million jobs were created in 2011—that’s only 19% of the 8.75 million American jobs lost during the recession. Again, in this light, the December job numbers do not impress.

As you can see, I’m not too impressed with the December job numbers report. But, more importantly, forgetting what I think, what did the stock market, a leading indicator of the economy, think of the December job numbers report?

The market yawned. The Dow Jones Industrial Average fell 40 points just after the market opened Friday morning. That’s funny. You’d think the stock market would jump on the better-than-excepted December job numbers. Maybe the market sees it the same way I do:

It might be a crude calculation, but here’s how I see it:

A $5.0-trillion increase in government debt over four years and 2.58 million jobs created in 2010 and 2011. That equates to $1,937,984 in debt created for every new job. How can anybody be happy with these numbers?

Where the Market Stands; Where it’s Headed:

The first week of 2012 is almost behind us and it looks like a good one for stocks. I’m not a big believer in the “January effect” (an adage that says if stocks rise in January, they will be up for the year), but there is no doubt that a good January sets the stage for the year.

The bear market is achieving its goal of luring investors back into the stock market under the pretense that the economy is improving. If you’ve never lived through a secular bear market, you’re seeing one right now. Phase II of the bear market, the rally that lures investors back into stocks, has been underway for almost three years now.

What He Said:

“Starting two years ago, I was writing how the housing boom would go bust and cause the U.S. economy to suffer sharply. That’s exactly what is happening today. From what I see happening in the U.S. economy, I’m keeping with the prediction I made earlier this year: By late 2007/early 2008, the U.S. will be in a homemade recession. Hence, I expect housing prices to continue declining, soft auto sales, soft consumer spending, and a lower stock market.” Michael Lombardi in PROFIT CONFIDENTIAL, August 15, 2007. You would have been hard-pressed to find another analyst predicting a U.S. recession in the summer of 2007. At the time the stock market was roaring, with the Dow Jones Industrial Average hitting its all-time high of 14,164 in October of 2007.