I couldn’t let the U.S. Department of Labor’s recently reported August employment numbers go without comment. Especially since most analysts and economists see the employment numbers as good economic news, while I see them as just the opposite.
The Labor Department reported Friday that 144,000 jobs were created in the world’s largest economy in August. The news was hailed positively by the popular media, with emphasis on August job growth being at the fastest pace in four months.
When I read between the lines, here’s what I see:
— There was a decline in the unemployment rate to 5.4% from 5.5%, but the decline came not because of more jobs created, but because more people left the workforce.
— Economists generally agree that a healthy U.S. economy should be generating about 250,000 or more jobs a month. Over the past four years, we’ve only been at that number a couple of times.
— Job growth is usually stronger during the summer than during the winter. The numbers going forward, I would say from November on, will not look good. Major retailers like Wal- Mart are expecting sales to come in on the downside for the remainder of the year. And weakness in the construction market could also bode poorly for U.S. employment figures.
Employment numbers tell us what happened. Companies, by gauging their daily sales activity, tell us what’s going on right now. Case in point, Intel.
Huge Intel makes chips for about 80% of the world’s computers. Last Thursday, it announced its third quarter sales would be 5% below the estimate the company made in July. Intel blamed weak demand for chips, noting customers were “working off” excess inventories. Intel is basically saying there is too much inventory, little demand, and maybe even over capacity. This all points to weaker consumer demand and poor business activity.
The reality: Five years later, our economy has still not recovered. Take out growth in the construction and housing markets, and we really never got out of the recession.