Unemployment falls to 7.8% (but only 114,000 job added?)

[mshan]

Here is Morningstar economist Bob Johnson's video commentary on today's BLS monthly jobs number: http://www.morningstar.com/Cover/videoCenter.aspx?id=569632 (just saw it there; haven't viewed it yet)

He also releases a written summary of all the week's economic data, usually Saturday morning on Morningstar website.

And like he has been saying all year, when you filter out all of the short-term noise and start looking at year over year trends on 3 month moving average basis, I am guessing he will again say we are at same about 150k / mo., 2% real GDP muddle through economy we have been in for the last year or two.

Third quarter GDP to be released later this month is already going to take an about 0.5% hair cut from drought (corn and soybeans), but there may be a disconnect occurring between Main Street America (domestic companies with domestic workforce) and what's going on with multi-nationals (perhaps have healthy North American unit, but international operations are bleeding money), and as long as serious layoffs don't start occuring at lots of companies in U. S. (not restructuring such as Best Buy, HP, downsizing in financial industry), so that U. S. consumer still feels they have decent disposable income (after inflation) and are comfortable they won't lose their job, and just continue to spend (2/3 of our economy is consumption, and 2/3 of that is services, not goods), we should be ok.

But we do need a faster rate of growth to pull in more of the unemployed who may need on the job training that employers are not often ready to provide because demand hasn't picked up sufficiently, yet.

 

[Infohawk]

Labor force participation went up slightly in September. This was not a month where unemployment went down because people quit looking for jobs. Nor was that true in July or August either. Beyond that, I'm not really sure what you're trying to argue here.

http://data.bls.gov/timeseries/LNS11300000/

Do you think the uptick in September is noteworthy? Even in a sustained statistical decline, you are going to see periodic upticks. You can see occasional upticks in the data for the past four years even though the trend is down. (And no I'm not saying it's Obama's fault.)

How are you so confident that people giving up on the job market isn't a significant factor in the unemployment rate? It seems like an issue.

 

[First]

Romney's finished, but smart money was already on him losing, likely by a ton.

 

[Juror No. 8]

Where do you live that 1 in 4 people you know who want to work can't find a job. Of the hundreds of people I know, I only know 1 person right now who can't find work. Actually, scratch that, he found a shit minimum wage job until he can find a job in his profession.

I live in Phoenix and I know a good number of people who either can't find work or can only find jobs that will give them limited, part-time hours (underemployed, not enough income to keep up with bills and expenses). These are people who are clean-cut, healthy, and speak excellent English.

Of course, none of that has anything to do with the unemployment numbers being cooked.

 

[dank69]

I live in Phoenix and I know a good number of people who either can't find work or can only find jobs that will give them limited, part-time hours (underemployed, not enough income to keep up with bills and expenses). These are people who are clean-cut, healthy, and speak excellent English.

Of course, none of that has anything to do with the unemployment numbers being cooked.

1 out of 4? Estimate for me.

 

[mshan]

Unfortunately, it sounds like there might be a skills mismatch there between currently open jobs in Phoenix area (isn't that a high tech corridor) and (forgive me if I am making assumptions that are not correct) the Latino (?) friends you know who may have had good paying jobs during construction boom years, but are still now struggling to find any sort of reasonably well paying employment. (Unemployment rate for blacks, Latinos, and those who never had an opportunity to attain a college education is significantly higher than other demographic cross-sections, such as a generic college educated white male, where unemployment rate is very low 4% range, or even highly skilled engineers, where unemployment rate is perhaps as low as 2%).



Phoenix Rising: http://www.realestateconsulting.com/content/LBMI-201204_2

[FONT=Arial, Helvetica, sans-serif][FONT=Arial, Helvetica, sans-serif]Strong Job Growth: After losing approximately 230K jobs from 2008 to late 2010 (approximately 12% of its workforce), the Phoenix metro has experienced 17 consecutive months of positive year-over-year job growth, with February's growth climbing to a 2.1% annual growth rate. The unemployment rate has also fallen sharply over the last year, dropping to a 3-year low of 7.8% from 8.8% in February of 2011. The local economy has had a boost from several big employers like Amazon.com and Intel who have begun hiring again. Other metros with large amounts of housing distress like Las Vegas and Riverside-San Bernardino lack the economic diversity that Phoenix has, resulting in a far more restrained economic recovery.[/FONT][/FONT]

- because of how overbuilt Phoenix metro was, recently low end, former new construction was selling at something like 40% below replacement value, which is why investors have swooped in and bought everything up. Similar story supposed to be true for Atlanta metro, though I don't know how aggressively investors have gotten into that market yet.



Las Vegas: http://www.realestateconsulting.com/content/LBMI-201208

[FONT=Arial, Helvetica, sans-serif][FONT=Arial, Helvetica, sans-serif][FONT=Arial, Helvetica, sans-serif][FONT=Arial, Helvetica, sans-serif][FONT=Arial, Helvetica, sans-serif]State legislation has played a huge role in the quick recovery. AB284, which was passed by the Nevada State Legislature in October 2011, requires that a lender provide proof through a notarized affidavit that it actually owns the loan before it can foreclose. Failure to comply with AB 284 brings with it the potential risk of felony charges! How can a bank ask an employee to take that risk, especially since the mortgage industry has become so complex? As one of our clients told us: [/FONT]

[FONT=Arial, Helvetica, sans-serif]AB284 has virtually stopped the NOD to foreclosure market. The buying public is now feeling it. The news has started to catch on. We are building new product as quickly as we can to accommodate and capture sales.[/FONT]
​

[FONT=Arial, Helvetica, sans-serif]According to RealtyTrac, foreclosure activity in Las Vegas dropped 26% between the fourth quarter 2011 and the first quarter 2012. The number of foreclosure filings fell 61% compared to last year. [/FONT][/FONT][/FONT][/FONT][/FONT]

- new home builders in this area might be doing pretty well, because they can offer competitive pricing vs. resales, but probably more importantly, they may have their own in house financing arm that can actually give out loans to customers who want to buy a home. So may be some jobs in construction there, but CNBC article says new home building have become more high tech and green in last 10 years, so getting certifications needed for job might be more difficult than in past.



Bakken Shale in North Dakota (rents have gone through the roof there, I think CNBC tv show said something like $3000/month, if you can find a room):
- http://video.cnbc.com/gallery/?video=3000041194
- http://www.cnbc.com/id/48926517
- http://video.cnbc.com/gallery/?video=3000114263&play=1



Good Luck!

 

[Juror No. 8]

1 out of 4? Estimate for me.

I don't know. Probably more like 1 in 5 are either out of work or working jobs part-time because they can't find full-time hours. One of them believes many of the job ads are fake, place-holder ads because no matter how much time passes, the ads never change or disappear over the course of many months.

Then again, that's all irrelevant. I could know a hundred people who all have full-time work and it wouldn't change the fact that that 7.8 percent number is nonsensical, election-year propaganda.

 

[mshan]

September BLS Monthly Jobs Report:

- By Level of Education Attained: http://www.bls.gov/web/empsit/cpseea05.htm (unemployment rate dropped from 12% -> 11.3% for those with less than a high school education)

- By Race / Sex: http://www.bls.gov/cps/cpsaat07.htm



Economic recovery has been very bi-furcated, and some of the secular changes that have been super-imposed (robotics and automation in manufacturing, requiring factory workers going back to community college to get basic computer skills to run these expensive machines) are here to stay.

Construction is coming back from very low base, but builders demanding more skilled workers even here because of apparent changes in how homes have been built in last 10 years or so (green technology?).

Hopefully, some of those who have left labor force have indeed gone back to community college already and are working on those degrees that will enable them to qualify for the job openings that are out there right now...

Really low paying, unskilled manufacturing jobs ($2 / hr, anyone?) may go to Mexico, if not China, Vietnam, etc.: http://www.cnbc.com/id/49007307/What_s_the_Next_Global_Manufacturing_Superpower

 

[Siddhartha]

Would you have a problem believing the numbers if the unemployment rate had gone up?

 

[blankslate]

Also, the creation of 1M burger jobs is not the same as the creation of 1M machinists value wise for the economy.

quite right. However, this administration has floated jobs bills that included infrastructure investments which would have created jobs in an underutilized segment of part of the workforce. People who could operate heavy machinery which would be involved in the maintenance (and perhaps construction of new) roads.

 

[FerrelGeek]

When Romney is president, this type of news will be praised by republicans. None will dare qualify the details. F**K the details, will be the republican war cry under the Romney administration.
What their real challenge will be is with defending that 19% unemployment rate under the Romney administration. Or 24%. Or more realistically, 29% by year 2014.
I have no doubts that republican spin masters are already now writing the excuses.
Their bull will be knee high by the 4th of July 2013.
And neck high by the 4th of July 2014.
BTW... my $10,000 bet is still good.

If Romney becomes president, all you'll hear from the media is how bad the REAL unemployment number is. They'll finally start counting the people that have given up looking for work. You'll also hear about how dismal most of the new jobs are. We'll magically go from an economy in recovery to a looming disaster from Jan 19th to Jan 20th.

 

[Darwin333]

When Romney is president, this type of news will be praised by republicans. None will dare qualify the details. F**K the details, will be the republican war cry under the Romney administration.
What their real challenge will be is with defending that 19% unemployment rate under the Romney administration. Or 24%. Or more realistically, 29% by year 2014.
I have no doubts that republican spin masters are already now writing the excuses.
Their bull will be knee high by the 4th of July 2013.
And neck high by the 4th of July 2014.
BTW... my $10,000 bet is still good.

Shrug, I figure if he wins he will use the same line of excuses that Obama is currently doing. "Its all Obama's fault, my policies will take a while to take effect" etc...

 

[mshan]

You do realize that Romney has been quoted as saying he doesn't have to do anything, just get elected, and confidence that creates in markets will cause economy to start to soar.

(seriously, that is really what he said).

 

[jackstar7]

Would you have a problem if the unemployment rate had gone up?

This would be such an amusingly reversed thread methinks.

 

[Siddhartha]

You do realize that Romney has been quoted as saying he doesn't have to do anything, just get elected, and confidence that creates in markets will cause economy to start to soar.

(seriously, that is really what he said).

The economy will take off in about six months, assuming everything staying the same, no matter who is in the White House.

 

[LTC8K6]

You do realize that Romney has been quoted as saying he doesn't have to do anything, just get elected, and confidence that creates in markets will cause economy to start to soar.

(seriously, that is really what he said).

Well, he could have said:

"this was the moment when we began to provide care for the sick and good jobs to the jobless; this was the moment when the rise of the oceans began to slow and our planet began to heal; this was the moment when we ended a war and secured our nation and restored our image as the last, best hope on earth."

 

[woolfe9999]

http://data.bls.gov/timeseries/LNS11300000/

Do you think the uptick in September is noteworthy? Even in a sustained statistical decline, you are going to see periodic upticks. You can see occasional upticks in the data for the past four years even though the trend is down. (And no I'm not saying it's Obama's fault.)

How are you so confident that people giving up on the job market isn't a significant factor in the unemployment rate? It seems like an issue.

It's a significant factor in the unemployment rate. It hasn't been a factor in the declines we've seen in it this month or, for that matter, this year. I think the problem is when you see a drop in the unemployment rate and people reflexively claim it was because of a decline in the participation rate when in fact the same report also shows that the participation rate didn't go down. You can't just keep making the same argument when it doesn't apply. When this argument was made in 2010 and 2011, it was generally valid. Not so much this year, yet the argument continues...

We've seen a .7% drop in the unemployment rate and a .1% drop in the participation rate so far this year. The numbers in total for this year are showing a trend of a stable participation rate and modestly improving employment. Maybe next year it's better or worse, but that is what we're seeing as the current trend.

- wolf

 

[Fern]

Would you have a problem believing the numbers if the unemployment rate had gone up?

If I understand it correctly, we've added only 114,000 jobs. Unless there were a lot of movement among those who decided to leave or come back into the workforce I'd expect the unemployment rate to stay basically the same.

And I've read recently that the last two quarters had a slowing GDP growth rate (under 2%). Slower GDP growth wouldn't seem to result in job growth.

So, ATM, I'm finding the employment numbers counter-intuitive.

Fern

 

[Darwin333]

Here is Morningstar economist Bob Johnson's video commentary on today's BLS monthly jobs number: http://www.morningstar.com/Cover/videoCenter.aspx?id=569632 (just saw it there; haven't viewed it yet)

He also releases a written summary of all the week's economic data, usually Saturday morning on Morningstar website.

And like he has been saying all year, when you filter out all of the short-term noise and start looking at year over year trends on 3 month moving average basis, I am guessing he will again say we are at same about 150k / mo., 2% real GDP muddle through economy we have been in for the last year or two.

And we only had to borrow and spend 8% of GDP to get that 2% rise.

 

[Darwin333]

If I understand it correctly, we've added only 114,000 jobs. Unless there were a lot of movement among those who decided to leave or come back into the workforce I'd expect the unemployment rate to stay basically the same.

And I've read recently that the last two quarters had a slowing GDP growth rate (under 2%). Slower GDP growth wouldn't seem to result in job growth.

So, ATM, I'm finding the employment numbers counter-intuitive.

Fern

IIRC, we have to add 120ish thousand jobs a month just to keep up with population growth but since they are new members (or would be) they wouldn't get counted in the unemployment numbers.

 

[Engineer]

How does the huge spike in retiring baby boomers effect this? I can imagine quite a few of them are leaving (or have been downsized or shut out of) the workforce, freeing up jobs for new people? Does anyone have the retirement numbers to confirm if there is indeed a spike in boomers retiring?

 

[Darwin333]

It's a significant factor in the unemployment rate. It hasn't been a factor in the declines we've seen in it this month or, for that matter, this year. I think the problem is when you see a drop in the unemployment rate and people reflexively claim it was because of a decline in the participation rate when in fact the same report also shows that the participation rate didn't go down. You can't just keep making the same argument when it doesn't apply.

We've seen a .7% drop in the unemployment rate and a .1% drop in the participation rate so far this year. The numbers in total for this year are showing a trend of a stable participation rate and modestly improving employment. Maybe next year it's better or worse, but that is what we're seeing as the current trend.

- wolf

I am a bit confused.

If the participation rate stays the same and the unemployment numbers drop wouldn't that basically mean the same amount of people are employed but however much the unemployment rate dropped is due to those people simply not being counted anymore?

If we had 100 people in the US and a labor participation rate of 90% and unemployment of 10% and 2 years later (assuming no pop growth or anything like that) the participation rate is still 90% but the unemployment numbers are 5% due to the way unemployment is counted then you would still only have 90 people working.

Or am I just confused about the point you are trying to make?

 

[mshan]

(Engineer): I have posted this particular link many times, so you may or may not have seen it already.

I think his charts and commentary about how seniors staying in workforce, squeezing out youth, starts around page 26 (please note that article itself is also dated): http://www.zerohedge.com/news/presenting-david-rosenbergs-complete-chartbook

Stock market has recovered from the crash, so if these baby boomers rode out the storm and stayed in their mutual funds or rotated into bonds that have done well (i. e. at least not lock into cash near bottom of market), perhaps they are starting to feel there nest egg is sufficient to retire in near future (?)


(Fern): Regarding the actual BLS release, one has to remember that the top number is SAAR (seasonally adjusted, annualized rate), which is different from raw data (appears to be 860K actual jobs added):

"Total employment rose by 873,000 in September, following 3 months of little change. The employment-population ratio increased by 0.4 percentage point to 58.7 percent, after edging down in the prior 2 months. The overall trend in the employment-population ratio for this year has been flat. The civilian labor force rose by 418,000 to 155.1 million in September, while the labor force participation rate was little changed at 63.6 percent. (See table A-1.)"

http://www.bls.gov/news.release/empsit.nr0.htm

Seasonal adjustment factor is supposed to account for typical seasonal hiring patterns this time of year, if they haven't been shifted from normal time of year they occur.

Biggie seems to be that college students with summer jobs went back to school earlier than seasonal adjustment factor accounts for right now, so maybe that cut into last month's number, but boosted this month's one (I am trying to watch Morningstar take, but video is hanging right now).

Honestly, putting political talking points about unemployment rate aside, my guess is that more careful analysis will show continued, slow but steady, employment growth, but growth that is not fast enough to put significant dent into those who may have lost their job from peak employment in January 2008 (beginning of Bush's last year).

It's good news, but still for many, it is not enough, and not fast enough (recovery in economy and jobs).

 

[First]

How does the huge spike in retiring baby boomers effect this? I can imagine quite a few of them are leaving (or have been downsized or shut out of) the workforce, freeing up jobs for new people? Does anyone have the retirement numbers to confirm if there is indeed a spike in boomers retiring?

It has been estimated that about 2/3rds of the decrease in participation rate over the last 3+ years has been due to retiring baby boomers. The other third has, unfortunately, been due to the disastrous financial collapse. That's the conventional wisdom.

 

[werepossum]

At what point in time does a new POTUS own the unemployment rate? Not from a political perspective, but from a realistic perspective. Serious question, if anyone can answer without partisan bias.

Here are the unemployment rates in Obama's first 6 months:

February 2009 - 8.1%
March 2009 - 8.5%
April 2009 - 8.9%
May 2009 - 9.4%
June 2009 - 9.5%
July 2009 - 9.4%

I don't think we can have an absolutely definitive answer, but I'm fairly certain that no one objective would say it's the February number. BTW if you're saying it's only a .1 difference then to now, that means he owned it in January, before he even set foot in the door. Way to spin it to the max!

The President owns the economy from Day One because he's ultimately responsible for leading the country, and the President never owns the economy because his power is inherently and intentionally limited. Obama's supermajority was the most power a President has had over the economy in my lifetime, and even that was only absolute party power for eight months. And even there, he's limited by the self-interest of party and cohorts who want to get re-elected and can only be pushed and bribed so far. The nearest thing I can recall was Reagan, who had a unique ability to go over the press to the American people and could therefore shame the Democrats into giving him what he wanted - for a price. So there really can't be a definitive answer, just one side desperately trying to claim credit for every good thing that happens whilst dodging blame for every bad thing that happens, and the other side desperately trying to deny that credit and affix that blame.

Reagan didn't have to deal with a completely new economic base that was hemorrhaging redundant, non-existent jobs in unprecedented numbers.

I mean "non-existent" because we are now a finance, research and design-based economy. We still had a strong manufacturing and low-skill labor need in the 80s. What we are now, wasn't quite emerging in the 80s, though it was certainly on its way. Reagan did a lot to create this, but he was basically dealing with a recovery that would allow laid-off workers to go back to the same jobs they previously inhabited.


Now, the vast majority of jobless remain jobless because their sector no longer exists. This sector had been running on fumes for two decades, well overstretching its limit by 2007. When the labor force senesces itself into the same trap of unimproved, low-skilled labor, such recovery is extremely difficult when trying to return to a labor force that you no longer qualify for.

And why do corporations see the greatest profits, over these 4 years of "economic disaster" than they have ever seen, and why do they refuse to hire these workers back?

well, they are hiring workers to fill these jobs. Just not in the US....

This same situation is also why I think we're arguing over fractions of a point rather than points in growth and unemployment. We've lost much of the wealth-producing work we used to have, which kills the effect of stimulus be it tax cuts or redistribution of seized wealth or borrowed spending.

Rather than fewer unions, perhaps what we need are more unions, specifically high tech unions running training programs that train the well-paid, highly technical workers these companies claim to need. And of course, revamped laws and tax codes that favor companies producing domestically and penalize companies producing abroad. It should be axiomatic that we can't all be designers and marketing consultants and telephone sterilizers if we want to consume real products, but we ought to be able to construct a reasonably productive economy that achieves much of our current (largely borrowed) material wealth without our rivers catching fire and our middle schoolers working production.