Record 1.2 Million People Fall Out Of Labor Force In One Month, Labor Force Participation Rate Tumbles To Fresh 30 Year Low
A month ago, we joked when we said that for Obama to get the unemployment rate to negative by election time, all he has to do is to crush the labor force participation rate to about 55%. Looks like the good folks at the BLS heard us: it appears that the people not in the labor force exploded by an unprecedented record 1.2 million. No, that's not a typo: 1.2 million people dropped out of the labor force in one month! So as the labor force increased from 153.9 million to 154.4 million, the non institutional population increased by 242.3 million meaning, those not in the labor force surged from 86.7 million to 87.9 million. Which means that the civilian labor force tumbled to a fresh 30 year low of 63.7% as the BLS is seriously planning on eliminating nearly half of the available labor pool from the unemployment calculation. As for the quality of jobs, as withholding taxes roll over Year over year, it can only mean that the US is replacing high paying FIRE jobs with low paying construction and manufacturing. So much for the improvement.
Listen To Obama Explain Why The US Labor Force Declined By 1.2 Million And Why Temp Jobs Surged By A Record
Actually, now that we think about it, he may not touch on those specific issues.Implied Unemployment Rate Rises To 11.5%, Spread To Propaganda Number Surges To 30 Year High
Sick of the BLS propaganda? Then do the following calculation with us: the US civilian non-institutional population was 242,269 in January, an increase of 1.7 million month over month: apply the long-term average labor force participation rate of 65.8% to this number (because as chart 2 below shows, people are not retiring as the popular propaganda goes: in fact labor participation in those aged 55 and over has been soaring as more and more old people have to work overtime, forget retiring), and you get 159.4 million: that is what the real labor force should be. The BLS reported one? 154.4 million: a tiny 5 million difference. Then add these people who the BLS is purposefully ignoring yet who most certainly are in dire need of labor and/or a job to the 12.758 million reported unemployed by the BLS and you get 17.776 million in real unemployed workers. What does this mean? That using just the BLS denominator in calculating the unemployed rate of 154.4 million, the real unemployment rate actually rose in January to 11.5%. Compare that with the BLS reported decline from 8.5% to 8.3%. It also means that the spread between the reported and implied unemployment rate just soared to a fresh 30 year high of 3.2%. And that is how with a calculator and just one minute of math, one strips away countless hours of BLS propaganda.
Final Nail In Today's NFP Tragicomedy: Record Surge In Part-Time Workers
It
appears the record surge in people not in the labor force is not the
only outlier in today's data. For the other one we go to the Household
Data Survey (Table 9),
and specifically the breakdown between Full Time and Part Time Workers
(defined as those "who usually work less than 35 hours per week"). We
won't spend too much time on it, as it is self-explanatory. In January,
the number of Part Time workers rose by 699K, the most ever, from
27,040K to 27,739K, the third highest number in the history of this
series. How about Full time jobs? They went from 113,765 to 113,845. An
80K increase. So the epic January number of 141.6 million employed,
which rose by 847K at the headline level: only about 10 % of that was
full time jobs: surely an indicator of the resurgent US economy... in
which employers can't even afford to give their workers full time
employee benefits. We can't wait for Mr. Liesman to explain how this
number, too, is unadulterated hogwash, and how it too is explained away
to confirm economic strength. Incidentally this is not the first time
we have discussed the issue of part vs full time workers: for more see
here: "Charting America's Transformation To A Part-Time Worker Society, Following 6 Straight Months Of Full Time Job Declines"Non Farm Payrolls Soar By 243K, Unemployment Rate Drops To 8.3%
Whopper of a NFP number, which prints at 243K, higher than the biggest forecast of 225K, on consensus expectations of 140K, the biggest jump since February 2009. The devil will certainly be in the revision details.More shortly.
Nonfarm Payroll Surge... On Gain From "Low Wage Jobs", Delay In Courier, Messenger Job Drop
Great news from today's BLS report, right (when one excludes that record 1.2 million explosion in people out of the labor force of course)? Wrong. As is well known banks have been firing workers left and right: these are the jobs that actually matter in the grand withholding taxes scheme of things. Yet someone is getting hired supposedly. Well, as we suggested before the NFP report, this is merely rotation from high paying jobs to "low-wage jobs." And no, it's not our words - this is what CRT Capital says. Per Bloomberg: About 113k of NFP gain from “low wage jobs,” David Ader, strategist at CRT Capital Group, writes in note. Additionally, “we didn’t see the drop in courier and messengers as expected - but suspect we will." Moreover, ‘‘long-term stress remains at the U6 measure at 15.1% is still high, but likely falling due to people leaving labor force, and duration on unemployment remains over 40 weeks." But yes, it is an election year, so by November expect the labor participation rate to be under 60% and the unemployment rate to drop to under 6%, or some other propaganda BS.Non-Manufacturing ISM Ignores Banker Layoffs, Surges Past Expectations On Biggest Jump In Employment Index Ever
And another major economic indicator beat, this time coming from the January Non-manufacturing ISM data, which unlike yesterday's miss in the manufacturing ISM, surged past estimates of 53.2, up from a revised 53.0 in December, to a whopping 56.8 in January. The primary reason for this was the reported jump in Employment which rose from 49.8 to 57.4, which was the biggest jump pretty much ever (see chart below), and the highest employment number since 2006. And this happened in a month in which the banking sectors laid of thousands of bankers. Brilliant. We leave it up to readers to estimate the credibility of this report. In other news, inflation is back, as the report states that "Corrugated Cartons is the only commodity reported down in price." What was up? "Airfares; Beef; Chemical Products; Chicken; Crab; Coffee (2); #1 Diesel Fuel (2); #2 Diesel Fuel (3); Fuel; Gasoline; Medical Supplies (2); Paper; Petroleum Based Products; Resin Based Products; Vehicles; and Wire." In other news, factory order missed expectations of a 1.5% increase, coming in at 1.1%. But who cares: it is an election year and the propaganda machine is on in full force.
A denial, a denial
Today's labor reports reminds me of the Nirvana video, "Smells like Teen
Spirit". What do you expect from a generation X'er? While the (economic)
pom-poms and heads are waving and swaying, there's still something
disturbing going on. Many of the government generated time series have
turned up. Chart 1: Civilian Labor Force (CLF) And Year-Over-Year (YOY)
Change Yet Cobain screams, A...
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Backup Post
Just in case the site goes down again, here is a reprint of the main post
from today:
Getting Caught Up
Friday, February 3, 2012 at 9:53 am
After yesterday's nefarious activities, I had hoped to create a lengthy,
comprehensive post for you this morning. The BLSBS has gotten in the way
and, since things are moving so quickly, I figured I'd better just post
what I have and worry about going into detail over the weekend.
Before we get started, thank you all for your patience in dealing with the
nonsense of yesterday. The attacks continue today but Ron and Stephanie
have battled thro... more »
I Never Buy Anything That Is In The Limelight
I never buy anything that is in the limelight. - *Dr. Faber when asked if
he was going to buy Facebook`s IPO, Bloomberg TV*
*Marc Faber is an international investor known for his uncanny predictions
of the stock market and futures markets around the world.*
I Am Not Buying Anything Right Now
I am not buying anything right now. I am mainly looking out the window. I
bought little gold when it went down, not long ago. - *in a CNBC video
interview with Larry Kudlow*
*Related, SPDR Gold ETF (GLD)*
*Jim Rogers is an author, financial commentator and successful
international investor. He has been frequently featured in Time, The New
York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The
Financial Times and is a regular guest on Bloomberg and CNBC.*
1-2-3 Gold
Volatile D-wave bottoms in gold tend to follow 1-2-3 setups. Chart 1:
London PM Fixed Gold and GLD (ETF) Total Assets WA Stochastic
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content, and more! ]]
Planned layoffs surge in January: Challenger
A rising stock market can hide a lot of economic “baggage”. The labor
market - i.e. the real economy remains surprisingly soft behind the rising
stock market façade. The trend in announced layoffs (chart 1) appears to
have bottomed in 2010. It’s hard to notice approaching cycle dates (chart
2) and subtle trend hints because a rising stock market can mask economic
reality which few are willing...
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content, and more! ]]
Public Policy Choice: Deal With Consequences Today or Maintain the Peace & Deal With Them Later?
State and local governments have the following choice: (1) Maintain or increase the trend towards public spending cuts enacted Q3 2009 (see chart 1). While this choice plays well in the headlines, it carries various consequences ranging from social unrest to economic contraction, or (2) The return public spending policies. The return of public spending will likely maintain “the peace” and... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]
Kyle Bass: "Don't Sell Your Gold"
The
mainstream media seem willing to sound the all-clear and bring us back
from Defcon-3 on the back of what can generously be described by
realists willing to look at the actual data as a 'murky' NFP print. The
market's reaction seems modestly QE-off (with rates up decently) but
the only modest drop in Gold appears to fit with a lack of
conviction in the data (especially given the EUR sell-off on Papademos
chatter). It seems, as Bloomberg reports, Kyle Bass is right to take the longer-view when he notes today "I'm against selling any of the gold"
in UTIMCO's portfolio, pointing out the mounting risks from government
deficits in US and Europe, "as every day goes by, I see deflation in the things you own and inflation in the things you need." Summing up the reality of our global situation, one of Bass's colleagues adds "This is a grand experiment and they typically never end well."EURUSD Tumbles On Rumor Of Papademos Resignation, Eurogroup Meeting Delay
EURUSD longs just got punk'd again, with the EURUSD surging to over 1.32 on the fake BLS number (1.2 million labor force decline, whatever, with ), when it collapsed by 100 pips as the news we tweeted earlier that Greek PM Papademos may resign today throwing the entire Greek bailout out of the window, if his talks for further austerity fail. From Kathimerini: "Papademos is expected to meet PASOK’s George Papandreou, New Democracy’s Antonis Samaras and Giorgos Karatzaferis of the Popular Orthodox Rally (LAOS) on Saturday. The three politicians will have to agree on measures that will satisfy Greece’s lenders and pave the way for a new bailout. Sources told Kathimerini that the troika is demanding that the minimum wage of 751 euros per month (gross) be reduced and that labor costs in the private sector drop by 25 percent in a bid to help Greece regain competitiveness. Skai TV and radio reported on Friday that should the leaders fail to agree a deal, he will tender his resignation on Monday." And just to make the confusion complete, Jean Claude Juncker just announced there would be no Eurogroup meeting on February 6. So while the market is celebrating the rotation of banker jobs with minimum wage jobs, Greece may be on the verge of blowing up Europe.
Greece, The Baltic Dry, And... Oh My
Just when it seemed that nothing could possibly surprise about
adverse Greek bank exposure, as these are beyond insolvent already
relying on the ECB for day to day operations as is, here comes one more
development, this time courtesy of the one index that has been in
literal freefall in the past two months, and recently hit a 20+ year
low - the Baltic Dry. OpenEurope explains: "An interesting but niche
issue has come to our attention recently in relation to the on-going
troubles in Greece. The 'Baltic Dry Index' (a measure of global
shipping demand/prices) has fallen for a month straight to record lows.
When this index falls it suggests that there is trouble in the
shipping industry, raising questions over the stability of shipping
firms. As it turns out many of these firms have secured their financing
from Greek and other European banks – meaning if they start defaulting
on their loans these banks could take losses. This raise further
questions over the bank recapitalisation plans and whether such
contingencies have been thought of in the second Greek bailout (which
sets aside €20bn for Greek banks)."
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