"Economists are pessimists: they've predicted 8 of the last 3 depressions."
--Barry Asmus

The Required Disclosures

The information presented in this blog and its individual articles is provided for informational use only and should not be considered investment advice or an offer for a particular security. The contents reflect the views and opinions of the individual writer as of the date the article was written and do not necessarily represent the views of the individual writer on the current date. They also do not in any way, shape, or form represent the views of the Firm Never-To-Be-Named. Any such views are subject to change at any time based upon market or other conditions and The Great Redoubt and its individual writers disclaim any responsibility to update such views. These views should not be relied on as investment advice, and because investment decisions for any security are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any contributor to The Great Redoubt. Neither The Great Redoubt nor any individual author can be held responsible for any direct or incidental loss incurred by applying any of the information offered. Please consult your tax or financial advisor for additional information concerning your specific situation.

Friday, January 7, 2011

US Employment Situation: A Fata Morgana Looks Pretty Good, Too

A Fata Morgana, in case you're wondering, is a rare and complex form of superior mirage.
And now, the US Employment Situation. Last month we had a surprisingly bad increase of only 39,000 nonfarm jobs (badly missing expectations), with the unemployment rate at 9.8%. For December, particularly after the ADP Employment Report earlier this week, the Street is feeling optimistic. They're looking for 160,000 new jobs (with 180,000 of them coming from the private sector, implying 20,000 public sector job cuts), with the unemployment rate falling to 9.7%.
Drumroll, please.
Here's the data[1]. Nonfarm payrolls missed expectations, coming in with a 103,000 increase in nonfarm payrolls. Within that figure,
  • Leisure and hospitality employment increased by 47,000, with the bulk of those jobs (25,000) coming from food services and drinking places{2].
  • Health care employment increased 36,000 - 21,000 in ambulatory services, 8,000 in hospitals, and 7000 in nursing and residential care facilities.
  • Temporary jobs increased 16,000.
  • Retail trade jobs increased by 12,000.
  • Mining employment increased by 5000.
  • Manufacturing employment increased by 10,000.
Interestingly enough, though, the unemployment rate has dropped 40 bps to 9.4%. The number of unemployed persons fell 556k to "only" 14.5 million.
  • The number of job losers and persons who completed temporary jobs dropped by 548,000 to 8.9 million.
  • The number of long-term unemployed (jobless for 27 weeks or more) remains largely unchanged at 6.4 million, and accounts for 44.3% of the unemployed.
  • The number of persons employed for economic reasons[3] remained largely unchanged at 8.9 million.
  • 2.6 million persons were not counted as unemployed because, although they are available for and want work, they had not looked for work in the last four weeks. 1.3 million of them are considered discouraged, meaning they have given up all hope of finding employment.
Putting all of that in perspective, unemployment is at 9.4%. But, if you count in the "marginally attached", it goes to 11.1%. If you also count in the "involuntary part-time workers" (and there have been a number of good arguments about why you should[4]), it goes to around 16.8%.
So really, even though the report looks good on the surface, it really isn't much of an improvement.
[1] Assume all of these numbers are seasonally adjusted, unless I say otherwise.
[2] Not to stereotype, but I think that it's safe to read this as fast food and waiters, neither of which typically make a lot of money.
[3] AKA "involuntary part-time workers".
[4] Why? Consider someone with a Masters in Engineering, working as a part-time janitor. Or a GM assembly line worker, laid off, delivering newspapers. Or any one of 8.9 million other cases in which the only difference between the skilled worker working a semi-skilled part-time job (and most part-time jobs are semi-skilled) and a skilled worker drawing unemployment is the fact that one of them has something approximating a job.

No comments:

Post a Comment