October 2013 Employment Situation Summary

Posted by PITHOCRATES - November 11th, 2013

Economics 101

Although there were 204,000 New Jobs in October 720,000 Workers left the Labor Force

The worst economic recovery since that following the Great Depression continues (see Employment Situation Summary by the Bureau of Labor Statistics posted 11/8/2013).

Total nonfarm payroll employment rose by 204,000 in October, and the unemployment rate was little changed at 7.3 percent, the U.S. Bureau of Labor Statistics reported today…

Both the number of unemployed persons, at 11.3 million, and the unemployment rate, at 7.3 percent, changed little in October…

The civilian labor force was down by 720,000 in October.

If the Obama administration was an employment agency that found people jobs someone would have fired the management team by now with numbers like this.  204,000 new jobs for 11.3 million unemployed people is a success rate of 1.81%.  Worse, although there were 204,000 new jobs 720,000 workers left the labor force.  Which means that for every new job we lost 3.5 existing jobs.  So for one step forward in fixing the economy the administration takes 3.5 steps backwards.  Which means we’re moving in the wrong direction with the economy.

After a near-trillion dollar stimulus bill and quantitative easing up the wazoo what do we have to show for it?  Not a whole hell of a lot.  Other than more debt.  And inflationary pressures just waiting to be unleashed.  Taking us back to the stagflation and misery of the Seventies.  The heyday of Keynesian economics.

Solid Economic Growth starts at Raw Material Extraction

Before John Maynard Keynes gave us Keynesian economics the economy hummed along based on classical economic principles.  Including, but not limited to, thrift.  Savings.  Investment.  A sound banking system.  And a strong currency.  People saved their money.  Banks accumulated their savings into investment capital.  Banks made this capital available to investors.  And interest rates were determined by our savings rate.  The more we saved (i.e., the more thrifty we were) the lower interest rates were.  These are the economic principles that made the United States the number one economy in the world.

Another key concept of classical economics is the stages of production.  From the extraction of raw materials to manufacturing to wholesale goods to retail goods.  In a healthy economy there is growth at all stages.  And solid economic growth starts at raw material extraction.  For this feeds manufacturing.  Which feeds wholesale goods.  Which feeds retail goods.  Where consumers spend their money.  The fatal flaw of Keynesian economics is that it focuses only on consumer spending.  Not at these higher-order stages of production.  And when Keynesians try to end a recession while ignoring them they fail.  And get job numbers like these.

Employment in retail trade increased by 44,000 in October, compared with an average monthly gain of 31,000 over the prior 12 months…

Manufacturing added 19,000 jobs in October, with job growth occurring in motor vehicles and parts (+6,000), wood products (+3,000), and furniture and related products (+3,000). On net, manufacturing employment has changed little since February 2013…

In October, employment showed little or no change elsewhere in the private sector, including mining and logging, construction, wholesale trade, transportation and warehousing, information, and financial activities.

This is not the picture of an improving economy.  Consumers are spending money.  Thanks to low interest rates and a record amount of government benefits.  But the economic activity is greatest at the consumer level.  As evidenced by the largest increase in jobs at the retail level.  There are fewer job gains at manufacturing.  And even less at the whole sale level and raw material extraction.  Meaning the new economic activity is greatest at the consumer level.  Because of cheap (and free) money.  But there are no new jobs at the highest stage of production.  Raw material extraction.  Because they see no real economic recovery.  Only Keynesian ‘hot’ money that will cause a surge in consumer spending.  And a surge in inflation.  Leading to a continued sluggish economic recovery.  Or a fall back into recession.  And the last thing they want should that happen is higher costs.  Or more debt.  So they don’t spend more or invest during periods of Keynesian stimulus.

President Obama’s Greatest Supporters are suffering some of the Greatest Unemployment

The October 2013 Employment Situation Summary paints a grim economic picture.  People continue to leave the labor force.  And the government’s efforts to stimulate economic activity isn’t stimulating anything above the consumer level.  As the higher stages of production fear the coming inflation.  And possible recession.  This after 5 years of President Obama’s Keynesian economic policies.  Further proving the futility of Keynesian economics.  And the failure of the Obama administration.  Whose policies have stalled new hiring.  And pushed people from full-time to part-time.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed at 8.1 million in October. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.

Those individuals who had their hours cut or can’t find a full-time job are in large part due to the Affordable Care Act (Obamacare).  Which is not only destroying any economic recovery.  But the Affordable Care Act is also making health insurance unaffordable.  Which will make these economic numbers worse as the carnage spreads to employer-provided health insurance.  As people will have to both pay for health insurance AND pay for all of their health care out-of-pocket thanks to those high deductibles.  Which won’t help the unemployment numbers.  For as consumer spending falls so does hiring.

Among the major worker groups, the unemployment rates for adult men (7.0 percent), adult women (6.4 percent), teenagers (22.2 percent), whites (6.3 percent), blacks (13.1 percent), and Hispanics (9.1 percent) showed little or no change in October. The jobless rate for Asians was 5.2 percent.

It is interesting, or rather ironic, that the president’s greatest supporters are suffering some of the greatest unemployment.  Teenagers.  Blacks.  And Hispanics.  Who seem to never lose their faith.  No matter how much President Obama’s policies favor old white men and women.  And Asians.  It’s not for the lack of spending, either.  For the Obama administration has spent more domestically than any other president.  But it is only his rich Wall Street cronies who are doing well.  And other rich people.  Not the rank and file Obama supporters.  Yet they remain Obama supporters.  So far, at least.  These continual bad job numbers AND the unaffordable Affordable Care Act may change things.  Especially when these continue to fall disproportionally on teenagers, blacks and Hispanics. 

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