The BLS Employment Situation Summary for January 2014

Posted by PITHOCRATES - February 17th, 2014

Economics 101

The Unemployment Rate is 13.6% when you count all Unemployed Workers

The economy is getting better and better.  There are more new jobs.  And the unemployment rate continues to fall.  According to the Bureau of Labor Statistics (BLS).  But this is little succor for the 10,948,000 who have lost their job since President Obama began trying to make the economy better.  No matter what the BLS says (see the Employment Situation Summary posted 2/7/2014 on the Bureau of Labor Statistics).

Total nonfarm payroll employment rose by 113,000 in January, and the unemployment rate was little changed at 6.6 percent, the U.S. Bureau of Labor Statistics reported today.  Employment grew in construction, manufacturing, wholesale trade, and mining…

Among the major worker groups, the unemployment rates for adult men (6.2 percent), adult women (5.9 percent), teenagers (20.7 percent), whites (5.7 percent), blacks (12.1 percent),and Hispanics (8.4 percent) showed little change in January. The jobless rate for Asians was 4.8 percent (not seasonally adjusted), down by 1.7 percentage points over the year. (See tables A-1, A-2, and A-3.).

The number of long-term unemployed (those jobless for 27 weeks or more), at 3.6 million, declined by 232,000 in January. These individuals accounted for 35.8 percent of the unemployed. The number of long-term unemployed has declined by 1.1 million over the year.  (See table A-12.)

Once again there are more new jobs and the unemployment rate fell.  Further proof the Obama administration says that their policies are working.  But the low unemployment rate is misleading.  As there are 91,455,000 people who are no longer in the labor force (see Table A-1. Employment status of the civilian population by sex and age).  An increase of 10,948,000 since President Obama entered office.  The BLS doesn’t count these unemployed people as unemployed in their calculation of the official unemployment rate.  If you did that would raise the unemployment rate to 13.6%.  Which is a lot higher than the official 6.6%.  And better reflects public sentiment on the economy.

Ironically, the people hurt most by the Obama economic policies—teenagers, blacks and Hispanics—are also the biggest supporters of the president.  Which tells us they obviously support him for reasons other than the economy.  And apparently put those reasons above having a job.  At least based their respective unemployment rates.

If we count all Unemployed and Underemployed the Current Economic Recovery would take more than 20 Years

Of the people they actually count as unemployed about a third of them have been unemployed for 27 weeks or more.  So a large percentage of the unemployed are not suffering from frictional unemployment.  That brief period of unemployment between jobs.  No.  These people have lost their jobs.  And can’t find new ones.  While others can find only part-time jobs.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) fell by 514,000 to 7.3 million in January. These individuals were working part time because their hours had been cut back or because they were unable to find full-time work. (See table A-8.)

In January, 2.6 million persons were marginally attached to the labor force, little changed from a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. (See table A-16.)

If you add the people up who want a full-time job but can’t get one that’s 9,900,000 who can’t find a full-time job.  If we only add 113,000 jobs a month it will take over 87 months to get these people the full-time jobs they want.  Or more than 7 years.  If we count the last 5 years of the Obama presidency it will take the economic recovery out to 12 years.  If we add the people who have left the labor force to the underemployed (the part-time workers looking for a full-time job) that would extend the economic recovery to 244 months.  Or more than 20 years.  Which is longer than the length of the economic recovery following the Great Depression.

The Obama administration still blames George W. Bush for causing the Great Recession.  But one thing they do say over and over is that it was the worst economic disaster since the Great Depression.  So they are saying that the Great Depression was worse than the Great Recession.  Yet the current economic recovery is on track to last longer than the economic recovery following the Great Depression.

President Obama’s Economic Recovery is on Course to be the Worst Economic Recovery in U.S. History

The Great Depression and the Great Recession share something in common.  In both the government used Keynesian economics to try and pull the nation out of the economic crisis.  With huge government stimulus spending.  You can see evidence of the FDR spending today.  Such as the Hoover Dam.  But you can see little evidence from President Obama’s stimulus spending.  For there are no Hoover Dams anywhere.  Just a lot of empty buildings that housed failed green energy industries.  With no new jobs to show for it.  Such as those good-paying jobs in the green energy industry that President Obama promised his stimulus spending would produce.  But, alas, it did not.  In fact, that’s just one thing this administration is not good at.  Creating jobs.  Even the jobs they created appear suspect.

Employment in manufacturing increased in January (+21,000). Over the month, job gains occurred in machinery (+7,000), wood products (+5,000), and motor vehicles and parts (+5,000). Manufacturing added an average of 7,000 jobs per month in 2013.

In January, wholesale trade added 14,000 jobs, with most of the increase occurring in nondurable goods (+10,000).

Mining added 7,000 jobs in January, compared with an average monthly gain of 2,000 jobs in 2013…

Employment in other major industries, including transportation and warehousing, information, and financial activities, showed little or no change over the month.

These numbers don’t make sense.  Much like Keynesian economics.  The economy created jobs in manufacturing (machinery, wood products, motor vehicles and parts).  Wholesale trade added jobs.  Mining added jobs.  But this new economic activity required no new financing.  Which is odd.  For it takes money to make money.  Also, there were no new jobs in transportation and warehousing.  Which begs the question.  What did they do with all the stuff they made from all those new manufacturing jobs?  Did it ever leave these factories?  Or is there another explanation?  Did the people who entered the labor force just replace people who left it?  For no net change?  Perhaps.

The manufacturing workweek declined by 0.2 hour to 40.7 hours, and factory overtime edged down by 0.1 hour to 3.4 hours.

Or perhaps this explains how they could add jobs in an industry that required no additional financing, transportation or warehousing.  Hiring new workers while shortening the workweek and cutting back on overtime.  Or a combination of this and people leaving the labor force to net out any economic gain from these new jobs.  Whatever the explanation is one thing is certain.  The economy is not improving.  And President Obama’s economic recovery is on track to be the worst economic recovery in U.S. history.  Despite the glowing jobs reports showing new job creation month after month.  And a continuing falling unemployment.  Things they can only show by not counting the 10 million or so who are no longer employed.

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The BLS Employment Situation Summary for December 2013

Posted by PITHOCRATES - January 13th, 2014

Economics 101

The Labor Force Participation Rate has Fallen Steadily since President Obama became President

Ever since the recovery summer of 2010 the Obama administration has told us the recession was over.  And his policies were creating one heck of an economic recovery.  Backed up by all those glowing monthly jobs reports. Like the December 2013 jobs report (see Employment Situation Summary posted 1/10/2014 on the Bureau of Labor Statistics).

The unemployment rate declined from 7.0 percent to 6.7 percent in December, while total nonfarm payroll employment edged up (+74,000), the U.S. Bureau of Labor Statistics reported today.

The unemployment rate is down.  And new jobs were created.  Again.  Jobs report after jobs report it’s the same thing.  The administration touts the falling unemployment rate and new job creation as confirmation that their economic policies are working.  Even though it’s been 5 years.  And the economy is still in the toilet.  Despite that falling unemployment rate.  For there is a reason why the unemployment rate is falling.  And it has nothing to do with an economic activity.

The civilian labor force participation rate declined by 0.2 percentage point to 62.8 percent in December… The labor force participation rate declined by 0.8 percentage point over the year…

In fact, the labor force participation rate has fallen steadily since President Obama became president.  This is not good.  In fact, it’s very bad.  Because it means that under President Obama’s economic policies more people have left the labor force than entered or remained in it.  Meaning that his economic policies have caused a net loss of jobs throughout his presidency.

The U-6 Unemployment Rate is Closer to the Bitter Sentiment of Job Seekers in the Current Economic Climate

In January of 2009 when President Obama began his presidency there were 80,507,000 people not in the labor force.  At the end of December 2013 that number grew to 91,808,000.  Subtracting one from the other and you get 11,301,000 people that have left the labor force since President Obama entered office.  Because his policies destroyed 11,301,000 jobs.  And because these people couldn’t find new jobs they just gave up looking.  Which is why the unemployment rate keeps falling.

So you can talk of new jobs created.  And a falling unemployment rate.  But those numbers don’t reflect the 11,301,000 jobs President Obama destroyed with his policies.  Which comes to 260,200 jobs lost per year.  Or 188,350 each month.  Which is a lot more than the 74,000 new jobs.  In fact, if you look at the change in the number of people not in the labor force from November to December of 2013 you’ll see that 525,000 people left the labor force.  So the December jobs lost is about 2.8 times the average jobs lost during the Obama presidency.  And giving a ratio of about 7 jobs lost for every new job created in December.  Making December a horrible month for jobs.  Much worse than the 6.7% unemployment rate would have us believe.

The funny thing about the official unemployment rate is that the Bureau of Labor Statistics (BLS) doesn’t count people who quit looking for a job.  Or who are working part-time because they can’t find a full-time job.  If we want an alternative measure of labor underutilization (that counts more people who can’t find a full-time job) we should look at the U-6 unemployment rate.  We can find this number in the same BLS jobs report (in Table A-15).  Which was 13.1% for December 2013.  An unemployment rate much closer to the bitter sentiment of job seekers in the current economic climate.

We will have to Wait through many more Bad Jobs Reports before we can Enjoy a Healthy Economy Again

The Employment Situation Summary confirms the horrible economy.  Though misleading with these falling unemployment rates the real economic picture is still in these reports.  All you have to do is look for them.  And understand what they mean.  For example:

In December, job gains occurred in retail trade and wholesale trade…

Employment in retail trade rose by 55,000 in December. Within the industry, job gains occurred in food and beverage stores (+12,000), clothing and accessories stores (+12,000), general merchandise stores (+8,000), and motor vehicle and parts dealers (+7,000)…

In December, wholesale trade added 15,000 jobs. Most of the job growth occurred in electronic markets and agents and brokers (+9,000).

Note that of the 74,000 new jobs 70,000 (94.6%) of them were in retail and wholesale trade.  Which is not surprising when you consider what’s in December.  Christmas.  (While near-zero interest rates sold cars to people who would otherwise not buy them.)  The final sprint of retailers for the year.  And when many of them go firmly into the black.  But while the Christmas surge on employment was underway other sectors did not fare as well.

Within the [professional and business services] industry, temporary help services added 40,000 jobs in December, while employment in accounting and bookkeeping services declined by 25,000.

Businesses add temporary workers when they have a surge in sales they believe won’t last.  And don’t want to have more permanent workers on their payroll when that surge in sales ends.  For it is easier to let temps go than full-time workers.  And less costly.  Accounting and bookkeeping services aren’t the most glamorous of services.  When the economy is growing businesses have more accounting and bookkeeping work.  But when the economy is contracting businesses have less accounting and bookkeeping work.  So a decline here could indicate an economic contraction.

The December 2013 jobs report is bleak.  Just as the oncoming winter looks in December.  Knowing we’ll have to wait through a long and cold winter before we can enjoy the warmth of summer again.  Just as we know we will have to wait through many more bad jobs reports before we can enjoy a healthy economy again.  Thanks to the horrific economic policies of the Obama administration that have failed to work these past 5 years.

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The BLS Employment Situation Summary for November 2013

Posted by PITHOCRATES - December 9th, 2013

Economics 101

There was Much Spending in November where People Gathered to Celebrate the Thanksgiving Holiday

The Bureau of Labor Statistics November’s Employment Situation Summary is out.  The government is trumpeting the 203,000 jobs created and the fall in the unemployment rate from 7.3% in October to 7.0%.  Proof they say that the economy is turning around.  And that their economic policies are working.  So everything is coming up roses.  If you stop reading the Employment Situation Summary there, that is.  For if you read further the economy is still horrible.

A big part of this improvement was the furloughed federal workers returning to work after the government shutdown.  And the Thanksgiving Holiday.  With retail hiring seasonal employees and stocking their shelves for the kick off of the Christmas shopping season.  This year starting on Thanksgiving Day for many retailers.  So you would expect a gain in employment connected to the Christmas shopping season.  Which there has been.  Retail trade employment added 22,000 jobs.  And leisure and hospitality, employment in food services and drinking places added 18,000 jobs.  And air transportation added 3,000 jobs.  Thanks to the biggest travel day of the year falling in November.

So there was much spending where people gathered with friends and family to celebrate the Thanksgiving holiday.  And the mad rush to the stores to begin their Christmas shopping.  There was much traveling, shopping and dining in November.  As there always is.  Though some years are better than others.  There was also new hiring in the automobile and construction industries.  Probably more due to the near-zero interest rates thanks to the Federal Reserve’s quantitative easing.  Basically printing money to drive down interest rates.  To encourage people to buy big ticket items like cars and houses.  Even though they had no plans to do so.

It is only the Decline in the Number of People in the Labor Force that gives us an Improving Unemployment Rate

So new jobs in these areas don’t reflect on the overall economic climate.  Because once Christmas is over business will lay off those they hired for those seasonal jobs.  And once the Federal Reserve stops ‘printing money’ those interest rates will rise.  Perhaps compounded by runaway inflation from so much printing.  So these aren’t good indicators of the economy.  We can gain a better understanding by looking at the higher stages of production.  Where there are large capital outlays required to hire and expand business.  Industries that look at the long-term.  So if they’re not hiring they’re not optimistic about the long-term economic picture.

A lot of economic activity has to happen before a retail store can sell anything.  Raw material industries have to pull resources out of the environment.  Industrial processors have to transform these raw materials so manufacturers can use them.  And once manufacturers build things wholesalers buy them and resell them to retailers.  That’s a lot of costs these industries have to incur to produce things that may sell 6-9 months later.  Or longer.  And if the economy is looking anemic to them they are not going to incur these costs.  Which is what happened in November with some of these higher stages of production.  Mining, logging and wholesale trade showed little to no change.

The civilian labor force declined by 720,000 in October.  With the government shutdown blamed for a lot of these lost jobs.  So when the government opened for business again in November we should have seen a large increase in the civilian labor force.  But we didn’t.  The civilian labor force only increased by 455,000 in November.  Which means that if you factor out the government shutdown there was still a decline in the number of jobs.  And it is only this decline in the number of people in the labor force that gives us an improving unemployment rate.  For once people give up and quit looking for a job because the economy is so bad the Bureau of Labor Statistics (BLS) stops counting them.  Skewing the real unemployment rate.

The Current Economic Recovery is a False One created with the Smoke and Mirrors of Low Interest Rates

This gets to the crux of the Obama economic recovery.  Or, rather, the absence of any recovery.  The government trumpets the creation of 195,000 new jobs per month this year.  But they don’t tell us how many jobs we lost per month this year.  Which we can calculate.  In January of this year there were 89,009,000 people not in the labor force.  In November that number rose to 91,273,000.  A total loss of 2,265,000 jobs this year.  Or a loss of 205,909 each month.  So while they cheerfully report the creation of 195,000 new jobs per month we actually lost 205,909 jobs each month.  If you count those people who left the labor force the BLS doesn’t count when calculating the unemployment rate.  In fact, if you look at the trends this year you can see the trends are going in the wrong direction.

Those in Labor Force vs Unemployment Rate thru November 2013 R1

The most shocking thing about this chart is that there are over 91 million people not in the labor force.  The labor force is the sum of the employed and unemployed persons.  So these are people who could be in the labor force but aren’t.  Because they don’t have a job.  For whatever reason.  On welfare, collecting disability, early retirement, just can’t get a job because the economy is so bad, etc.  So there will always be people out of the labor force.  And a large number is bad.  Because these people aren’t helping to create economic activity.  Which is why the Obama recovery is so anemic.

What’s also shocking about this chart are the trends.  The official unemployment rate has been falling.  Good news, yes?  Well, as it turns out, no.  Because the number of people not in the labor force has been rising during the decline in the unemployment rate.  Making the unemployment numbers questionable at best.  For you can’t have less unemployment if people continue to leave the workforce because they can’t get a job.  And the employment picture isn’t getting better.  It’s getting worse.  And it’s going to keep getting worse until those higher stages of production start hiring.  Which they won’t do until they see a real economic recovery.  And not a false one created with the smoke and mirrors of low interest rates.

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