Misleading Employment Data Can Still Sometimes Lead To Correct Conclusion
Yes, we know that the nonfarm payrolls headline number for January was wrong, but those who concluded that job growth is weak are correct. It just was not as weak in January as they thought.
The real problem, and tragedy, lies in the fact that the five to ten million fake jobs that the late, lamented housing bubble spawned are never coming back. So the Fed tries to stimulate new bubbles, hoping that they will generate new kinds of fake jobs to replace the ones that were lost when the US housing mirage of 2002 to 2006 got vaporized. Yes, prices have largely recovered, but sales and construction and mortgage volume haven’t and they won’t for as long as it matters. Furthermore, bubbles that are limited to financial assets don’t stimulate jobs at all. They encourage speculation, but not real investment. Bankers and speculators benefit, job seekers don’t.
Total and Full Time Employment Data
Both total and full time employment are only back to 2006 levels in spite of a decent month in January. Job growth is merely keeping pace with population growth. The market has recovered only about half of the 9 million jobs that materialized during the peak years of the housing bubble.
A key measure of how well or poorly the jobs picture is for American workers is the full time employment data. According to the BLS household survey, full time jobs fell by 887,000 in January. That’s the actual number, not seasonally adjusted. January is always a down month, in fact the biggest down month of every year, as seasonal retail workers get laid off after the holidays. Looking at the decline of 887,000 compared with prior years, this was a very good number. It was much better than the January 2013 decline of 1.2 million, and was second only to the January 2011 decline of 834,000, which was the best performance over the previous 10 years. The average decline for January from 2003 to 2013 was -1.4 million. The crying, moaning, and gnashing of teeth over the January jobs data was completely misplaced.
On an annual basis, there were 1.9 million more jobs this January than in 2013, a gain of 1.7%. That was right in the mid range of the annual rate of gain going back to November 2011. In terms of the monthly release, this is more evidence that the headline writers and mainstream journalists overreacted to the faulty January non farm payrolls data.
But it does not change the fundamental fact that job growth is too slow to grow the US out of its unemployment problem. As for the quality of the new jobs being created, let’s not even go there.
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