November 2, 2012

“Here we go again! Economists: Employment gains are ‘implausibly high’”

Well, saying I told you so in crass.  But quoting myself saying I told you so?  Perfectly acceptable and in the best of taste.  Because I told you so — a year ago, a few months ago, and yesterday, even amid speculation that the unemployment numbers simply couldn’t be massaged enough to stay below 8%:

My prediction:  there’s no way in hell Labor lets that number go up over 7.9%.  If they do, that’s an admission that even they are tired of covering for this guy and his corrupt Administration, and it’s time for him to go.

Guess they’re holding onto some of that hope — enough so that they’re willing to engage in methodology that changes reality into perception.

Jim Pethokoukis:

Recall all the eyebrows that were raised last month at the huge jump, nearly 900,000 jobs — in the September household jobs survey conducted by the Bureau of Labor Statistics. The last time the economy added that many, it was growing at a white-hot 9.3% — not 2%. And it was way out of line with the more well known payroll survey.

The results led Gallup’s chief economist to say that the “household results should be discounted. … The obvious conclusion is that a new employment measure is needed.”

But in October we had another mega-month, at least according to that survey. Household employment jumped 410,000. Here is the economics team of John Ryding

Conrad DeQuadros at RDQ Economics:

The economic data for October continue to be relatively upbeat as the gain in payrolls and the upward revision to employment growth in the prior two months put the level of payrolls in October some 255,000 above the previously reported level for September.  The employment gains in the household survey (about 1.3 million over the last two months) are implausibly high and we still expect to see an eight-handle on the unemployment rate again before the end of the year. 

Translation: Unemployment is headed back to the 8% level after the election.

The thing is, though, it’s already there.  And we most of us know it.  But because 8% seemed to be judged the magic number from which no President could return, everything possible has been done to push the number below that mark in the run-up to the election.  As many knew it would be.

Here’s more Pethokoukis, putting even the dubious 7.9% minor uptick in unemployment into perspective:

1. If we suddenly had a string of months where job growth was the same as in October, it would take 7 more years — until 2019 ! — to get back to the Bush unemployment low of 4.4%. Even if we averaged 210,000 jobs a month, we wouldn’t close jobs gap until 2021.

2. We are now 41 months into the recovery, and we have recovered just 55% of the 8.9 million lost private sector jobs from the Great Recession. During the Reagan recovery, it took just 10 months.

3. Back in early 2009, White House economists Christina Romer and Jared Bernstein predicted the unemployment rate would be 5.2% in October 2012 if Congress passed the $800 billion stimulus. As the above chart shows, they weren’t even close.
4. In October, average hourly earnings for all employees on private nonfarm payrolls edged down by 1 cent to $23.58. Over the past 12 months, average hourly earnings have risen by 1.6%. Yet inflation is up 2% over the past year. That means worker take-home pay is declining.
5. As economist Doug Holtz-Eakin notes: “Average weekly hours of work declined. Average hourly earnings declined. The average weekly earnings and index of weekly hours showed sharp declines.” Not good.

6.  The shrunken workforce remains shrunken, although the labor force participation rate did nudge up last month, a good sign. But if the labor force participation rate was the same as when President Obama took office, the unemployment rate would be 10.6%.

7. If the participation rate had just stayed steady all year, the unemployment rate would be 8.2%.

8.  The broader U-6 gauge, which also measures underemployment, dropped just a smidgen to 14.6%.

9. Employment growth has averaged 157,000 per month thus far in 2012, about the same as the average monthly gain of 153,000 in 2011. Excruciatingly slow progress.

10 . The average duration of unemployment actually jumped to 40.2 week from 39.8 weeks. And the percent unemployed 27 weeks or more surged to 40.6% from 40.1%

Bottom line: Anemic economic growth of around 2% not only puts the U.S. economy at heightened risk of recession, but is also too slow to a) generate enough jobs to quickly close the jobs gap, and b) boost take-home pay. Anyone satisfied with or hyping this report does a great disservice to the America worker.

…and here’s ALG describing the kinds of jobs being created, many of them, outside service industry jobs, what they are calling “defensive jobs”:

One area in the report that sticks out like a sore thumb is that only 21,000 of the total number of jobs reported to have been created were in industries that create anything.  The rest are service industry jobs, many of which appear to be more related to protecting a company from the effects of government regulations than actually increasing a company’s financial health.  Defensive hiring to deal with big government is not healthy, as it is just another drag on businesses ability to fund expansion that results in real job growth.

Leaving all that aside — because it deals with the way the government self reports, and with the way the media uses as it’s “official” number the U-3  — here’s another take on the true state of the economic recovery as it pertains to jobs:

The seasonally-adjusted SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994. That estimate is added to the BLS estimate of U-6 unemployment, which includes short-term discouraged workers.

The U-3 unemployment rate is the monthly headline number. The U-6 unemployment rate is the Bureau of Labor Statistics’ (BLS) broadest unemployment measure, including short-term discouraged and other marginally-attached workers as well as those forced to work part-time because they cannot find full-time employment.
And that rate — using pre-1994 calculus, which adds back long-term discouraged workers who have left the work force entirely — puts unemployment at 23%.
That is absolutely staggering — and absolutely unnecessary — which is why it’s also so absolutely tragic.
People who willingly vote for four more years of this are saying one of three things:  1) I’m politically ignorant 2) I’m ideologically entrenched and I’m going all in for the team, or 3) I deserve your shit, and I’m going to vote for those who will take it from you and give it to me.
And in a way, they are saying all three things at once, whether or not they consciously realize it.

 

 

Posted by Jeff G. @ 9:42am
23 comments | Trackback

Comments (23)

  1. Utterly deep-sixing any trust heretofore held for government issued statistics is a side gain to the tyrant: mistrust enables coercion, grain by grain, for there are vacuums to fill.

  2. Wherein we see the SPIRIT OF HALLOWEEN in the celebrations of a delighted minion.

  3. We all know that businesses are not hiring because they are afraid of what they know Obama will do next to screw them over. If we had a real pro-jobs president we would be recovering strongly by now.

    If Romney is elected you can bet that the progressive pundits and the MFM will give Obama all the credit for the recovery that will start even before Romney does anything.

  4. Successive WAVES OF PROGRESS, drowning civil society in change.

  5. “there’s no way in hell Labor lets that number go up over 7.9%.”

    If Romney wins, will this be investigated, or will he allow it to be swept under the rug?

  6. Romney will not investigate anything. If he did, that would take away from anything positive he could do.

  7. Over the past 12 months, average hourly earnings have risen by 1.6%.

    And look at the trend.

  8. Oh hells, these people simply don’t understand the purpose of numbers transmission — they befoul a liberal’s wet-dream.

  9. Facts are stubborn things.

  10. Talking about the President’s GPA is inherently racist and must be stopped.

  11. I spent some semesters on academic probation — double-secret and otherwise — and I still graduated with a better GPA than that.

  12. I graduated cum laude and I had two kids at home and was five months pregnant with my third.

    That’s multi-tasking, baby.

  13. Hmmm. My GPA was 5.6, which translates to 2.6 on a 4.0 scale. If I were graduating this year with that GPA, the company I currently work for wouldn’t consider me for any job.

    So, there’s that. Things change.

  14. Whoops, 4.6. We may have to back-adjust all of my math grades.

  15. It’s okay, Slart. Math is hard.

  16. Math is easy. Partial differential equations are hard.

    English am hard too.

  17. Partial differential equations are hard.

    That’s what my youngest tells me. He’s a wizard and also thinks English are hard.

  18. English isn’t difficult, you just have to memorize a lot of rules. Since I used to have a good memory before cruel eld crept up on me, I didn’t have a problem, though I still cannot diagram a sentence very well.

    The partial differential equations are not really difficult either, as the ones you see in school are all designed so they can actually be solved. In the real world, one can rarely find a closed-form solution to any differential equation.

    My undergrad GPA was abysmal. I got it up a bit by adding a math major, then I went to a tier-3 grad school and ended up with a GPA high enough to get into a high tier-2 grad school for the piled higher and deeper, where that GPA was good enough to graduate but certainly not outstanding.

    I was an extremely lazy student.

  19. I solved one equation readily enough: picked a school that didn’t give grades!

  20. PDEs are probably easier when you have a teacher whose technique is not rooted in “why aren’t you guys getting this?”.

    Also, some explanation of what the fuck it is that we are doing as a solution to this equation would have been nice. What does this approach mean? Why am I doing this? At least with ODEs the solution approaches made sense, at least with the decade-later 20/20 hindsight available from Complex Variables.

    If you’re going to teach cookbook techniques, fine. Teach them. Teach them to us so that we can actually solve a problem or two.

    I blame my professor, may she rest in peace. I am still fucking pissed at her.

  21. You outsmarted us all!

  22. I freely grant that I am not the sharpest knife in the drawer, math-wise. My ability to do proofs in multivariate calculus was not the best. Enough to score B-grades in grad school, but I was all thumbs. Took lots of extra steps.

    Still, I had this sense that this was not really all that hard. I was not at all helped by the fact that there wasn’t one text that I could lay my hands on (and I tried plenty) that could offer any help at all.

    Maybe I’m just not as smart as I thought I was.

  23. A bad teacher can ruin math. Most of what you learn is cookbook techniques, and they need to be explained properly.

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