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Friday, September 03, 2010

A Very Good Employment Report

The number of employed grew. We are still down YoY in total employed, but we might make that back next month, and if not, we should make it back by November.

Basically all I have to say about this is purr-purr-PURRRRRR-PURRRRRRRRRRR. Don't bother me while I"m purring. It's been quite a while since I've had the chance. If this report had been bad it would pretty much have been toes up. I couldn't see how it could be that bad with the good indications on WIET tax receipts, but I was on tenterhooks anyway.

The official unemployment rate doesn't mean anything - it just reflects more people looking for work. See Table A-1 and Table A-15, Alternative Measures. Note that U-5 did not grow (that includes marginally attached and discouraged workers). U-1 (number of employed 15 weeks or more as a percentage of the labor force) dropped from 5.7% to 5.5%.

U-6 (U-5 plus involuntary part-time) rose from 16.5% to 16.7%. The number of part-time employed has shifted upwards, and that is because of some of the weakening in manufacturing. But it's not enough to overcome the underlying trend.

To understand how good this is (comparatively, employment is historically very weak), take a look at Table A-8. Since last August, any way you look (SA or NSA) we have dumped a lot of government workers and added a lot of private sector workers.
Non-seasonally adjusted:
Government: 20,665
Private Emp: 107,828
Ratio: 19.16%
Government: 20,326
Private Emp: 108,381
Ratio: 18.75%

Seasonally adjusted:
Government: 21,124
Private Emp: 107,094
Ratio: 19.72%
Government: 20,575
Private Emp: 107,760
Ratio: 19.09%
This is so important, because of the structural fixes that have to happen in order to achieve an economy which can grow sustainability, one of the most important is cutting government employment in relationship to private employment. There's a lot more of this that should be done, but at least we are getting a grip on it.

The second big issue is of course retirements, both public and private. A lot of government pensions and retirement medical benefits will have to be cut for current employees and some current retirees, and for that a legal basis will have to be developed. But otherwise, big swathes of the country will go the way of Camden, Detroit and Buffalo and ultimately the retirees will be defaulted on anyway. Almost all public sector unions are in complete and abject denial over this.

It would be pretty crazy to raise taxes significantly now. The states and locals are still raising taxes, so if Congress doesn't pretty much pass through an extension of most the Bush tax cuts, the overwhelming probability is that they'll screw this up big-time.

From here on out, stimulus shouldn't try to support state and local governments nor housing prices. Things just have to come back into balance. Stimulus would be better focused on tax cuts and a more even distribution of taxes.

And for heaven's sake, no new regressive taxes. That's the last thing we need. We are still in the "A job - any job" phase of recovery, and we've got two years to go before enough debt is slapped out of the system to really make a difference.

From here on out, stimulus WILL try to support state and local governments and housing prices.

Fixed it for ya. ;-)
Neil, I suspect November should have something to say about that.

Don't hassle me while I'm purring.
MoM, I wondered what that sound was. I knew it wasn't my cat,she is very quiet after she has gobbled a gopher and she had two this morning.Any good news is welcome at this point!
I'm not convinced this is anything more than a pause
in the employment decline. The service and manufacturing reports don't quite mesh with this
report. The states sales tax numbers should help
us understand the overall economic picture.

David Rosenberg rains on the parade and explains why the employment report was more bearish than the market response:


he seems kinda hard to please
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