Friday, January 07, 2011
Employment Household Survey Employed Up 297K
There is a six to eight month lag for the basic price shock to move through the economy, so we are looking at the impact of the recent Fed/DC dips initiatives to really start hurting the economy in the late spring/early summer and into next fall, which is where I had the next chance for very solid growth occurring.
But anyway, let's just roll around in these nice, nice numbers for a bit (unless noted, all numbers are seasonally adjusted):
- We got one technical revision in this report. Unemployment rates for recent months were revised only slightly.
- Job losers and persons who completed temporary jobs dropped in December by 548K. This means that my guess that the inventory cycle really was controlling a lot of the recent dip is correct. I haven't been sure until I saw this number. The great thing about the inventory cycle is that it is self-correcting.
- Part-timers for economic reasons dropped 29K.
- On a less encouraging note, marginally attached and discouraged worker numbers are still growing, as is long term unemployment. Basically unemployment is segmenting.
- Moving to Table A-8, it appears that government in December accounted for some of the great number. Government jobs grew by 159K from November, whereas private non-ag jobs grew by 157K. I believe this number is in-line with what is happening in the economy. The feds are creating bureaucratic jobs right and left, and many of the federal mandates on the states will require state hiring as well. My guess is the recent dip (the fall dip after the spate of school closings) in government employment is more related to a spate of retirements than total job cuts. This did drop the core 25 and over, BA + unemployment rate from 5.1 to 4.8%, however.
This is about all I have time for today, because I have to shovel out and take the Chief to the hospital for some cardiac testing.
On a less optimistic note, it appears that Medicare wages aren't going to be that great and that Jan/Feb/Mar is going to be something of a crunch quarter.
Table A-4 gives the core (25 years and up by education attainment) unemployment rates. It's really worth a read this month, because there are some very big improvements. Some of that was seasonal holiday, but my feeling is that companies are going to hire more this year also. The ground has solidified under their feet.
I do not yet know what the real effect of the recent fiscal moves will be. I am sure it will be negative, but I don't know whether it will kick the slats out from under this thing or if it will just result in a very disappointing second half in 2011. Part of the wild card are the state and local initiatives, which are far too many to even count or tabulate.
The Household Survey employment increase was good news, but the context for it is negative. In the bigger picture, Household Survey employment picked up strongly at the beginning of 2010, but has gone nowhere since the April number (139,382)!
Why is the Household Survey not detecting hiring six quarters into a recovery? I'm pretty sure its low business formation, which means the Birth/Death revision to the Employment Survey should be large.
But this month turned a corner and at least we veered into positive territory.
Further, the numbers are large enough to means something.
NSA showed a drop, but unless something really, really unusual happened, December was good news.
The reason I am only working with the Household survey numbers is that I think the Establishment survey is unreliable right now. It is important to remember that it will be unreliably negative when the trend does shift.
Medicare wages will tell me more, but right now, at least we have our heads above water and are dogpaddling along.
"It improves my mood considerably!"
Perhaps things can get better. Wouldn't it be nice if we could look back a year from now and say:
"The gold and silver bubbles popped."
For what it is worth, I think they are bubbles now.
As is seen in my name, one of my bigger concerns (since 2004) has been that I'm just not a believer in commodity driven stock markets (as also seen in the 1970s).
It is good to see oil back off a bit in the face of these stronger employment reports.
I heckled an "Oil Poised to Rally Past $97 on Bullish Flag Breakout: Technical Analysis" prediction earlier this week. So far so good.
This one takes the cake though and surely is a sign of the times.
Aluminum ETF Launched
It was claimed by the CEO of Global X that "Aluminum has seen tremendous price increases as a result of increased global demand, especially from China and India."
I offered a chart of those "tremendous price increases" going back to 1913. They are nowhere to be found.
"But Mark, given your considerable investment in aluminium foil, aren't you talking down your own book?"
Indeed I am! Hahaha! I hope my aluminum foil hoarding works out very poorly for me though. The last thing I want to see is for my meager hoard to be the best investment of my life, lol.
Forgive me for sharing such a long story but I think you might get a kick out of it. I might have even shared it with you before. Double apologies if true.
It was the mid 1990s and I was attending a computer gaming development conference.
I attended one seminar for a product that could convert Windows code to Mac code. They also had a product that could convert Mac code to Windows code.
A programmer had the microphone. Someone from the audience asked how long it took for the code to be converted. This was his answer paraphrased from memory.
"The sun rises. The sun sets. It is real slow."
I'll tell you what wasn't slow though. That microphone made it back to the manager's hand in less than 2 seconds, lol.
It did not end there though.
Someone from the audience asked if they tried converting the code from Windows to Mac and then back to Windows.
The person now holding the microphone said that it was a good question. It had never been attempted though.
I wish you could have heard the sound from the audience at that point. It was something between laughter and booing, lol.
We had full faith in the honest programmer. We lost all faith in the one who now had the microphone though.
In today's paper, Tesoro Refinery had a double sided, full page ad for refinery workers. It looks like they are planning to hire about 30 people. These are good jobe with full benefits. I suspect the lines will be long at the refinery tomorrow.
I read some years back that one good paying job in a local economy indirectly created five more jobs in the area. If true, that is the key to getting things moving on the employment front. Much as I disagree with most of Obama's policies, I think the extension of the Bush tax rates, the faster investment write offs, and the possibility that the Health Care reform bill is never going to be implemented could provide some confidence so employers start looking to grow again.
Maybe wishful thinking, but that thought is influencing the way I'm positioning my portfolio for 2011.
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