Friday, March 09, 2012
Very Good Employment Report
Well, people want to do the headline thing, and it is true that unemployment remained at 8.3% - but for once, the "not-in-labor-force" number dropped hard. Down 310K. It is still up over 2 million YoY, but this does improve the picture. From January employment grew 428K (household). This is notably better than establishment, but that's what you would expect. Job losers dropped 112K from January, which is certainly consistent with the weekly claims reports.
Why the sudden change for the better? My guess is that a lot of this (the portion that doesn't show up in establishment) is focused in construction/reconstruction. The picture there has finally shifted off the floor, and since a huge number of chronic job losses were concentrated there, this does improve the US picture for 2012.
Unemployed 27 weeks and over dropped by 92K. So this report is much better than the headline number would suggest. The most important number in this report is full-time workers - quality of employment is just as important as whether you are officially unemployed or not. Table A-9 shows that we have gained about 1.85 million full-time jobs (NSA) over the year. Table A-8 gives us approximately 2.6 million more non-ag workers over the year. Finally, real gains.
The establishment survey numbers were excellent also, but they are off. They have missed the turn, as they often do. Look at the negative number of construction jobs - you can tell that's wrong just from rail freight. If you scroll down to the government numbers, note that education jobs gained. I believe this. There was a wave of retirements in education over about the last seven months, largely because of pension/benefit concerns. Construction/reconstruction jobs are particularly hard for the survey to catch.
One word of caution - explosive growth does not pend in the construction industry. Some parts are cycling down as other parts pick up. Further, the very mild winter, especially when contrasted with two rather harsh winters preceding, makes employment moves now look a bit better than they are.
I have many more comments to make on this, but later. For now, it's good, and it provides us a stronger base with which to navigate what must be a year of decision for the US economy. The decision points still lie ahead - look at the retail jobs on the establishment survey!
Update: Added full-time graph w/ Feb data:
You have to open it up, but you can see the problem. Inventory isn't chocked up, but we're probably at equilibrium without significant demand growth, and we are not yet getting that from jobs.
Do we pass Go and get $200? Do we get sent to jail? I guess we wait for Feb Treasury receipts next week to get more of an inkling.
Incomes will control what happens. The February deficit was very high, but of course we're spending a lot, so let's see what payroll taxes showed.
Next week we'll find out what that means in terms of money.
I think it is fair to say that there is an underlying positive change. It could hardly be called "enough", at this point.
I think this is mostly a function of time, to be honest with you. The industrial recession started in 2006. The full recession started between the second and third quarter 2007. It's time. Even in a depression, after five years things gotta pick up a bit.
Most the jobs are now being generated in the prior "bust" states, so that tells you something.
What I don't like about this is that we lost jobs in some areas that say that the consumer side of the economy is losing pace pretty quickly. Admittedly we knew retail had to correct, but it's hardly a sign of prosperity. -35K in department stores is credible, but painful in one month.
On the other hand, if you look at the establishment link and the job cuts in department stores, you wonder. Retail is "rightsizing", it would seem.
Let me see next week's data before going further.
The entire case for a skipping recession instead of an outright recession for 2012 rests on the idea that we are not going to get sustained correlations - that among other things, the genuine crunch resulting from the Japanese supply shortages last year and in-filling of manufacturing induced a wave of discontinuity that would extend through enough of this year to break the sync.
This economy is not in a strong growth phase at all. I'm just theorizing that it bounces along in almost a steady line because some minor ups compensate for some necessary corrections.
If inventory starts jamming up, then my wonderful theory will take its place in the Hall of Wishful Thinking next to Bernanke's "But buying bonds doesn't cause commodity prices to rise!".
Basically I'm counting on pent-up demand to keep up some of the retail spending, and I may be a total fool for doing so.
What I'm doing now is trying to assess the constraints. The foray into student loanage is part of that. When I think of parents cosigning student loans (or worse, getting the parental variety at 7.9%), I start to panic. That's the same demographic I need to be going out and buying cars.
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