Friday, May 3, 2013

The Government's Non-Farm Payroll Report Has Taken The Term "Farce" To A Whole New Level

I'm not even sure where to start to with today's April employment report.  It was so out of line with all the other economic indicators and with what we know about big banks, big retailers and big manufacturing companies and their numerous announcements of big job-count reductions this year.

Let me give just one example.  The Government and Wall Street has been telling us that there a big recovery going on the housing market.  And yet, if you go to Table B1 in this report from the BLS - LINK - you see that the construction sector was said to have lost 6,000 jobs in April.  That makes no sense.   The Birth/Death model (see below) shows construction adding 29,000 jobs.  This is completely inconsistent with the story line that housing is improving.  Bernanke said so himself on Wednesday.

And on the heels of this rather "robust" employment report, the Commerce Dept releases the factory orders report for March which shows a big decline of 4%, vs an expected decline of -2.8%.  Not only that, but prior report of +3% for February was revised to lower to +1.9%.  And then the ISM - Institute of Supply Management (formerly the Nat'l Assoc. of Purchasing Managers) releases its "services" report, which shows a decline from March to April and the index level was lower than expected.  Someone is lying.  I don't think the factories and private businesses reporting data that affects their bottom line are the ones.

I could go on all day boring you with the line by line analysis of today's jobs report.  But you can peruse through the report linked above if you like.  Trust me, there's better things to do with your time.  What I will mention, however, is that according the Government - from their nefarious "Birth/Death" model - new business formations by small businesses theoretically added 193,000 thousand jobs to the number that the Government then "seasonally adjusts."  I don't really know of anyone who believes that the Birth/Death model has an credibility whatsoever.

The thinking is that people who leave their job for whatever cause - i.e. get "headcount reduced" for cost cutting purposes - decide to all of a sudden take all of the money they haven't saved and start a new business. The theory is that these "businesses" add jobs or subtract, depending on what the BLS's "voo doo black box" decides was the likely number of businesses started vs. closed.  Sound credible?

Anyway, when I went through my initial glance at the non-farm payroll report, I noticed a big bulge in the number of "business and professional" jobs that the BLS said were added in April.  In fact, it was 73,000 of the 165,000, or nearly 50%.  Then I noticed that according to the birth/death model, new businesses in this sector created 63,000 new jobs.  Know anyone who started a business consulting business last month?  Certainly IBM - probably the largest "professional services" employer in the country was hiring consulting employees, because they just significantly cut hours for that segment of their workforce:  LINK 

In addition, the Government, despite what we know about the fact that most of the big box retailers are closing something like 10% - 20% of their stores this year, added another 29,300 jobs.  No way.  Sorry.  That number is a complete fabrication. Here's a link this "Alice In Wonderland" fairy tale called "the birth/death model:"  LINK

The sad part is that there's 89 million people "not in the labor force," most of whom would probably like to have a job if they could get one.  I wonder how what's going through their mind - at the least ones not getting disability, student loans, food stamps, etc - as they see a completely fictitious jobs number and then the stock market rocketing up 155 points (the Dow) on the heels of that fictitious jobs report.

I have a feeling it's going to get very ugly in this country in the second half of this year.  That's why there's a record number of people buying up a record amount of gold and silver coins minted by the U.S. mint.  In fact, now there's shortages of gold and silver eagles.  The mint has not reported any silver eagle sales so far for May, but it's because they don't have the silver required to produce them.  I also have a feeling it's why Ben Bernanke is going to leave the Federal Reserve in January.  He doesn't want to be left holding the empty bag he inherited from Greenspan and then proceeded to blow up himself with even more helium.  Have a good weekend.

8 comments:

  1. Michael JacksonFriday, 03 May, 2013

    Jobs are getting harder to find in Nevada. The State Job Board/Job Connect gets their job listings from careerbuilder.com, not from interacting with Nevada's Businesses (which they lie, saying they are through the media) and that is drying up. I found some leads thru craiglist but that is drying up. Or you're qualified for a job posting so the job posting gets re-done so that you don't qualify. People are now posting on craiglist that they despartely need a job or they are on the streets. Two families just moved from California (one from Sunnyvale; the other from Concord). They said there's NO jobs there. They are quickly finding out that there's none here either.

    What I find is strange is that the data shows that consumerism is dying yet casinos are increasing their hiring. I doubt that it's due to blissful ignorance (but you never know). Someone (or group) has to be infusing the casinos with money. I know that Nevada's 150th anniversary is coming up but to think people from all over the country are coming here for it is beyond stupid. The dead-beat Governor here has received a silver bar that he's going to turn into 1,000 special 150th anniversary Nevada medallions, hoping their sales will help the state (I'll stick to Silver American Eagles). If the people of Nevada are struggling financially, do they really think we're going to buy into this? Maybe those who haven't learn their lesson that spending more than you make leads to poverty. Maybe those who don't know where to go for silver. No one around here I know has the money.

    To make a long story short (ahem): The states have to give information to the Feds to create the BLS-BS report. The states manipulate the numbers to make them look better (they need investors and businesses willing to work with the state) and then those numbers are further manipulated into the BLS-BS. Not only does the US looks like its heading toward recovery but every state-of-the-union is posting better economic health (or at least protraying that with happy, smiling politicans). It just isn't the Feds in on this; the States are in as well. In Nevada, I meet people struggling while the politicans here ignore the problems and pull that "postive-attitude" crap. Frustrating.....

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  2. The US economy will officially become 3 per cent bigger in July as part of a shake-up that will see government statistics take into account 21st century components such as film royalties and spending on research and development.

    Billions of dollars of intangible assets will enter the gross domestic product of the world’s largest economy in a revision aimed at capturing the changing nature of US output.

    More
    On this story

    US economy gets a Hollywood makeover
    BEA revision preview
    US fiscal hawk warns on excessive debt
    Gavyn Davies Great Recession and Not-So-Great Recovery
    Lawrence Summers America’s problem is not political gridlock

    Brent Moulton, who manages the national accounts at the Bureau of Economic Analysis, told the Financial Times that the update was the biggest since computer software was added to the accounts in 1999.

    “We are carrying these major changes all the way back in time – which for us means to 1929 – so we are essentially rewriting economic history,” said Mr Moulton.

    The changes will affect everything from the measured GDP of different US states to the stability of the inflation measure targeted by the Federal Reserve. They will force economists to revisit policy debates about everything from corporate profits to the causes of economic growth."

    [In order words, let's count everything as GDP, including the broken furniture.]

    http://www.ft.com/cms/s/0/52d23fa6-aa98-11e2-bc0d-00144feabdc0.html

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  3. Spot on. Rising Employment is a lagging indicator. In a "normal" recession/recovery, production rises coming out of the recession and it is only when Employers are struggling to meet the increased demand, only then do they start to put on more employees (after having previously dumped them when the recession started). Basic stuff actually.

    So, we should already have experienced months and months of increased demand/production before employment begins to rise.

    Yes, something is badly "out of whack" here and it's not the production figures - evidence of a stuffed economy abounds (how many people are there on Food Stamps, how many people of the 90% are experiencing increased incomes, blah, blah, blah).

    Lies, Lies and damn Statistics..........................

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  4. I happened to catch a bit of this story on CNN, they showed that manufacturing created zero jobs (well what do you know, they reported something truthful economic wise, will wonders never cease)

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  5. The cost of hand-to-mouth living

    A silent, dark underbelly of economic pain is stalking America’s current ‘recovery’

    A few weeks ago, when I was chatting with the head of one of America’s largest food and drink companies, he made a revealing comment about data flows. Like most consumer groups, this particular company is currently spending a lot of money to monitor its customers with big data.

    But it is not simply watching what they do or do not buy. These days it is increasingly scrutinising the micro-level details of pay and benefit cycles in every district in America. The reason? Before 2007, this executive said, consumer spending on food and drink was fairly stable during the month in most US cities. But since 2007, spending patterns have become extremely volatile. More and more consumers appear to be living hand-to-mouth, buying goods only when their pay checks, food stamps or benefit money arrive. And this change has not simply occurred in the poorest areas: even middle-class districts are prone to these swings. Hence the need to study local pay and benefit cycles.
    “We see a pronounced difference between how people are shopping today and before the recession,” the executive explained. “Consumers are living pay check by pay check, and they tend to spend accordingly. Then you have 50 million people on food stamps and that has cycles too. So for our business it has become critical to understand the cycle – when pay [and benefit] checks are arriving.”

    http://www.ft.com/intl/cms/s/2/f5763610-b2bb-11e2-8540-00144feabdc0.html#axzz2SHInpjkq

    Some recovery....

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  6. Dave,

    Paul Craig Roberts mentions you in his last aricle on the latest jobs report. Congratulations! It looks like you hit the big time. Maybe Gerald Celente will come calling to do some work for the Trends Journal. LOL Incidentally, I do happen to admire both.
    Ken

    http://www.counterpunch.org/2013/05/06/delusions-of-economic-recovery/

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    Replies
    1. Thanks Ken. Appreciate the feedback.

      Delete
  7. Manufacturing Jobs Growth Stalls Out

    Growth in U.S. industrial jobs seems to have reversed course recently after the addition of roughly half a million manufacturing jobs over the last three years. In fact, the latest jobs report shows year-over-year manufacturing job growth falling to a 30-month low.

    ReplyDelete