Saturday, June 07, 2008

Does the latest jobs report means a recession? Hardly!

A little note I sent to Don Luskin yesterday:
Leave it to the AP's "economic reporters." I basically ascribe zero credibility to anything Martin Crutsinger or Jeannine Aversa write, like this.

So this article says:
The 5.5 percent rate is relatively moderate judged by historical standards. Yet, there was no question that employers last month sharply cut jobs in manufacturing, construction, retailing and professional and businesses services. Those losses swamped gains elsewhere, including in the education and health fields, government, and leisure and hospitality.
As you and I know, this unemployment rate is normal by historical standards. During the Carter years, 5.5% would be called a "boom."

Now, there's absolutely NO WAY that a loss of 49,000 jobs could account for 0.5% unemployment. That implies there are only 9.8 million jobs in the whole country, which is absurd. A mere 49,000 jobs compared to the U.S. workforce is barely over 0.03%. So clearly the dramatic increase in unemployment is from an influx of new workers who can't find jobs, NOT because the economy has shed jobs. It's graduation time, right? So this is perfectly expected. In fact, for being so "bad," the economy has gained jobs overall for the last 12 months:
The government said the number of unemployed people grew by 861,000 in May — rising to 8.5 million. The over-the-month jump in unemployment reflected more workers losing their jobs as well as an increase in those coming into the job market — especially younger people — to look for work, the Bureau of Labor Statistics said.

A year ago, the number of unemployed stood at 6.9 million and the jobless rate was 4.5 percent.
The "year ago" figures imply there were 153,333,333 jobs -- 6.9 million divided by 4.5%, right? The present figures imply 154,545,454 jobs. So the economy has gained 1.2 million jobs, year-over-year. Not terrific, but not bad, either.

So when the article says this,
So far this year, the government said, job losses have totaled 324,000.
I know what the truth is. Hey, if people think our economy is really doing so bad, let them move to France and pray their car doesn't get torched overnight. Or Germany, whose present 8% unemployment is a 15-year low!
I sent that to Don during my lunchtime. I'm not sure when Don gave his remarks on the unemployment report to Larry Kudlow, but he says the same thing too.

It just needs a little clear thinking, folks, and maybe a little bit better perspective than the average bear. Think about it: how can 49,000 people be equal to half a percent of the workforce? Ergo, there's another explanation for it.

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Blogger StevenTomer said...

Things aren't always as they seem. Remember Manila Bay, circa 1910 :)

Monday, June 09, 2008 4:55:00 PM  
Blogger Richard Jennings said...

Whatever the employment stats are these days - I see a lot of high paying jobs on employment sites -

I dont see how the stats match the market at all.

Thursday, June 19, 2008 6:58:00 PM  

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