The Market Ticker
Commentary on The Capital Markets- Category [Employment]

Gee, someone is waking up?

A field supervisor in the Census Bureau’s Denver region has informed her organization’s higher-ups, the head of the Commerce Department and congressional investigators that she believes economic data collected by her office is being falsified.

And this whistleblower — who asked that I not identify her — said her bosses in Denver ignored her warnings even after she provided details of wrongdoing by three different survey takers.

Of course it is.

And the media is intentionally reporting false claims -- that they know are false -- as well.

One of the worst lies in the reports about the job situation is that demographics are "shrinking" the workforce.  That's utter nonsense; the population of working-age people, defined as those between the ages of 16 and 64, is growing, not shrinking.

I present this data every single month in graphical form; the number of jobs gained (or lost) adjusted for the change in the working-age population.  It has barely been positive of late, hovering right around zero.

So how does the unemployment rate decrease when the number of working-age people is increasing by approximately the same number as are jobs "added"?  It decreases because people are no longer looking for work, therefore, according to Census and the BLS, they're not "unemployed."

Period.

This is not a positive economic trend.  Those who give up and no longer look for work yet are of working age are almost-certainly not "retired" in the formal sense, that is, self-sufficient and ok with what they have.

They are on welfare of various forms and therefore not producing anything, but are instead sucking everyone else dry.  That's bad, not good.

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This morning's stupid: Kudlow saying "Buffett said buy the dip yesterday."

Uh huh.  Ok, if that counts as a "dip" then you're a dip**** Warren (and Larry.)

Indeed, that's one of my biggest and brightest flashing red warnings right now -- people think that a mere 2% move is suddenly an emergency event and requires one to adjust their strategy?  That gets my attention!

But -- let's talk about payrolls.

Total nonfarm payroll employment increased by 248,000 in September, and the unemployment rate declined to 5.9 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in professional and business services, retail trade, and health care.

Yeah, ok, so let's see what we think about the internals of this thing.

That's not bad, all-in.  Note that on an annualized basis we're roughly keeping up with population growth -- and evenly-so.  That is, we're not making much progress, but we're also not getting hammered either.  Correcting for working-age population change makes this more-clear:

But the divergence in the report shows up here -- and this isn't so good at all:

People who left the workforce and did not come back are responsible for most of the decline in the unemployment rate.  You can spin this however you'd like, but that's what the numbers tell you.

While this looks good on the headline it is not good from a forward-sustainability perspective for the economy and most-particularly from a government funding model perspective.  

There are, as I have repeatedly pointed out, only two ways to fund government: You can tax people explicitly where they can see it or you can tax them behind their backs via monetary gamesmanship.

The latter is what deficit spending does and is, but doing so depends on an increase in people willing and able to be fleeced by this mechanism.  That mechanism works through continued and increasing borrowing, an exponential function that has a terminal point albeit at an unknown location.

The problem is that there is no indication in the numbers that the general public is actually willing (say much less able) to do so.

Average weekly hours were up a tenth, which is strong but hourly earnings were down a penny. I'll dismiss the hourly earnings decrease this month in the face of the hours worked figure, but that bears careful examination in coming months -- and had better not continue.  Work harder (longer) for less money was the mantra of the "great recession" and if it returns there's trouble afoot.  In addition I do not like the marked deterioration in the diffusion index over the last three months nor do I like the annualized difference in that index (compared against September 2013) either.

This is a comparatively strong report -- but it's not as good on the inside as the wrapping looks on the outside.

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