Nonfarm payroll employment increased by 151,000 in October, and the unemployment rate was unchanged at 9.6 percent, the U.S. Bureau of Labor Statistics reported today. Since December 2009, nonfarm payroll employment has risen by 874,000.
Hmmm.... here's the graphs, and they look pretty good:
But those who have followed me for any length of time know that I put nearly no importance on the "Establishment" survey, mostly because it's not just a survey - it contains a black box known as the "birth-death" model which is just a guess as to how many small businesses the government thinks have been formed.
Historically, that has always overstated reality. The skeptics among us think it does that on purpose, as a means of trying to "pump" markets and sentiment.
So I turn instead to the Household Survey, which is an actual count. And here, what I find has less reason to cheer.
That's pretty flat. Annualized it's a small improvement - the same as it was last month. Note that last month was allegedly less good than this month, but on the household, it says no material change. In addition these are numerical counts, which is a problem on an annualized basis as you need to add people to the workforce to take up the slack caused by new entrants - therefore, the actual "jobs being added" line is not at zero - it's somewhere near the 2000 mark (2 million annualized.)
The total number of people employed has not materially changed this month. That's exactly what would be expected from the above.
The number of people who gave up on a change-basis is also flat annualized. Bah.
Ah, here's the problem. This was improving for a few months, but it's not any more. These are people who have given up. They're not counted as "unemployed" as they're not looking - they're "not in the labor force." Therefore, the government says "oh, you don't want a job so we'll ignore you." Uh huh. More like "there are no jobs for me, so screw it, I'm gonna drink beer." This number, expressed as a percentage, norms for the population change, and it's not good.
And finally, as expected, we are still losing people in terms of the percentage of the population that is employed. This is the important number, as it's the "tax coverage" number - the percentage of the population that is working and thus paying taxes to support everyone - including those who aren't working.
After a period of legitimate improvement starting at the beginning of the year this indication has now turned downward again. This is an extremely dangerous development, as it will preclude any meaningful improvement in the federal deficit, and goes exactly to what I've been saying about "QE" and other similar things - they're effectively taxes, and drive people from the workforce.
The official unemployment "rate" is 9.6%, same as last month. U-6, which is my favored gauge, inched down 0.1% to 17.0%. The workweek inched up 0.1 hour, which isn't awful; average earnings is up on an annualized basis by 1.7% - not enough to cover the commodity-price ramps from QE - not even close.
I wouldn't call this a disaster - but I also wouldn't call it improvement. From the household survey the gains all came from people leaving the workforce. That's a rather clever bit of arm-waving on the part of the government, but it won't put food on your table.
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