Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Silver Price 2021 Roadmap - 22nd Jan 21
Why Biden Wants to Win the Fight for $15 Federal Minimum Wage - 22nd Jan 21
Here’s Why Gold Recently Moved Up - 22nd Jan 21
US Dollar Decline creates New Sector Opportunities to Trade - 22nd Jan 21
Sandisk Extreme Micro SDXC Memory Card Read Write Speed Test Actual vs Sales Pitch - 22nd Jan 21
NHS Recommends Oximeter Oxygen Sensor Monitors for Everyone 10 Months Late! - 22nd Jan 21
DoorDash Has All the Makings of the “Next Amazon” - 22nd Jan 21
How to Survive a Silver-Gold Sucker Punch - 22nd Jan 21
2021: The Year of the Gripping Hand - 22nd Jan 21
Technology Minerals appoints ex-BP Petrochemicals CEO as Advisor - 22nd Jan 21
Gold Price Drops Amid Stimulus and Poor Data - 21st Jan 21
Protecting the Vulnerable 2021 - 21st Jan 21
How To Play The Next Stage Of The Marijuana Boom - 21st Jan 21
UK Schools Lockdown 2021 Covid Education Crisis - Home Learning Routine - 21st Jan 21
General Artificial Intelligence Was BORN in 2020! GPT-3, Deep Mind - 20th Jan 21
Bitcoin Price Crash: FCA Warning Was a Slap in the Face. But Not the Cause - 20th Jan 21
US Coronavirus Pandemic 2021 - We’re Going to Need More Than a Vaccine - 20th Jan 21
The Biggest Biotech Story Of 2021? - 20th Jan 21
Biden Bailout, Democrat Takeover to Drive Americans into Gold - 20th Jan 21
Pandemic 2020 Is Gone! Will 2021 Be Better for Gold? - 20th Jan 21
Trump and Coronavirus Pandemic Final US Catastrophe 2021 - 19th Jan 21
How To Find Market Momentum Trades for Explosive Gains - 19th Jan 21
Cryptos: 5 Simple Strategies to Catch the Next Opportunity - 19th Jan 21
Who Will NEXT Be Removed from the Internet? - 19th Jan 21
This Small Company Could Revolutionize The Trillion-Dollar Drug Sector - 19th Jan 21
Gold/SPX Ratio and the Gold Stock Case - 18th Jan 21
More Stock Market Speculative Signs, Energy Rebound, Commodities Breakout - 18th Jan 21
Higher Yields Hit Gold Price, But for How Long? - 18th Jan 21
Some Basic Facts About Forex Trading - 18th Jan 21
Custom Build PC 2021 - Ryzen 5950x, RTX 3080, 64gb DDR4 Specs - Scan Computers 3SX Order Day 11 - 17th Jan 21
UK Car MOT Covid-19 Lockdown Extension 2021 - 17th Jan 21
Why Nvidia Is My “Slam Dunk” Stock Investment for the Decade - 16th Jan 21
Three Financial Markets Price Drivers in a Globalized World - 16th Jan 21
Sheffield Turns Coronavirus Tide, Covid-19 Infections Half Rest of England, implies Fast Pandemic Recovery - 16th Jan 21
Covid and Democrat Blue Wave Beats Gold - 15th Jan 21
On Regime Change, Reputations, the Markets, and Gold and Silver - 15th Jan 21
US Coronavirus Pandemic Final Catastrophe 2021 - 15th Jan 21
The World’s Next Great Onshore Oil Discovery Could Be Here - 15th Jan 21
UK Coronavirus Final Pandemic Catastrophe 2021 - 14th Jan 21
Here's Why Blind Contrarianism Investing Failed in 2020 - 14th Jan 21
US Yield Curve Relentlessly Steepens, Whilst Gold Price Builds a Handle - 14th Jan 21
NEW UK MOT Extensions or has my Car Plate Been Cloned? - 14th Jan 21
How to Save Money While Decorating Your First House - 14th Jan 21
Car Number Plate Cloned Detective Work - PY16 JXV - 14th Jan 21
Big Oil Missed This, Now It Could Be Worth Billions - 14th Jan 21
Are you a Forex trader who needs a bank account? We have the solution! - 14th Jan 21
Finetero Review – Accurate and Efficient Stock Trading Services? - 14th Jan 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

If Friday's U.S. Employment Data Confused You...

Economics / Economic Statistics Feb 06, 2011 - 10:56 AM GMT

By: Trader_Mark

Economics

Best Financial Markets Analysis Article... this story via AP should help 'clear' it up.  There remains a lot of confusion even by economists who follow this stuff for a living.  Essentially the larger story is traditional businesses are not hiring at pace so large swathes of America are either (a) dropping out of the workforce or (b) becoming self employed.  Hence the new workers in category b respond affirmatively when the household survey calls and asks "are you working?".  Even if working means selling some of those old Beanie Babies on their new fangled Ebay store. 


Of course calling 60,000 households and trying to extrapolate that over a 130M workforce is a bit aggressive but that is the survey that calculates the unemployment rate. Further, please recall that if one is not actively seeking work for 4 weeks, they are no longer unemployed per American government statistics.

  • The Labor Department survey of company payrolls showed a net gain of 36,000 jobs in January. That's scarcely one-fourth the number needed to keep pace with population growth.  
  • The government uses a separate survey of households to calculate the unemployment rate. It calls 60,000 households and asks people if they're working or looking for a job.  This survey includes some people not counted in the payroll survey: the self-employed, farm workers and domestic help. It also includes those who work at small companies.  (this is the survey that calculates the unemployment rate)
  • By contrast, in the payroll survey, about 140,000 businesses and government agencies send forms to the Labor Department showing how many people are on the payroll and how many hours they worked. The payroll survey can be slower than the household survey to recognize startup companies. (this is the survey that shows jobs created or lost)
So as Americans cannot find work in traditional routes, they are turning to self employment:
  • The number of people who described themselves as self-employed rose by 165,000 to 9.7 million in January, the report said. 
The 0.8% drop in unemployment rate over the past 2 months is very rare - but a lot of this has happened since people are deserting the workforce altogether.   Another 200,000 seemed to disappear last month.
  • The last time the unemployment rate fell so far so fast was in 1958, when it dropped to 6.2 percent from 7.1 percent in two months. At the time, the economy was bouncing back from an eight-month recession.   The rate is falling now in part because some people without jobs have stopped looking. The number who have given up looking rose to 2.8 million last month, from 2.6 million in December.
"U-6" which is the broader measure of unemployment remains stubbornly over 16% but dropped last month; of course it is also affected by the issues above, and unfortunately appears to be understating the situation as well.
  • The number of people who are employed part-time but would rather be working full-time fell to 8.4 million from 8.9 million in December. Combined with the 13.9 million unemployed and people who have given up looking for work, roughly 25 million people were "underemployed" last month. They amounted to 16.1 of the labor force, down from 16.7 percent in November.
Of course all these numbers have been made 'sunny side up' versus how they were measured in the 80s and 90s - by both parties.  When I was reverse engineering current standards back to how things used to be measured it essentially added 3-4% to the unemployment rate so our 9% is closer to 13% in the 1980s methodology.  [Oct 2, 2009: True September Unemployment in America Reaches 14%; Our System is Broken] On top of that if we had a normal workforce participation rate we'd add another 2.5% or so on top of that. Bigger picture, we continue to evolve into a bifurcated society, where frankly due to outsourcing and innovation, many people are no longer needed (until the next housing bubble of course).   [Sep 22, 2009: BusinessInsider - The Real Problem is the Economy Does Not Need you Anymore]  And of the jobs being created, many are a far cry from what create a middle class living, and often don't pay the ones that disappeared the past 10+ years, even before adjusting for inflation.  [Feb 3, 2011: CNNMoney - Jobs Coming Back, but the Pay Stinks!] --------------------------- Meanwhile the "socialists" to the north, have now recovered all the jobs lost during the Great Recession and pathetically added more jobs than the U.S. did in January despite 1/10th of the population.  And no Canada did not blame snow for the inability to add jobs in January... apparently their firms still somehow hire people during snowstorms.
  • Canada's labor market generated a better-than-expected 69,200 new jobs in January, moving the country ahead of other developed nations in recovering all the jobs lost during the recession.  The January employment boost was about four times greater than economists had predicted and the largest since last April. Economists had expected 15,000 new jobs.
  • Statistics Canada said Friday that there are 327,000 more Canadians working since January 2010, and 467,000 more jobs since the downturn ended in July 2009. (in U.S. terms this would be equivalent to 4.5 million jobs added)
  • To weather the recession, the Conservative government created 222,000 jobs through a mix of tax cuts, unemployment benefits, infrastructure spending and industry support in the wake of the global financial crisis.  Since then, the Canadian economy has recovered at a faster pace than its G-7 counterparts.
  • With these economic gains, the country's finance minister Jim Flaherty has said the government is on its way to balance budgets by 2015 through planned spending freezes and the end of stimulus funding.

By Trader Mark

http://www.fundmymutualfund.com

Mark is a self taught private investor who operates the website Fund My Mutual Fund (http://www.fundmymutualfund.com); a daily mix of market, economic, and stock specific commentary.

See our story as told in Barron's Magazine [A New Kind of Fund Manager] (July 28, 2008)

© 2011 Copyright Fund My Mutual Fund - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Rick
07 Feb 11, 05:16
Friday's U.S. Employment Data Confused Every One

From here on in, it will be becoming increasingly impossible for any one to determine just what the current U6 rate is in the United States because of highly problematic government accounting, but I think that a good 'conservative' estimate would place it at somewhere between 19%-20%.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules