Are Obama's employment gains for real?
After a poor debate performance, the president's re-election campaign gets a boost from a surprise drop in joblessness. But something doesn't seem right.
All of this seems just a little too perfect. I'm not a tin-hat conspiracy theorist, but something doesn't smell right. On the face of it, the economy seems to be gaining traction despite terrible ancillary evidence, including pitiful reports on durable goods and factory orders. Friday's jobs report showed the unemployment rate dropping to 7.8%, thanks to a whopping 873,000 spike in household employment (vs. a 368,000 drop in August).
That's the largest one-month gain in 29 years, excluding the annual Census population adjustments. It also far exceeds the gains suggested by the 114,000 increase in payrolls, calculated based on a separate survey of businesses.
Is it election year statistical engineering, as suggested by former GE CEO Jack Welch on Twitter when he said the data are a response to Obama's debate performance? Or is the job market truly bouncing back?
Partisans are up in arms. Americans for Limited Government issued a statement saying the numbers used by the Bureau of Labor Statistics are wrong or manipulated. Labor Secretary Hilda Solis fired back that "it is insulting when you hear people just cavalierly say that somehow we're manipulating numbers."
There are some irregularities. Superficially, there are things like the way the number of people who gained part-time employment for economic reasons (582,000) was precisely two-thirds of the 873,000 household survey increase. That's 66.666666% out to as many decimal places as you'd care to calculate. That seems a little too perfect.
There is also that gap between the household survey employment gains and the payroll gains on the establishment survey. At 759,000, it's the eighth-largest gap since 1948 and the largest gap since 2003.
There's also the fact that the employment-to-population ratio, arguably a truer measure of the health of the labor market, has barely budged. Translation: The economy is adding only enough jobs to just offset population growth.
The broader U6 measure of unemployment was also unchanged, at 14.7%, because of the rise in part-time workers who would rather have a full-time job. The gap between the U6 and the standard U4 measure remains large.
The report also relied heavily on gains in education, which compensated for weaker-than-expected private-sector gains, as well as part-time positions. And the household survey, the source of the drop in the unemployment rate, is well-known for being very volatile and prone to seasonal adjustment errors. For instance, there has been a surge in part-time positions in September for each of the past three years, which suggests the BLS' models need tweaking.
Analysts at Merrill Lynch aren't convinced the gains are sustainable, given the economic drag likely from the "fiscal cliff" of tax hikes and spending cuts worth about 5% of GDP unless Congress acts before year's end. Already, political uncertainty has CEOs nervous, withholding capital investments and new orders. That will drag on employment in the months to come.
Unless payroll gains increase markedly, the drop in the unemployment rate won't be maintained -- the point made in the Merrill Lynch chart above.
Payroll gains of about 100,000 just won't cut it. According to Gluskin Sheff economist David Rosenberg, given that we're in the 39th month of an economic expansion, typical monthly payroll gains would be around 220,000. Also, 47% of private-sector companies either cut their staffing requirements or held them steady, up from 42% just three months ago. Fewer than 40% of manufacturers are hiring.
No surprise then that more than half the payroll gain was concentrated in two sectors: education/health and leisure/hospitality, which, combined, represent just a 25% share of overall employment.
Also, weekly wage gains were offset by higher costs at the gas pump and at the grocery store. Thus, despite the drop in the unemployment rate, Rosenberg expects Q3 GDP growth to still clock in around 1.5%. That just isn't fast enough.
Philippa Dunne of the Liscio Report notes that we've regained close to half -- 48% -- of the jobs lost between December 2007 and February 2010. At the current pace of job creation, it'll take 40 months to recoup all the losses.
The proof is in the pudding. If the job gains translate into higher spending and income data, and stronger September retail sales numbers, than the critics and skeptics will be proved wrong. If not, maybe Jack Welch, who knows a thing or two about tweaking numbers to maintain consistent earnings growth while at GE, was on to something.
For now, Wall Street seems unconvinced. Consumer stocks, such as those represented by the Retail SPDR (XRT) and the Consumer Discretionary SPDR (XLY), have been lagging the overall market since mid-September.
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Watch the number jump back up if O'liar wins.
TO THINK THAT THERE ARE PEOPLE WHO STILL BELIEVE THE LIES
AND THE OBAMA FANTASY PMSNBC PROPAGANDA BULL!
oh crap its' simple the teachers are back in school, seasonal uptick lol
If illegal immigration were brought under control most of the joblessness could be solved. While there would still be issues with the types of jobs and pay levels, low and semi skilled job pay rates would rise to a level that legal citizems would take them. We would have no need for min wage, entreprenuers would form new ventures to fill the void and the economy would experience a whole new level of stimulus backed by goods and services. This would be sustainable and valid and easily replace the feds counterfieting practices.
Yes, we would all pay more for these products and services in the short run but the additional tax revenue from legal earners would start to ease our debt burden if congress would put the breaks on any additional spending, a trickle up phenomena would occur. I had rather pay $12 for a fast food hamburger knowing that a legal resident is in the kitchen than an illegal paying no income tax, living in a house wth 12 other people, and sending most of their earnings out of the country.
Even in the short run if crops rot in the field, the market would raise the price of the product where a legal person in need of a job will take it.
Republicans and democrats alike avoid taking on this issue. The dems want the illegals to become dem voters and the repubs want the cheap labor for their corporate and agribusiness donors. If you take away the jobs- THEY WILL STOP COMING. Higher prices from higher labor costs can be off set by reductions in government spending over the longer term and shoild be helped by tax reductions as the illegals drain on social services, education, and medical incrementally reduce to a sustainable level.
A recent study concluded that an average family of 4 illegals will pay around $12,000 annually in taxes and fees to local governments, probaly pay no or little federal taxes and receive over $32,000 annually in benefits. Never mind the idealogy that accompanies this debate. THE MATH WILL NOT WORK OVER THE LONG TERM.
I am for finding a way to legalize worthy illegals who are here but I dont pretend to know how to do it in a fair manner that most americans would accept as a pragmatic solution. Obamas administration and congress are heavily populated with ivy league scholars and lawyers-seems they could figure it out .
In closing, another study reveals that 40% of immigrants that come to the U. S. are still in poverty 20 years after they arrive having not developed skills and learned the language that could lift them out of poverty.
REALITY IS PAINFUL.
how much are all these new jobs paying most of them are about ten dollars an hour
thats all im finding a far cry from what i was making
The importance of numbers that are correct cannot be overestimated.
Decisions by governments, entrepreneurs, and big business alike depend on the reliability of these figures.
If these numbers are shown to be numbers that no confidence can be vested with, the effects will be felt far and wide.
BTW. it is pointless to defend the BLS. No one here knows if they do a good job or not.
My opinion is they are a bunch of lazy government bureaucrats who do as little as possible. They also take vary long lunch breaks!
Down with Obama!
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