The job market still stinks
Another curious payroll report masks ongoing deterioration.
Something odd is happening at the Bureau of Labor Statistics. Over the last few months, the unemployment rate has fallen rapidly from 8.3% in August to just 7.7% now. For the average person not interested in the details, it seems like things are going gangbusters.
But for those who care, the underlying data is at odds with the jobless rate. And it suggests that not only is the job market not getting better -- it's actually getting worse. Here's why.
Back in October, I wrote about how the largest statistical outlier since 2003 was responsible for the pre-election drop in the unemployment rate to 7.8%. A surge of new jobs, many part-time positions, boosted the jobs reported in the household survey.
Friday morning, there was another curious result that used a different strategy to knock down the jobless rate. This time, it was a 540,000 rise in people out of the labor force -- which continues the waterfall decline in the labor force participation rate. At just 63.6%, it's already at levels not seen since the double-dip recession of the early 1980s.
As the unemployment rate has improved over the last few months, the percentage of the population with a full-time job -- what I believe to be a truer measure of the health of the labor market -- has fallen from 47.7% to 47.3% and remains well below its pre-recession peak of nearly 53.3%. Back in the go-go years of the dot-com bubble, this measure nearly hit 55%.
More evidence was provided by Gallup, which conducts its own unemployment survey of households. It found that the unemployment rate surged nearly a full percentage point last month to 8.3%. That takes the jobless rate to levels not seen since May. Other measures, such as the percentage of those working part-time for economic reasons and the broader underemployment measure, also suggested significant weakening in the labor market.
And if you still don't believe me, then consider the huge drop in Friday's University of Michigan Consumer Sentiment Survey, which plunged from 82.7 to 74.5 -- well below expectations of 83. The future expectations component fell a whopping 13 points to 64.6, as people start worrying about the fiscal cliff/debt ceiling debate in Washington.
All of this suggests the economy is already stalling ahead of what will likely be a rocky 2013.
I continue to recommend investors adopt a defensive portfolio posture with a focus on safe havens like the U.S. dollar, Treasury bonds, and selected shorts such as Goldman Sachs (GS) and short ETFs such as the UltraShort Euro (EUO) -- both of which I've added to the Edge Letter Sample Portfolio.
Disclosure: Anthony has recommended GS short and EUO long to his clients.
I found these positions with the help of technical screens developed with Fidelity's Wealth Lab Pro back-testing tools, which you can find here. (Fidelity sponsors the Investor Pro section on MSN Money.)
Be sure to check out Anthony's new investment newsletter, the Edge, and his money management service, Mirhaydari Capital Management. A two-week free trial has been extended to MSN Money readers. Click the link above to sign up. Mirhaydari can be contacted at firstname.lastname@example.org and followed on Twitter at @EdgeLetter. You can view his current stock picks here. Feel free to comment below.
I"m talkin' to you "guilty" white azzwipes that had good jobs or at least some income worthy of sayin' 'yea at least I'm workin for now this is ok', but you just had to vote for a "black" guy right? you just had to vote in a black guy to prove your not racist, or your so fckin' cool you can't stand it============================================================================
Like I said Logic and math is a leftwing conspiracy.
I want to thank you morons for helping elect President Obama.
Look at the whacks whine, hey whacks math and logic I hear is a leftwing conspiracy.
What is really amazing, there is no economic program to increase jobs, solet's start one.
Final consumption sales tax only - no item or person exempt – When a family goes into a grocery store and buys $100 in groceries and the clerk adds $5 for local tax, $7 for county, $15 for state tax, $35 for federal tax and $45 to pay off the federal debt, the crap will come out of the American peoples head about the cost of government.
Then give the American people the right to directly decide what they are willing to buy through government, (by pass congress). Socialism, liberalism, high government spending will end. In 4 years the American people will reduce government spending by 35% and increase the productivity of our tax dollars by 400%.
Final consumption tax would make America made products and services more competitive. Taking taxes off business will bring business, their money and jobs back to America. Also, if the fed were to make the real inflation rate between a deflationary .5% and 0% inflation foreign money would move to America and keep interest rates low in a free market.
As an investor, Anthony, you want to know that the businesses you invest in are worth it. What does your gut tell you? Any idiot can jack numbers and most not only have but enjoy excellent wages and a corner suite in leased office space. As long as there are too many retained law firms, accounting cartels and more common and tax laws than any human can recite-- we are screwed. I'm not poor. My background was so high in demand leading into 2007 that my cell phone had blind offers on it everyday. 3,800 resumes later and no calls at all. You have to think that something is more afoot than a recession. IF you are good, you are self-employed now and as far from financial wrangling as possible. It isn't easy when the economy is this queasy but it allows an illumination of rare kind. I believe America was the victim of a terror act during the Bush Era and we remain in the grips of it now. THINK about who is doing well... THINK about what they do and how valuable they really are in our economy. They aren't. Not at all. My wish is for Obama to get off the fence and ACT. We are dying from the domination of groups, networks, associations, parties and sects, but all of them seem to contain the same people. They are not self-sufficient so every time part of the economy takes another hit, they get that much weaker. As for everyone else-- they operate in the sub economy that thrives globe wide. it isn't organized nor consistent in any tangle way. Take time to read your history. No organized attempt to suppress one group ever worked. No administrative class EVER survived itself. We aren't at a cliff, we are on the rim of a caldera. either we keep the Kool Aid flowing or we die. When you sever the root, the bouquet dies no matter how many times you refresh the water.
well way to go obamazombies, unemployment is down 7.7% why you ask?? not because of millions of people now getting hired but because MILLIONS OF PEOPLE HAVE JUST QUIT LOOKING FOR A DAMN JOB TO BEGIN WITH!!!! that's some fckin' recovery we got going and you stupid sons of whores let it happen! you voted in this sorry azzed excuse for a leader and now your gonna reap what you've just sown!!! how's all that political correctness make you feel?? does it pay your car note?? your mortgage?? your kids' needs??
and I"m not talkin' bout you worthless parasitic welfare obama phone lady vermin, you're a fckn lost cause, a blight a chronic disease in this country,keep watchin' maury povich to find out which of your 5 kids were fathered by which of 17 guys you've had on top of you
I"m talkin' to you "guilty" white azzwipes that had good jobs or at least some income worthy of sayin' 'yea at least I'm workin for now this is ok', but you just had to vote for a "black" guy right? you just had to vote in a black guy to prove your not racist, or your so fckin' cool you can't stand it, you wouldnt' vote for a man of merit, or of knowlege to get us the **** outta this mess, no!! you voted AGAIN for this muslim motherfckin' marxist! and now where the hell are you huh??? mortgage underwater, lost your job 4, 3 2yrs ago? and guess what your unemployment extension aka WELFARE CHECK is depleted or depleting and where are you now, in foreclosure?? repo man gunnin' for your fancy car that you can't afford now? comin' for your furniture next??? thank yourself for a job well done!! not only did you **** everyone in the country, but yourselves as well, how's that FAIR SHARE workin' for ya!!!
Just when I think there's no hope for you, you sprinkle this piece of truth out into the MSM. You're about as bipolar a financial "journalist" i've seen, but with some real training and therapy, you have a fighting chance of being a consistant truth sayer to the likes of ZeroHedge.com
Obamacare WILL raise unemployment even further. It boosts costs of hiring. Even if you don't offer any healthcare coverage, you still have to pay the fine.
It is good to see someone else actually look at the number. Obamanuts, you keep drinking the Koolaid...
Bingo, LPR down .2% and UR goes down to 7.7%. There is no recovery, just cover ups. The cheer leaders keep using jargon like economic outlook, and consumer sentiment. These are opinion based statements that are not translating into real demand. The banking stress tests include 3 scenarios that don't include the single most important factor, what if interest rates were to go up even 1 %? The big 5 banks would fail without extraordinary intervention. They'll go after 98 billion in tax hikes from those who make 250K or more (would run the government for about 4 days) and refuse to cut back spending to realistic levels. What a joke the government is and I'm not laughing.
Timmy where do you find that UN-Employment report, that is substantiated and a reliable source??
I may want to change my investments in light of those reports...
Thanks very much in advance, I will be waitng for Info....
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Serious issues like drought and the deterioration of the developed world spell opportunity for this industry leader.
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