The job market still stinks

Another curious payroll report masks ongoing deterioration.

By Anthony Mirhaydari Dec 7, 2012 2:51PM

Man reading job listings copyright Tetra Images, Tetra images, Getty ImagesSomething 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.

 

 

There's more.

 

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 anthony@edgeletter.c​om and followed on Twitter at @EdgeLetter. You can view his current stock picks here. Feel free to comment below.


152Comments
Dec 7, 2012 4:27PM
avatar

Anthony,

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. 

Dec 7, 2012 4:36PM
avatar
"The job market still sucks"

That's because, so does the President........
Dec 7, 2012 4:20PM
avatar

Even the dumbest politician should  see what's going on! And that includes most of them. Employers are hesitant about hiring because they have no idea what that ****  who is driving this train is going to do next and where he's going. And there is no point in hiring if the people are going to be layed off and taxes and insurance is going up, along with everything else. A mind is a terrible thing to waste.  hahahahaha

And about the recent increase in jobs (duuhhh), most if not all the new jobs are temporary for the holidays. They will probably be gone by the end of January, if not before.

MAYBE Bush got us into this mess, but OBUMMER hasn't helped the situation with all of his welfare supporters.

Dec 7, 2012 4:21PM
avatar
Just wait till Obamacare kicks in.  There may be an initial one to six month phantom improvement in the economy (because of the euphoria effect that often occurs when socialism is first implemented), but then watch out!  The economy could tank a lot.
Dec 7, 2012 4:16PM
avatar
With all the able bodied people on the obama handouts, unemployment is really over twenty five percent.
Dec 7, 2012 4:27PM
avatar
To think that the truth actually showed up on MSNBC.............What the author should have noted is the U-6 unemployment number, not the traditional U-3 number.  The U-6 rate, which counts those that are underemployed or have stopped looking for work at almost 15%.  Unfortunately the lamestream media will never report the truth if it negatively effects their anointed one.
Dec 7, 2012 4:17PM
avatar

Anybody really surprised by this great epiphany?


Guess who's been saying this for the last four years.............


Obama doesn't care. After all, he's got "more flexibility" now that the election is over!


5 1/2 weeks since Sandy, and nothing happening for the folks on the east coast


No worries! I hear Hawaii is nice this time of year!      MERRY CHRISTMAS!!



Dec 7, 2012 4:28PM
avatar

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...

Dec 7, 2012 4:14PM
Dec 7, 2012 4:29PM
avatar
At 58 years young, I've just given up on finding a job that pays a living wage. I'm lucky because I invested my youth in the military and have that retirement to live on....better said... to survive on. There are allot of folks out there that have either used up their unemployment benefits or for some reason or another are unemployable. Today is an employers market and it shows by the ratio of people that apply for jobs and those that are actually accepted. These articles of how a person could land a $ 50.000 a year job with no educational degree are just plain BS....I liken an employer to my wife at the produce section of the supermarket.....she would only pick the freshest and best looking product.
Dec 7, 2012 4:40PM
avatar
We're screwed, sold down the river by the insanity of the US government... and these idiots are still in charge.  Third-world status, here we come.
Dec 7, 2012 4:46PM
avatar
The participation rate has probably fallen since Obama took office because average pay has skyrocketed in the past 4 years and only one spouse needs to work now.  Oh wait, average pay has fallen over the last 4 years.  Never mind.
Dec 7, 2012 4:41PM
avatar
It seems that everyone but Wall street knows these government statistics are phony bolony. The government continually changes the way they are calculated to "make them more accurate", but really they do it to make things appear better than they are. Does anyone really believe these geniuses who allowed our economy to be destroyed have solved the inflation problem? They haven't. They just changed the way they calculate inflation so that it come out low. Then to confuse the public even more they routinely compare the new differently calculated statistics to those of the past. Unemployment, inflation, GDP, etc should be calculated by an independent party, not the government.
Dec 7, 2012 4:40PM
avatar

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!!!

Dec 7, 2012 4:53PM
avatar
Obama is a socialist , one other words can explain him and his agenda.............
Dec 7, 2012 4:48PM
avatar
Obama says; 

"Give me the tax hikes on the rich, and then maybe I'll talk about Spending Cuts!"

That's like having a car with a blown engine, and bad wiper blades, and saying

Fix my friggin' wiper blades, and then maybe I'll think about fixing the motor.
Dec 7, 2012 4:28PM
avatar

Anthony,

 

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

Dec 7, 2012 7:34PM
avatar
John Williams Shadow Stats plugged today's "official" unemployment numbers into the governments 1992 model, the results, 23% unemployment. Clinton changed the formula back in 1992, doesn't include discouraged workers, part timers looking for full time, ect. They did the same thing with inflation numbers, actual inflation, 9%. Until the government starts reporting the actual facts, nothing will change. Just like an alcoholic, until you admit you have a problem nothing will change.
Dec 7, 2012 5:38PM
avatar

Is it just possible that the unemployment numbers dropped because people just gave up looking for a job?

Dec 7, 2012 5:55PM
avatar
On the money Anthony.  People are hurting badly....especially Seniors.  They see the value of their saving decline as more dollars get printed, interest on safe saving is next to nil, they are denied jobs...because there aren't any and part-time work pays minimum wage.   What a nightmare!
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

123
123 rated 1
262
262 rated 2
480
480 rated 3
651
651 rated 4
649
649 rated 5
629
629 rated 6
616
616 rated 7
496
496 rated 8
346
346 rated 9
111
111 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
EXCEXELON CORPORATION9
TAT&T Inc9
VZVERIZON COMMUNICATIONS8
CTLCENTURYLINK Inc8
AAPLAPPLE Inc10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.