- KINGSTON, NY -- A
statistically meaningless increase in August private sector jobs data "eased
recession concerns," Bloomberg reported on September 3. Private sector
jobs gains came in 27,000 above the consensus forecast of 40,000.
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- We see the touted jobs gain as nothing but statistical
noise. The Bureau of Labor Statistics' 95 percent confidence interval
in reporting of monthly change is +/- 129,000 jobs. Yet, "stocks
climbed around the world" as a result of a statistically meaningless
jobs gain. The flimsy jobs report "sent stocks to their best pre-Labor
Day week in two decades" (MarketWatch).
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- "The worst fears were not realized," declared
Stephen Stanley, chief economist at Pierpont Securities. "The double-dip
talk was probably misplaced," said Maury Harris, chief economist at
UBS Securities.
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- These are strong conclusions to be drawn from a statistically
insignificant result. But anything will do to fend off reality.
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- Looking behind the headlines at the BLS August jobs report,
we see an unsettling picture. Total nonfarm payroll jobs fell by 54,000
from the previous month, due to a 121,000 decline in state employment jobs
and federal census worker employment.
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- Moreover, it takes approximately double the reported
67,000 private sector jobs gain each month just to stay even with the growth
in the work force.
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- Despite the headline emphasis on jobs gain, the most
commonly reported unemployment rate ("U.3") rose to 9.6 percent.
The unemployment rate that includes that part of "discouraged workers"
still counted by the government as unemployed ("U.6") rose to
16.7 percent. The unemployment rate estimated by John Williams of shadowstats.com,
which includes all discouraged workers, is 22 percent.
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- The U.3 unemployment rate of 9.6 percent, the "happy
rate," amounts to 14.9 million Americans out of work. The U.6 unemployment
rate corresponds to 25.9 million out of work Americans. The 22 percent
rate, estimated according to the official government methodology of 1980,
means that 34.1 million Americans are out of work.
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- These are heavy numbers. Yet, "recession fears
have eased" on the basis of a statistically meaningless gain of a
few thousand jobs. At the August rate of job gain, it would take ten years
to reduce unemployment by eight million assuming no further growth in the
labor force, which would still leave us with many millions of unemployed.
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- Where were the 67,000 new private sector jobs, whose
increase of 27,000 above expectations "eased recession fears"?
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- Twenty-eight thousand of the new jobs were in health
care and 12,000 in social assistance. Ambulatory health care services
and hospitals accounted for health care's contribution to employment.
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- BLS reports that "the return to payrolls of 10,000
workers who were on strike in July" added 10,000 construction jobs.
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- New employment for waitresses and bartenders added 12,000.
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- Meanwhile, manufacturing lost 27,000 jobs in August.
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- Astonishing, isn't it, that 12,000 jobs for waitresses
and bartenders, 10,000 returning construction strikers, and 40,000 jobs
for ambulatory health care services, hospital orderlies, and social assistance
can cause world stock markets to rise.
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- The 17th century Dutch Tulip Mania, in which single tulip
bulbs sold for more than ten times the annual income of a skilled craftsman,
has nothing on our modern scientific era, a time of high economics and
even higher finance, when meaningless monthly job gains can send up world
stock markets.
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- Note: The Trends Research Institute is pleased
to present this Trend Alert® written by our new contributing
editor, Dr. Paul Craig Roberts. A former associate editor of the Wall
Street Journal, columnist for Business Week, and professor of economics,
Dr. Roberts served on personal and committee staffs in the House and Senate
and as Assistant Secretary of the Treasury for Economic Policy during the
Reagan Administration. He speaks with an authority bred of experience.
As a former "insider" now on the outside, we welcome his bold,
clear and informed analyses.
-
- To arrange an interview with Trends Research Institute
Director, Gerald Celente, or to request a copy of the Summer edition
of the Trends Journal® (with its unique, hard-hitting, in-depth
analyses of the economic, sociopolitical and cultural trends shaping the
world) please contact:
-
- Zeke West
- Media Relations
- zwest@trendsresearch.com
- 845.331.3500 Ext. 1
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