Job Report Shocker
I find it amusing to watch the analysts and economists scrambling about as if their hair is on fire to cover their *** after so sorely missing their numbers with respect to today's job report. We said yesterday on the radio show, and in our market updates, that the jobs report would be weaker than expected today and the unemployment rate would rise to 9.1 to 9.2%.
Not only was the job report weaker than expected this month but the change in total nonfarm payroll employment for March was revised from +221,000 to +194,000, and the change for April was revised from +244,000 to +232,000. Therefore, expect to see May's number revised lower when the June number is released as we have seen a rise in the weekly number of jobless claims.
Furthermore, the Birth/Death Adjustment is the largest in over a year at 206,000. This is a "guess" at the number of jobs that are being created by small businesses. However, as I will address in a minute, the BLS should get with the NFIB to get a "clue" as to what is actually going on in the world of small businesses and their plans to hire. If you take out the B/D adjustment we really LOST 150,000 jobs last month which, when combined with the people falling off of the ability to claim unemployment, is more in line with the recent rise in jobless claims and the fact that the absolute number of unemployed persons increased from 13.747 million to 13.914 million last month.
As I was writing this I was listening to John Boehner and his crew of minions bash the current administration about their failed policies to create job growth; they site the fact the 70% of all job growth comes from small business. As we just recently posted in our missive on Not The American Dream I Was Told About we addressed the very issue that small business have NO incentive to hire and therefore, while you can wish and hope, the small business are NOT going to come to the rescue anytime soon. Today the NFIB (National Federation of Independent Business) released the following statement confirming our statement:
“After solid job gains early in the year, progress has slowed to a trickle. The two NFIB indicators—job openings and hiring plans—that predict the unemployment rate both fell, suggesting that the rate itself will rise. May’s job numbers will disappoint; meaningful job creation on Main Street has collapsed...one in four owners still reporting ‘weak sales’ as their No. 1 business problem, there is little need to add employees, especially with the uncertainty about future labor costs arising from new regulation and legislation. And, if Congress doesn’t deal effectively with the trillion dollar deficit, we’ve got plenty to keep us worried."
The Economic Recovery That Wasn't
Does this look like an economic recovery to you.
This is the worst recovery of any post WWII recession and it is very likely that the pressures on the consumer and small businesses, as opposed to the what the mainstream media espouses, will intensify in the future as the continuation of high unemployment collide with falling wages, rising prices, declining home prices and misaligned political policies to create an economic malaise of weakness.
Furthermore, with the economy already slowing to well below long term trend growth and now, as we have stated in several previous posts, the decline in manufacturing, slowing consumption and weakening housing will weigh on economic output in the coming quarters. With slower economic growth there is no reason for businesses to hire...between you and I it seems that economists keep trying to jam a round peg into square hole and claim success if they can wedge it in. In reality, and as investors, we must pay attention to the direction and momentum of economic growth as the financial markets will adjust, and in most cases over compensate, for slowing growth which will ultimately attack profit margins.