On Friday, August 2nd the Labor Department announced the long awaited and much anticipated monthly jobs report. In the United States we informally call this Jobs Friday. Well the report came out with a net gain of 162,000 new jobs with an expectation of 184,000. Obviously this report did not meet expectations. The interesting aspect of this report is the Unemployment Rate which up till now was 7.6 percent was reduced to 7.4. So the question is how can this be?
The Labor Department also made another revelation and that is (according to them) 37,000 people dropped out of the labor market. In other words 37,000 stopped looking for work. I find this to be amazing; so 37,000 people dropped out of the workforce and that’s the reason why the Unemployment Rate dropped to 7.4%? Interestingly enough the actual jobs created for May and June also dropped by a combined total of 26,000. So much for accurate statistics. Yet the U6 rate of unemployment which is what the Bureau of Labor Statistics use to measure the long-term unemployed is at 14%. The U6 rate includes everyone who wants fulltime employment but either can’t find suitable work or have to settle for a part time job.
In terms of the quality of jobs created; Retailers hired 47,000, Bars and Restaurants hired 38,000, manufacturing hired 6,000 and construction shed 6,000. This is not recovery, this is the sign of a stagnant economy that can’t figure out what it wants to do going forward. When construction sheds jobs at this time of the year, you know something’s not right.
FOMC Member Bullard spoke earlier today in the United States and reiterated what the Federal Reserve has been saying for a while and that is the data cannot be measured by one month’s worth of data but needs to be examined over a longer time horizon. You have to ask yourself a question who is putting pressure on the Federal Reserve to taper Quantative Easing? Why, ever since the June meeting has this become such a controversy? I suspect it is the institutionals aka “Smart Money” and the lobbyists who want this to end. Who has the majority of lobbyists in Washington, DC? Well it certainly isn’t the Liberals. They can’t get oil and gas companies to stop fracking.
Another measure that comes to mind is the way the Department of Labor compiles statistics. If someone is unemployed and collecting unemployment benefits, they’re counted because officially they’re “on the dole” so to speak. However once that person exhausts their benefits, they’re considered “employed” with the notion that “they must be doing something, right?” Well maybe but maybe not. Another fallacy is the method that the Bureau of Labor Statistics uses to devise the rate by the use of a household survey. Bottom line, they’re not using actual numbers but a survey method to determine the unemployment rate. Well this time I believe they got it all wrong as these numbers just don’t add up.
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