a) The jobs report is flawed, it massively understates unemployment - so today's "bad" number is worse than it looks [Apr 2: The Underemployment Rate is Rising]
b) There were revisions downward to January and February
c) As I said earlier this week, if not for our 2 inflated job sectors of government and healthcare - both of which are contributing to our massive federal deficit and should be cutting jobs to save us money - we'd have no job growth at all. Construction, manufacturing et al have been weak for a long time - but now the weakness is spreading to our bread and butter - professional and services.... the bedrock of our economy. So we continue to add jobs to things that will weigh down the pocketbooks of our kids, grandkids and their grandkids (bloated costly sectors)... and lose jobs in things that won't. This is what your economy has become...
d) Wages continue to flail in the face of real inflation - 3.6% year over year increases. If you believe in the government inflation reports - wages are keeping up with inflation. If you live in the real world you know they are not.
- Employers buffeted by talk of recession slashed 80,000 jobs in March, the most in five years and the third straight month of losses.
- At the same time, the national unemployment rate rose from 4.8 percent to 5.1 percent, the clearest signal yet that the economy might already be shrinking.
- "The labor market has indeed turned south," said Joel Naroff, president of Naroff Economic Advisors. "That was the one last bastion of hope to stay out of a recession. Now the question is how deep and how long will it last?"
- Job losses were widespread in March. Construction, manufacturing, retailing, financial services and various business services all racked up losses. That overwhelmed elsewhere, including in education and gainshealth care, leisure and hospitality as well as in government.
- The new employment figures were much weaker than economists were expecting. They were anticipating a drop of 50,000 payroll jobs and the unemployment rate to rise to 5 percent.
- Job cuts in both January and February turned out to be even deeper. Employers got rid of 76,000 in each month. The elimination of 80,000 jobs in March was the most since March 2003, when the labor market was still struggling to recover from the 2001 recession.
- Average hourly earnings for jobholders rose to $17.86 in March, a 0.3 percent increase from the previous month. That matched economists' forecasts. Over the past 12 months, wages grew 3.6 percent. With lofty energy and food prices, workers may feel like their paychecks are shrinking.
Stock wise: The action has been very good this week and all bad news can be shrugged off. This can be shrugged off in the near term. The stock market is now "predicting" everything will be fine in 6 months, and this is why there is little reaction to the news. The CONSENSUS is now this is lagging indicator and if you look forward everything will be fine. My BELIEF is the consensus is dead wrong. But I am not going to place my money against the herd. Just like they were wrong in September/October 2007 that everything will be fine in the financial world and "subprime is contained", my THESIS is they are wrong today. But just like I put my beliefs to the side to take advantage of the Kool Aid bull market in the fall, I will do the same here.
I do believe the economy is in dire shape and there is a big disconnect between Wall Street and Main Street. Just like Wall Street denied the true carnage in financials all last fall until the bleep hit the fan in November, they will continue to deny this will be anything but a short, shallow recession until something happens in the future, where the amount of evidence overwhelms them... i.e. jobs reports of 150K type of losses in the summer. But thats the long term; in the short term you have to go with the herd. The herd wants to trade on hope. Remember, this is the same herd who denied any chance of recession until December 2007. Now the same pundits who said there is no chance of recession are now admitting there could be one, but it will only be mild. Etc.
I am typing this so people newer to the market can understand why the market is cheering 80K in job losses, and revisions down in January and February (higher job losses). I, myself, am simply going by the stock charts (still ok)... at some point reality will hit the market and we have to get extremely defensive again - could be later today, in 2 weeks, or 2 months. When that time comes and the market goes from denial to acceptance we will have another major selloff. This is the battle between hope and reality (intermixed with government bailouts)
