Friday, November 6, 2009

Official Unemployment Rate Hits 10.2%; Reality is Far Higher

I am not going to break down the full unemployment data because like much of our government reporting it is "garbage in, garbage out" and "you can't handle the truth" mixed together.  If you are newer to the website please peruse these entries during spare time this weekend
  1. [Oct 2, 2009: True September Unemployment in America Reaches Towards 14%; Our System is Broken].
  2. [Apr 3, 2009: Real March Unemployment Rate Reaches 12.5%] <---last time I reviewed all the inaccuracies of the report
  3. [Apr 2, 2008: The Underemployment Rate is Rising]  
  4. [Jan 27, 2008: Monthly Jobs Report & Birth Death Model]
  5. [May 10, 2008: Finally Some Mainstream Reporters are Figuring Out the "Spin" from Government]

But I want to point out a few key metrics and conclusions.  First, the politicos (both parties) have changed our metrics since the early 90s.  You will hear today that the unemployment rate is the worse it has been in 26 years; that is inaccurate.  As best as I can "retrofit" the measurement today, in an apples to apples comparison, if we measured unemployment as we did in the late 70s, early 80s we'd be somewhere in the mid teens.  It's been roughly a 4% spread over the old ways we used, i.e. we've been understating by about 4%... so figure 14.2% unemployment.

Second, this data actually comes from two reports - the downright scary thing is the second survey (household) shows the workforce shrunk again.  Recall, in America if you don't look for a job for 4 weeks you are no longer unemployed.  What we have seen in the past many months (and again this month) is a shrinkage in the labor force.  This has held DOWN the unemployment rate.  When people actually begin to believe there are jobs to be had they will go out searching which will immediately move them from "nowhere to be found in America's statistics" back to "unemployed" pushing up the unemployment RATE.  I thought this is what happened today as the rate jumped 0.4%.  But lo and behold, the unemploymentr rate surged EVEN as the workforce shrunk.  Again... scary.

Third, other key metrics... the work week is stuck at all time lows: 33 hours.  Long term unemployed continues to surge and I have not looked for it but the "birth death model" surely has overstated the results by "creating" jobs in businesses too small to measure.  Keep in mind, the government fessed up that through the 1 year ending March 2009 they overstated the "birth" of jobs by over 800K which is why acting like a lemming to any of these flawed government numbers is silly.  I expect March 2010 they will come back and say "oops, we did it again" (with apologies to Brittney Spears)

Fourth, the 2 positives: (a) wages gained 0.3%, far better than we have seen in the past few months where it has been 0.0% to 0.1% most of the time (b) temporary workers gained by 34,000 - the first increase since December 2007.  So point (a) is an actual green shoot and point (b) is something the market looks for as employers at first stage of recovery hire temp workers first.

We continue to add jobs in the 2 places that are in and of themselves massive Ponzi schemes - federal government and healthcare (which is pseudo government).  These are 2 sectors that we don't actually have to pay the bills today, so we just increase their costs each and every year, and borrow to do it - therefore in theory as long as we can print or borrow more money the job growth in these 2 sectors can explode ever higher - and that's what's been happening for 2 decades.  Not once in this recession, not even in the worst of it a year ago did we lose jobs in healthcare.  It's a magical sector.

Conclusion: I am surprised the stock market is not up 5%+ in pre market.  Remember, less employees is a "great thing".  It means (a) better corporate profits and (b) easy money from our central bank for as long as the eye can see.   Remember, the economy does not need you anymore [Sep 22, 2009: BusinessInsider - The Real Problem is the Economy Does Not Need you Anymore] - we have the Asians to do our work.  Jobs only slow down Americans ability to shop.  We can continue the Ponzi scheme economy where instead of getting wages for income, our government endlessly borrows money we don't have (or prints it) [Jun 5, 2009: 1 in 6 Dollars of Income Now Via Government; Highest Since 1929] [Jul 30, 2009: Cash for Clunkers a Bit Hit, Government Asks "What Can we Buy You Next?"]  Government helps buy us houses, cars... heck even lets us rent our own homes from ourselves if we cannot afford it.  What's not to love? 

So after an initial hit to the jaw, just as we saw a month ago as people are staggered that things are not improving... speculators should go back to joy within hours or by early next week as they realize - in their world - life is good.  Main Street is an afterthought...  the market should come to its senses shortly and realize everything is on "track".

Can you hear the next stimulus act being written as we speak?  Shhh... listen... you can almost hear the money bring printed from here.

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