The lower than expected jobs numbers that the Bureau of Labor Statistics released last week could signal a trend more disturbing than a potential rise in unemployment.
The February jobs report showed a dip in the unemployment rate. But it also showed zero wage growth and a lower labor force participation rate.
A close look at the numbers shows this "recovery" has passed by too many people…
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The government's official unemployment rate is "a Big Lie," according to Jim Clifton, the CEO of 80-year old analytics firm Gallup. In a Feb. 3 op-ed, Clifton slammed the White House, Wall Street, and the media for celebrating about how unemployment is "down" to 5.7%.
Of course, here at Money Morning, we've called the "official" unemployment numbers cooked all along.
It's a good thing that Clifton is onboard with us - the more the merrier.
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The July jobs report brings the total number of part-time jobs created this year to more than three times the amount of full-time jobs added.
Welcome to America: Land of part-timers...
The trend was pronounced in June when data revealed part-time jobs grew by a robust 360,000 and full-time jobs declined by 240,000. Friday's July jobs report was further proof.
Although you might think the markets simply respond any time Ben Bernanke sneezes, his "cold cycle" is not one of the indicators that will spell the slowing
and eventual cessation of the printing press at the Fed.
There actually is a mathematical formula used by the Federal Reserve to determine when to stop the presses.
I could give you the formula and it would look like this:
POP2 = [1-(%∆POP) m*m] *POP1.
Or, I could share the link to the Federal Reserve's Jobs Calculator in Atlanta.
This is the same calculator used by the Fed to determine when the jobs market and the unemployment rate will align properly. And when they do, it will signal to the Federal Reserve that it might be a good time to start tapering its $85 billion a month bond buying program.
This is what needs to happen: The economy will have to show new job growth.
The Fed is looking for the creation of 150,000 to 200,000 new jobs each month for 6 months. This is how we look now:
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When bad news is good news for stock markets you know just how convoluted the current economic environment is.
According to the May jobs report out today (Friday), the U.S. unemployment rate ticked up to 7.6% in May from 7.5% in April, the first increase since the start of 2013. And, markets rallied on the news. The Dow Jones soared more than 200 points by mid-day.
Some will say the May jobs report was good news - thousands of out-of-work people returned to the work force, and the 175,000 jobs added beat expectations.
The reality is we're just treading water. And the labor force participation rate is still at 30-year lows.
But the real good news is the jobs report means more U.S. Federal Reserve support, which will fuel markets already hitting record highs.
Economists breathed a sigh of relief when the Labor Department reported a better than expected April employment report on Friday, but the details show cracks still remain.
Many of the job gains proved to be in lower paying fields and the average number of hours worked dipped.
In fact, April's report revealed the average workweek for private sector employees declined 0.2 hour to 34.4 hours.
The data also suggests The Affordable Health Care Act, aka Obamacare, is already having an impact on hiring since job growth has slowed most significantly among businesses with 50-499 employees.
This could be the reason why...
Employers added just 88,000 jobs in March, according to the U.S. jobs report released Friday, hiring at the slowest pace since June 2012.
The number was a huge miss. Analysts expected a gain of 200,000.
"We all over shot it," Austan Goolsbee, former chairman of the Council of Economic Advisors in U.S. President Barack Obama's first administration, said on CNBC. "This is a punch to the gut. I mean, this is not a good number."
Since the government's way of calculating unemployment is frighteningly inaccurate, even with such a small amount of jobs added the unemployment rate fell from 7.7% to 7.6%.
That's because the labor force participation rate slipped from 63.5% to 63.3% -- the lowest level since 1979.
The U.S. Labor Department released the January 2013 jobs report Friday, showing the unemployment rate inched upward from 7.8% to 7.9%.
Employers added 157,000 jobs in January, short estimates of 168,000, which would have kept the unemployment rate stable.
The jobs report included some good news: Revisions to last year's data, customary in January, show the U.S. added 335,000 more jobs than initially reported in 2012, bringing the monthly average for jobs gained to 181,000 from the 153,000 initially reported.
Employment gains for November and December were revised higher by a total of 127,000.
Contributing most to January payroll increases were the retail, construction and healthcare sectors. The government continued to shed workers, a trend that began four years ago.
But the employment outlook remains bleak. Joblessness has proved persistent, with the unemployment rate stuck above an unhealthy 7% for more than four years.
"The good news is that January's employment gains, coupled with large revisions to the prior months, may translate into more consumer spending power. The bad news is that unemployment remains stubbornly high," said Kathy Bostjanic, director of macroeconomics analysis at the Conference Board.
On one level, the JOBS Act is full of promise. On another some of the elements are downright ugly. As Shah explains, its buyer beware. Continue reading...
I'm not just talking about the upcoming election and who is promising to do more to stimulate the economy. The entire future of America depends on job creation.
There are good and bad reasons why there aren't enough jobs.
Jobs have been lost because of advances in technology. Jobs have been lost because they've been outsourced.
Jobs aren't being created because banks aren't readily lending to entrepreneurs and businesses, and entrepreneurs and businesses supposedly aren't hiring because there are too many regulations and the future is uncertain.
All the reasons why there aren't enough jobs in America can be argued from both sides. And, while that's being done, arguing isn't doing anything for the unemployed.
Fortunately, there is a light at the end of the tunnel.
There is a pathway open, and hopefully soon to be widened, that bypasses all the arguments and does what our bickering partisan politicians can't do, create good jobs in areas where American ingenuity has always outshined the rest of the world.
The Promise of the JOBS ActThe Jumpstart Our Business Startups Act or JOBS Act was signed into law on April 5, 2012 and is the single best hope America has of regaining its preeminence in the world.
The JOBS Act has good, bad and ugly elements...
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The dismal and downtrodden jobs numbers, the elevated long-term unemployment levels, the ailing housing market and the looming "fiscal cliff" are all fueling recession fears.
Just last month, the nonpartisan Congressional Budget Office reported that unless lawmakers move to avert scheduled tax increases and spending cuts at the end of this year, a recession is likely.
This marked the first time the CBO has forecast a recession resulting from the fiscal cliff.
The CBO projected that gross domestic product (GDP) will contract by 1.3% in the first half of 2013 before growing 2.3% later in the year. Annualized, GDP would grow just 0.5% in 2013.
That forecast is an about face from January when the CBO forecast a 1.1% GDP growth in 2013 (if policies are not dealt with).
The report stated, "Given the pattern of past recessions as identified by the National Bureau of Economic Research, such a contraction in output in the first half of 2013 would probably be judged to be a recession."
Now other economic experts are saying the same.
Meanwhile, presumptive Republican nominee Mitt Romney hasn't gotten as much benefit from the weak economy as one would expect - a sign of his inability to connect with voters.
The past month has not been kind to the U.S. economy - or President Obama's standing in the polls.
The barrage of bad news has included:
- An uptick in unemployment from 8.1% to 8.2%;
- A 700-plus point drop in the Dow Jones Industrial Average since May 1;
- A reduction in the U.S. Federal Reserve 2012 economic growth forecast by half a percentage point;
- And a deflating Labor Department announcement that just 69,000 jobs were created in May.
In that poll, President Obama's job approval rating slipped from 50% in May to 47%, and those saying the country is on the wrong track jumped 6 points to 68%.
Meanwhile, Romney gained 6 percentage points in the head-to-head matchup, making the Election 2012 race a statistical dead heat (Obama 45%, Romney 44%).
Although President Obama's argument that he inherited economic problems too severe to fix in three years resonates with his liberal base, the moderates and independents likely to decide who sits in the Oval Office next year aren't so sure.
Welch joins a large number of economists and pollsters trying to sort out why the U.S. economy in 2012 hasn't rebounded more strongly from the 2008-2009 recession.
In particular, everyone is trying to figure out why job creation has been so sluggish.
The U.S. economy added just 69,000 jobs in May. That's far below the 150,000 or so needed just to keep pace with new workers joining the labor force.
"We should be poised to do well, but we are getting hammered by political forces who won't deal with the fiscal cliff coming up," said Welch, referring to the expiration of the President Bush-era tax cuts and sharp reductions in federal spending due to hit in January.
Welch blamed an array of government agencies for cooking up more and more nitpicking rules. Such rules have little or no benefit, but hamper business owners and suppress job creation.
"These are the things that are going on every day. They add up," Welch said. "That's why we're not taking off."
Welch compared the current recovery to the Reagan Administration recovery in the mid-1980s. That recovery, once it got going, accelerated rapidly.
"If you look at 2009, and you look at the recovery we launched, we were getting into a traditional recovery," Welch said. "We had 4%, 4.5% growth until we started getting into regulations."
Jack Welch Not Alone in U.S. Economy ViewThe blunt talk from Jack Welch echoes data from several recent surveys of businesses.
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U.S. equities experienced a steep drop during May, enduring the worst monthly declines in two years. The Dow Jones Industrial Average fell 6.2%.
A good part of May's decline was blamed on the ongoing European sovereign debt crisis that has swelled of late and shattered investors' confidence. But things on the home front are far from ideal.
The flight from stocks flowed into the first day of June. The Dow plunged 274 points Friday, erasing all of the year's gains. Fueling Friday's fall was May's dreadful U.S. jobs report, which showed employers added just a trifling 69,000 in payrolls, less than half the expected 150,000.
The Standard & Poor's 500 Index and Nasdaq both plummeted more than 2%. The Nasdaq has given back more than 10% since its late-March peak.
Traders consider a 10% drop to be a market correction. Meanwhile, the S&P 500 is just a mere point above correction territory.
Just 17 of the 500 companies in the S&P index ended higher on Friday.
"The big worry now is that this economic slowdown is widening and accelerating," Sam Stovall, chief equity strategist at market research firm S&P Capital IQ, told the Associated Press.