Friday, January 10, 2014

December Jobs Report: no line left to hold

I have to admit something: I actually thought November's Jobs Report from the BLS was not all that bad. The unemployment rate went down, while the labor force participation rate actually went up. It seemed to possibly be the beginning of some positive trends, real trends, not ones manufactured to serve political agendas. Alas, the December Jobs Report is now out and it has come down like a sack of bricks on the heads of people like me, who were trying to be positive, even when they knew they were kind of dreaming.

Recall that in the November report, the unemployment rate ticked down to 7.0% (from 7.2%), even as the LFPR went up to 63.0% (from 62.8%). And the total jobs added topped 200,000. While there were still some internal issues, some specifics that were less-than-positive (like too much part-time work), it was tough to argue that the report was something other than good news, even allowing that some of the job increases were holiday-related.

In the latest Jobs report, the usually key metric--the unemployment rate--has dropped yet again. The BLS now figures it to be 6.7%, the lowest it has been since October of 2008! So that has to be good news, right? We should be hearing the blasts of trumpets throughout the land, heralding this breakthrough. The Administration, battered and beaten by one things after another, can finally push back via this strongly rebounding economy. Can't it?

In a word, no. Various media outlets are leading with the second most important metric in the report: the number of added jobs. As I noted above, the November Report showed some 200,000 jobs added (or jobs created, for those living on fantasy land), and the December report actually revises that number slightly upward. But what about the number of jobs added in December, itself? A measly 74,000, which as frequent readers of this blog know is nowhere near the number needed just to keep pace with population growth (around 150,000 jobs is the minimum in this regard).

Given this number, how exactly did the unemployment rate manage to tumble down by nearly a third of a percentage point? Yep, you guessed it: the LFPR went right back down again, from 63% to 62.8% (where it was in October). And even more significantly, over half a million people exited the labor force. As Tyler Durden notes, this number--the people not in the labor force--is now at a record all-time high of over 91.8 million:


Looking at the numbers from the BLS, it appears that an astounding one million plus people (1.13 million) have left the labor force in just the past three months. And if we look at the numbers from a year ago, we see an exit from the labor force of 2.363 million people. That's some scary stuff. The change in the total noninstitutional population (the base number used by the BLS for all of these metrics) for the same period was plus 2.395 million. That's a difference of only 32,000. Or in other words, in the past year our economy has been able to absorb only 32,000 new workers.

But then, we've known for a while that the economy was more or less stagnant and these numbers bear this out. The hope was that things were beginning to trend in a positive direction. The new numbers make it clear this isn't the case in the least. Some are pointing to weather playing a role here, but that should have been more than offset by holiday-related gains in December, gains that supposedly helped push up the number in November. This didn't happen, which suggests the November gains were more of an aberration than anything else.

Cheers, all.


  1. The numbers aren't going to improve without fundamental changes in the economic environment. Regulatory overhead and financial instability have finally reached the tipping point where most new growth will be in grey or underground markets, not the ones that show up in government reports. The aboveground economy is too burdened with chains to compete with the free market, and respect for the government is too low to keep people playing their regulatory games.

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