I’d take credit for a “spot on” prediction, but unfortunately it’s not that simple. Let’s first deal with the simple — the headline.
The unemployment rate fell by 0.4 percentage point to 8.6 percent in November, and nonfarm payroll employment rose by 120,000, the U.S. Bureau of Labor Statistics reported today. Employment continued to trend up in retail trade, leisure and hospitality, professional and business services, and health care. Government employment continued to trend down.
Heh, not bad; I pretty much nailed it. So I can go home with a feather in my cap, right?
There’s a fairly serious problem with the numbers, and it’s not in the headline — it’s in the only number that matters from a fiscal perspective for the government — and there, it’s bad news. Even worse, there is some real serious misdirection going on in here, me thinks.
Let’s do the charts:
Heh wait a second…. that monthly line (blue dashed) shows a flat to small decline in employment! How’s that possible? Let’s look at the “not in labor force” numbers:
So those not in labor force aren’t re-entering the labor force. That’s not so good; remember that you need about 125,000 people to find jobs a month to keep up with the population.
This led to the following “big picture” chart:
That’s the labor participation rate which is all that matters for the ability of government to collect taxes — since all taxes are paid by people, and if you’re not working, you’re not paying taxes.
And that number, my friends, is down on the month.
Not by a lot, but down.
So what we have here is a report that is nowhere near as strong as it appears.
PS: The original version of this post called the report an outright fabrication. The BLS site went unavailable for nearly an hour from the time I picked up the figures until I posted the Ticker, and when it was available again the figures were in different places. Among other things the original data showed a decrease in population, and not a small one either. I have updated the graphs above from the now-available data tables. Whether this was an error in their table or in my original pick-up I cannot determine at this point as I did not save the original copy off to local disk. In any event the report is not strong on a monthly basis and the lack of recovery in the employment rate bodes ill for the ability of the government to continue to spend, which is the “big picture” argument I’ve made since I began this series of reports.