Tag: Unemployment

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What Today’s Job Report Shows About The Future Of The US Economy Is Shockingly Scary.

Here is what we got.

  • 288K new jobs added in April, far higher than 218K expected.
  • The unemployment rate tumbled down to 6.3% from 6.7%.
  • Labor participation rate collapsed from 63.2% to 62.8%

That’s great…..right? Not so fast there sparky.  If there was ever a fundamental setup for a massive bear market to start, we got it today. Think about it the following way.

As Janet Yellen has suggested on a number of occasions, jobs or job creation is her primary concern. Today’s job report validates her view that the US Economy is recovering at a good clip and that full employment is just around the corner. As such, further monetary tightening is now a certainty.  Yet, the reality is quite different……

  • Incredibly overpriced financial markets and most other asset classes.
  • Extreme levels of speculation driven by cheap money and FED printing.
  • An economy and a financial market environment that is entirely dependent on cheap credit and/or stimulus.
  • Technically negative GDP growth and slowing economy.

Job creation is a lagging indicator. As I suggested a number of times before, the worst thing the FED can do right now is tighten further.  I hate going back to 2007, but the “fundamental” setup we face today is identical to the one we have faced at 2007 top. Jobs were plentiful, markets were in extreme overvaluation and the FED was tightening. It was not until the mid 2008 (or well after the stock market peaked in October of 2007) that the unemployment rate started surging higher. Expect the same thing to happen now.

Our mathematical and timing work confirms this notion. It shows a severe bear market between 2014-2017. When it starts it will very quickly retrace most of the gains accrued over the last few years. If you would be interested in learning exactly when the bear market will start (to the day) and its subsequent internal composition, please CLICK HERE

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What Today’s Job Report Shows About The US Economy Is Shockingly Scary.  Google

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Bloomberg: Labor Shortage Forces Employers To Fight Over Employees. Salaries To Surge?

Nice fluff piece Bloomberg. I am not sure who paid for it, the FED or the America Is The Best Country In The World propaganda group. 

Companies across the U.S. from Texas to Virginia and Nebraska are struggling to fill positions with metropolitan jobless rates below the 5.2 percent to 5.6 percent level the Federal Reserve regards as full employment nationally. Competition for workers is prompting businesses to raise wages, increase hours for current employees, add benefits and recruit from other regions.

Give me a f&#*ing break Bloomberg. If you believe their reporting is anchored in reality, give me a call, I have some Pets.com and Nortell stock to sell you. If you want a better look at the employment/unemployment situation, here are a few links worth checking out. 

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Bloomberg: Labor Shortage Forces Employers To Fight Over Employees. Salaries To Surge?  Google

Bloomberg Writes: Tight Job Market in U.S. Cities Prompts Higher Pay

To hire 10 to 15 project coordinators this year, Sabre Commercial Inc. has boosted pay 10 percent and added a 401(k) retirement plan.

“It is an employee’s market,” said John Cyrier, co-founder and president of the 48-employee Austin, Texas-based builder. “We are definitely seeing a labor shortage in Austin and central Texas. I see it only getting worse.”

More from Bloomberg.com: Toyota Responds to Hyundai’s Sonata With Refreshed Camry

Companies across the U.S. from Texas to Virginia and Nebraska are struggling to fill positions with metropolitan jobless rates below the 5.2 percent to 5.6 percent level the Federal Reserve regards as full employment nationally. Competition for workers is prompting businesses to raise wages, increase hours for current employees, add benefits and recruit from other regions.

“There are spot labor shortages” that probably will “broaden out over the next year as the job market steadily improves,” said Mark Zandi, chief economist at Moody’s Analytics Inc. in West Chester, Pennsylvania.

More from Bloomberg.com: S. Korea Says 284 Missing After Ferry Sinks

Unemployment in Austin-Round Rock-San Marcos was 4.8 percent in February, Labor Department figures show. Forty-nine, or 13 percent, of the 372 metro areas reported jobless rates below 5 percent that month, the most for February since 2008, two months after the start of the recession. The lowest was 2.8 percent in Houma-Bayou Cane-Thibodaux, Louisiana, because of offshore-oil exploration in the Gulf of Mexico.

Four years ago, during the worst of the labor-market slump, just two cities had rates below 5 percent.

More from Bloomberg.com: Chinese Thunder God Herb Works as Well as Pain Therapy

Wage Pressure

“That says the economy is getting better in a lot of places,” said David Wiczer, labor-market economist at the Federal Reserve Bank of St. Louis. While national unemployment is a closely watched indicator, “it is difficult to average things. This does have implication for wage pressure at the local level.”

The Fed’s Beige Book review of regional economic conditions has highlighted the pinch. Labor markets in the Minneapolis Fed district have tightened, with “strong demand for welders and health-care workers, such as certified nursing assistants,” and earnings at “high levels in the oil-drilling areas of North Dakota and Montana,” the Fed reported March 5. The next review is due today.

Compensation has risen about 2 percent nationally so far this year and probably will increase by 2.2 percent next year, 2.5 percent in two years and 3 percent by late 2016, Zandi estimates.

“The national economy will return to full employment one metro area at a time,” he said.

Benchmark Rate

As incomes edge higher and labor markets tighten, the Fed may raise its benchmark interest rate more than policy makers have projected, said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities in New York and the top unemployment forecaster for the past two years, according to data compiled by Bloomberg.

The FOMC has held its federal funds rate on overnight loans among banks near zero since December 2008 and has predicted the rate will be 1 percent at the end of 2015 and 2.25 percent at year-end 2016. LaVorgna estimates it will be 1.5 percent in December 2015 and 3.5 percent a year later.

Regional demand will have the greatest impact on paychecks for the lowest-wage jobs, such as fast-food, because people aren’t likely to relocate for these positions, said Gary Burtless, an economist in Washington at the Brookings Institution who was previously at the U.S. Labor Department.

‘Geographic Mismatch’

“Tightening local markets while the national market remains weak would reflect some geographic mismatch, in which demand is rising in some localities while the supply — unemployed workers — are concentrated elsewhere,” said Harry Holzer, a professor of public policy at Georgetown University in Washington and former chief Labor Department economist.

While some people will move for good-paying careers over time, migration can be limited by poor information about opportunities, houses with mortgages more than the value of the properties and an aging population, Holzer said.

The number of positions waiting to be filled climbed by 299,000 to 4.17 million in February, the most since January 2008, the Labor Department reported April 8. The figure is among the job-market barometers Fed Chair Janet Yellen tracks.

In New Orleans, where unemployment is 4.2 percent, “we are getting killed on overtime,” said Ti Martin, co-owner of Commander’s Palace, SoBou and Café Adelaide, which employ a total of more than 350 people. “We are doubling up and working extra hours,” and managers are filing in as cooks. The restaurants have a dozen or more openings, mainly for experienced chefs and servers, she said.

Needed Staff

Martin is leading an effort among proprietors to start a nonprofit culinary institute in the city to train needed kitchen staff.

In Omaha, with a 4.5 percent unemployment rate, the Greater Omaha Chamber is coordinating a program that will increase the number of internships to more than 300 this year from 135 in 2012 at employers including Mutual of Omaha Insurance Co., Union Pacific Corp. (UNP) and ConAgra Foods Inc. (CAG) Exposing young people to the city has been an “excellent recruitment tool,” said Sarah A. Johnson, director of talent and workforce initiatives for the chamber.

A tight market “is literally our reality,” said Omaha Steaks International Inc. spokeswoman Beth Weiss. The food seller hired more than 3,000 people for seasonal jobs during the holidays and uses cash bonuses and employee discounts to try to attract workers.

Five-Year Low

The jobless rate in the Washington metro area, which includes the Virginia cities of Alexandria and Arlington, was 5.1 percent in February, near a five-year low, which means some professional jobs have gone begging.

“The competition for people is really fierce right now,” said Gar Muse, principal with Cooper Carry, an architectural firm that has increased staff to 50 in Alexandria from 40 in 2010 and plans to hire more. Cooper Carry boosted its advertising to seven print and online outlets this year from a single posting and uses social media to promote job openings.

The company also has had to work to keep existing staff. “We have lost a handful of people,” Muse said. “They are constantly being approached and we have had to make some counteroffers.”

Social-media sites are playing a bigger role in scouting talent. Some 77 percent of employers used networking websites to recruit potential job candidates last year, up from 56 percent in 2011, according a 2013 study by the Society for Human Resource Management, an Alexandria-based trade group representing human-resource professionals.

Worsening Shortage

The labor shortage is expected to worsen in some regions. In Houston and the surrounding area, construction for the oil, gas and petrochemical industries on the Gulf Coast will require about 36,000 more workers in 2016 than in 2013, according to Industrial Info Resources Inc., a Houston-area based research company.

Even with hot labor markets in some cities, twenty-nine metro areas still have unemployment rates of at least the October 2009 post-recession peak of 10 percent, including Atlantic City, New Jersey, and Fresno, California.

The national picture is “generally consistent with a slowly improving” job market that is “still far from complete health,” said Rob Valletta, research adviser at the San Francisco Fed, whose work has been cited by Yellen.

Moreover, some economists believe the decline in joblessness — which was 6.7 percent in March and has fallen faster than Fed policy makers predicted — is sending a misleading signal about the health of the economy.

More Slack

“The labor market actually has a fair bit more slack than would be indicated by the national unemployment rate,” said Jesse Rothstein, a former chief economist at the Labor Department who now teaches at the University of California at Berkeley. “If you believe that, then the same problem has to hold in local labor markets as well.”

Employers in Austin say they don’t see evidence of slack, such as discouraged workers waiting for more opportunities to start looking for jobs.

“There is a stronger economy and a lot of growth in the tech sector,” said Jason Schenker, president of Prestige Economics LLC, an Austin-based economic research company. “Construction is booming. There is some migration of people for jobs, which has a multiplier effect creating more jobs.”

The city was “relatively resilient” during the 18-month recession that ended in June 2009, in part because it is the state capital and home of the University of Texas, he said.

Talent War

“It is definitely a war for regional talent,” said Sherri Manning, vice president at Q2 Holdings Inc. (QTWO), an Austin company with 446 people that provides technology for online and mobile banking.

Q2 Holdings, which hires 70 percent of its staff from Texas, provides cash bonuses to employees for referrals and holds recruiting events with pizza at pinball arcades. Last year, it started a 90-day training program to teach needed skills to people with a technical inclination — such as a math or science degree — though no formal experience. Those who do well are hired, Manning said.

Shortages exist in Austin for construction workers in trades including installing drywall and painting, Sabre Commercial’s Cyrier said. His company, which began boosting wages in 2011, directly employs project coordinators, while contracting out most other tasks. Subcontracting costs have gone up 15 percent or more in the past three years, he said.

He has sought to create a more collegial environment to attract younger workers. One example: stressing more communication, including daily huddles among staff about project issues. Making sure the company is viewed as a good place to work is important because it receives a third fewer resumes than two years ago, he added.

“If we get a good resume, we have to make a decision really quick,” he said. “We are always looking.”

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FED Unemployment Delusions

I have argued, for at least a few years, that the FED is delusional and behind the ball most of the time. If minutes released from their 2008 meetings don’t prove that without a shadow of a doubt, I don’t know what will. If you recall, those minutes clearly showed Bernanke anticipating economic growth and worrying about housing prices going up as late as Q3 of 2008. Mind you, the stock market was already down more than 30% at that stage. To keep their stupidity streak alive, the FED presents us with another gem. Get this, according to James Bullard, president of the Federal Reserve Bank of St. Louis, the unemployment rate will fall below 6% this year. 

The reality, of course, is a little bit different. Never mind the fact that their unemployment calculation understates the real unemployment by a good 2-4%. The most significant issue here has to do with where we are in the economic cycle. Based on our mathematical and timing work, the bear market of 2014-2017 is about to rear its ugly head. Shortly thereafter, the US Economy will fall back into a severe recession where unemployment will quickly surge. To be honest, I am afraid Mr. Bullar will see 10% unemployment before he sees 6%. 

Just more prove, as if you needed any, that the FED is ill-equipped for forecasting future economic developments. 

If you would be interested in learning exactly when the bear market of 2014-2017 will start (to the day) and its internal composition, please Click Here. 

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FED Unemployment Delusions  Google

Reuters: Fed’s Bullard says U.S. jobless rate expected to fall below six percent this year

HONG KONG (Reuters) – The U.S. unemployment rate will fall below 6 percent by the end of this year, a Federal Reserve official said on Wednesday, offering a bullish view on the country’s economy after central bank comments sent shock waves through financial markets last week.

James Bullard, president of the Federal Reserve Bank of St. Louis, said that the outlook for the U.S. economy is “quite good,” despite data from early in the year.

“The biggest thing is that unemployment has come down more quickly than expected,” said Bullard, speaking on a panel at the annual Credit Suisse investor conference in Hong Kong.

He added later during a question and answer session that more progress is needed in the labor market before U.S. policymakers can consider raising interest rates.

Bullard is known to be one of the Fed’s more hawkish policymakers. He previously advocated for a rate hike as early as 2014, a stance he appears to have backed away from.

U.S. monetary policy tightening took center stage last week after a two-day policy meeting, when the Fed said it expected to keep benchmark interest rates near zero for a “considerable time” after it wrapped up a bond-buying stimulus program, which it is widely expected to do toward the end of the year.

Pressed on the statement at a news conference afterward, Fed Chairman Janet Yellen said the phrase “probably means something on the order of around six months or that type of thing.” Stocks and bonds immediately tumbled as traders took the statement to suggest rate hikes could come sooner than they had anticipated.

Bullard has joined other Fed officials in playing down the “six months” comment from Yellen, saying it was in line with what the private sector was anticipating. He repeated that view on Wednesday.

The unemployment rate for February rose to 6.7 percent from a five-year low of 6.6 percent as Americans flooded into the labor market to search for work.

But the rate hovering around the Fed’s previous 6.5 percent benchmark has raised the prospect of the central bank moving to push up rates more quickly than some in the market previously expected.

Fed officials appear increasingly worried that keeping policy so easy for so long could encourage investors to take too many risks, building bubbles that may eventually pop and roil financial markets.

The U.S. economy is “set for a pretty good year,” Bullard said on Wednesday. “Despite the spate of weaker data in the January, February time frame.”

The Fed has held rates near zero since late 2008 to help the economy recover from the 2007-2009 recession.

Bullard was asked about where he saw interest rates in 2016, at which point he referred to his “dot.”

The Fed introduced a “dot chart” in its January 2012 economic projections. Each dot represents the view of an individual policymaker on how they see the appropriate level of interest rates for the coming few years.

“I’m here to tell you that my dot has not changed,” Bullard said.

Data on Tuesday showed U.S. consumer confidence surged to a six-year high in March and house prices increased solidly in January, positioning the economy for stronger growth after a weather-induced soft spot.

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Confused Economist Predicts Labor Shortage

According to Gad Levanon director of macroeconomic research at the Conference Board, we should anticipate significant labor shortages in the US Labor market over the next 15 years. Why? In a nutshell, due to baby boomer retirement and end of productivity gains. 

Fair enough, but over the next 15 years the earth might split in half and crush into the sun. Once again, an irrelevant analysis coming out of academia. Plus, the report fails to address the most important issues associated with today’s labor market, unemployment and structural changes. Particularly, massive economic bubble within the US Economy, robotics and outsourcing. If you would be interested in getting a better understanding of what the US Labor market is facing over the next few years, CLICK HERE.  

EconomistsMessedUp

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Confused Economist Predicts Labor Shortage Google

 

BusinessWeek Reports: This Economist Foresees 15 Years of Labor Shortages

Economists who worry about high unemployment are a dime a dozen, or 0.83¢ each, as they will point out. It’s less common to find an economist predicting an era of chronic labor shortages, with employers struggling to fill openings. One who does see things that way is Gad Levanon, the Israeli-born director of macroeconomic research at the Conference Board, a business research group founded in 1916.

I sat down with Levanon this week to ask him to explain why he’s swimming against the tide on the topic of labor. Here’s what he said:

Bureau of Labor Statistics
Productivity: If it’s true that companies are automating and streamlining jobs out of existence, we should see a big jump in the government’s measure of output per hour worked—i.e., productivity. We see no such thing. In fact, when averaged over a three-year period, productivity has been drifting lower. This key fact simply doesn’t fit the conventional wisdom of a hyperefficient economy pushing workers into the street.

Baby-Boom Retirements: Lots of things about the future are unknown, but one thing we can say with certainty is that in 25 years, baby boomers will be 25 years older than they are today. Bureau of Labor StatisticsThe aging of the workforce has pushed down the share of Americans who are in the labor force, either working or looking for work. The labor force participation rate will continue to fall in coming years as the vast majority of those who haven’t already retired do so in the next couple of decades. Companies will struggle to replace those retirees, Levanon predicts.

Two-Tier Market: It’s quite possible for labor market shortages to co-exist with high unemployment for those people who lack the skills that employers are seeking, Levanon says. In fact, that’s what’s happening. For people who have been out of work for less than half a year, the job market is pretty much back to normal, while there’s still an enormous bulge in the number of people who have been out of work for more than half a year, as this chart shows. Bureau of Labor StatisticsAnd these numbers don’t even reflect those who have dropped out of the labor force altogether. The upshot is that the labor market could start to get tight—and wages could start to rise—even at low levels of employment, Levanon says.

History: Automation has been a fact of life in the working world for generations, and never before has it generated mass unemployment, Levanon says. True, it dislodges people from old jobs and forces them to find new niches, but it’s never caused permanently high joblessness, he says, asking: “So why should it be different now?”

The Conference Board economist’s message rings true to many people in the business world, who have long been complaining that it’s a seller’s market for labor despite the above-average unemployment rate—6.7 percent in February. “There’s a greater demand for workers than there is a supply with the right skill sets,” George Prest, chief executive officer of the Material Handing Institute of America, told me yesterday. “If we could somehow magically have people go to one of these [training] programs, they’d have a job very quickly.”

Levanon says both Republicans and Democrats have a political incentive to exaggerate the slackness of demand for labor—Republicans because perceived weakness makes the Obama administration look like a poor steward of the economy, and Democrats because it justifies more stimulus. So does that put Levanon on the side of those who think the Federal Reserve should start raising interest rates sooner?

Actually, no. He thinks a tighter labor market would help lift some people out of long-term unemployment, because employers couldn’t afford to be so picky. And he doesn’t think there’s a grave risk of an inflationary wage-price spiral. On the whole, Levanon thinks the big labor issue facing the U.S. economy over the next 15 years will be shortages, not surpluses.

EconomistsMessedUp

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Job Creation Surges Higher. Now What?

Despite the bad weather, the US Economy added 175,000 jobs in February Vs. estimated 149,000.  Damn, I am impressed. Let me run out and buy some shares of Facebook, Netflix, Tesla, Google, etc… Even though I can puncture the “validity of data” hole (as I have done before) wide enough for a semi to drive through, that is not the angle I am going to take today.  

Listen, jobs is a lagging indicator. It’s a trend measure and is not indicative of future market developments. Let me give you an example. The US Companies were hiring hand over fist at 2000 and 2007 tops. In fact, they continued to do so 6 months after said tops. With the stock market surging higher over the last 6 months, I would hope that the February jobs report come in above expectations. Yet, it is all in vein.  As the 2014-2017 bear market accelerates speed over the next few months, any job gain will quickly turn into mass layoffs. 

What Bear Market? Read the  bear market report here.  

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Job Creation Surges Higher. Now What?  Google

jobs-feb-14-2

The U.S. economy added 175,000 jobs in February, more than anticipated despite brutal weather conditions across much of the U.S., with the unemployment rate ticking slightly higher.

Economists had predicted 149,000 new jobs. The headline unemployment rate was 6.7% last month, up from 6.6% in January, actually a positive sign because it means more people entered the workforce.

The December and January figures, both well-below expectations, were revised higher by a combined 25,000.

Weather had been widely predicted to put a dent in the numbers ahead of the release of Friday’s data by the U.S. Labor Department. That was the case but it didn’t impact overall hiring as much as analysts had anticipated.

“The weather was unseasonably cold in February, especially during the period leading up to and including the (Labor Department’s) survey week. In addition, snowfall has been unseasonably high over the same period,” analysts with Nomura’s Global Markets Research unit wrote in a note prior to the release.

Instead of chilling overall hiring, the Labor Department said the weather resulted in 7 million people working part-time last month rather than full-time, 10 times the number in January and the largest figure since January 1996, when a blizzard paralyzed the Northeast.

Todd Schoenberger, managing partner at LandColt Capital in New York, said the February numbers bode well for the spring.

“Despite headwinds, such as the continuation of a brutally cold winter, the labor market persevered, which leads to added optimism for a spring thaw in discretionary spending as we close out the first quarter of 2014,” he said. “Wall Street will cheer this report because strict attention is now given to economic and fundamental analysis as the (Federal Reserve) continues its tapering strategy.”

Despite a weak January jobs report, Fed policy makers voted unanimously earlier this  year to continue scaling back the central bank’s monthly bond purchases by $10 billion. The amount has been whittled down to $65 billion a month.

In public comments, Fed members have said the economic data would have to shift dramatically for the Fed to alter its stated objective of reducing bond purchases at $10 billion intervals until the program, known as quantitative easing, expires later this year.

After gaining an average of 194,000 jobs each month in 2013, the numbers have fallen off significantly in early 2014. The economy added a meager 113,000 jobs in January, which followed the  addition of just 75,000 new positions in December.

But members of the policy-setting Federal Open Market Committee, including newly installed  Fed Chair Janet Yellen, have taken pains to explain that labor data, especially the headline unemployment rate, is one of several economic indicators the Fed is using to determine future policy.

The unemployment rate has fallen to its lowest level since the onset of the 2008 financial crisis  but often for the wrong reasons, namely because thousands of people have been leaving the workforce each month which reduces the number of people the government counts as unemployed.

In addition to labor numbers, gross domestic product, which slowed to 2.4% in the fourth  quarter compared to the 4.1% growth in previous quarter, and consistently low inflation have been cited by policy makers as key barometers for the health of the U.S. economy.

In any event, central bankers have vowed to take a cautious approach to tapering, seeking to  find a balance between dialing back bond purchases too quickly, which could backfire if the economy shows signs of stalling again, and not scaling back fast enough, which could lead to runaway inflation.

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January Jobs Report Disaster And Other BS From The Department Of Labor

This should come as no surprise, but this jobs report has more holes than a Tijuana hooker. The report missed by about 72,000 jobs with 185,000 expected Vs 113,000 actual jobs created. Yet, leave it to the government geniuses to spin it the right way. It was too cold. Yes, apparently it was too fucking cold to hire anyone in January. 

But its not all bad news. The unemployment rate is now down from 6.7% in December to 6.6% in January. Plus, the participation rate surged higher 0.2% from 62.8% to 63%. Holy Fuck!!! That’s incredible, let me run out and buy some stocks now.  

On a more serious note, this is not a laughing matter. Even though the US Economy was propped by a massive infusion of credit over the last few years, it is now running on empty. I assure you that any marginal job gains will soon turn into massive layoffs as the bear market takes us into the 2017 bear market bottom (see my timing work to find out why) 

UNRATE_Max_630_378

—————————————————————————————————————
WASHINGTON (Reuters) – U.S. employers hired far fewer workers than expected in January and job gains for the prior month were barely revised up, suggesting a loss of momentum in the economy, even as the unemployment rate hit a new five-year low of 6.6 percent.

Nonfarm payrolls rose only 113,000, the Labor Department said on Friday. But with strong job gains in construction, cold weather probably was not a major factor in January.

The second straight month of weak hiring – marked by declines in retail, utilities, government, and education and health employment – could be a problem for the Federal Reserve, which is tapering its monthly bond-purchasing stimulus program.

December payrolls were raised only 1,000 to 75,000.

The data also comes on the heels of a report on Monday showing a surprise drop in factory activity to an eight-month low in January and could rattle investors, already nervous about slowing global growth.

Economists polled by Reuters had forecast payrolls increasing 185,000 last month and the unemployment rate to hold steady at 6.7 percent.

But there was a silver lining in the report. The unemployment rate dropped a tenth of a percentage point to 6.6 percent last month, the lowest since October 2008.

The household survey from which the jobless rate is derived showed gains in employment. In addition, more people came into the labor force, an encouraging sign for the labor market.

The participation rate, or the proportion of working-age Americans who have a job or are looking for one, increased to 63 percent from 62.8 percent in December, when it fell back to the more than 35-year low hit in October.

The unemployment rate is now flirting with the 6.5 percent level that Fed officials have said would trigger discussions over when to raise benchmark interest rates from near zero.

But policymakers have made it clear that rates will not rise any time soon even if the unemployment threshold is breached.

The private sector accounted for all the hiring in January. Government payrolls fell 29,000, the largest decline since October 2012.

Manufacturing employment increased 21,000, rising for a sixth month. Retail sector jobs fell 12,900 after strong increases in the prior months, the first decline since March.

Construction payrolls bounced back 48,000 after being depressed by the weather in December. It was the largest increase since December 2012.

Average hourly earnings rose five cents. The length of the workweek was steady at an average of 34.4 hours.Book Formlead Big

January Jobs Report Disaster And Other BS From The Department Of Labor  Google

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4 Reasons Why The US Unemployment Rate Will Be At 20% By 2017

Hey, don’t hate the messenger. I am just a financial analyst with a knack for accurately predicting financial markets and overall economies. If you really need someone to blame, I have got a few peeps for you.  You can start with Bush, Obama, Greenspan, Bernanke and every member of Congress/Senate over the last 15 or so years.

It was their irresponsible fiscal management that has led us all into this predicament.  Let’s take a look.

Reason 1:  Today’s Unemployment Reading Is Not Very Accurate

UNRATE_Max_630_378

As per Chart 1, according to the Bureau of Labor today’s unemployment rate stands at 6.7%. However, this number alone doesn’t show a clear picture. It excludes a number of categories. Primarily, those working part-time, but looking for a full time job and those who have given up looking for any sort of a job, exiting the labor pool completely. Perhaps waiting for a better time.   

unemployment rate 2 investwithalex

Now, if you take a look at Chart 2, you will note that the total unemployment rate (including the people above) is at around 12.5%. I believe that is a much better representation of today’s unemployment number. Particularly, when you take distrust in our Government’s statistics into consideration.

In conclusion and according to our Government’s own numbers, the true starting unemployment number  should be at 12.5% and not 6.7%.  I can argue that the overall number is technically higher, but to be conservative let’s go ahead and stick to 12.5%.  

Reason 2: Upcoming Bear Market (2014-17) Will Throw The Economy Into A Severe Recession

This has been my fundamental view for quite a bit of time. Today’s economic “recovery” is nothing more than an illusion driven by massive amounts of credit pumped into our economy by the FED . If you are counting, 3 Trillion over the last 3 years alone while maintaining a negative interest rate environment.

Listen buddy, there is no free lunch.  If you think that these actions to save the US Economy from the “Great Recession” of 2007-09 will be without consequences, you are gravely mistaken.  A few weeks ago my mathematical timing work has confirmed that December 31st, 2013 was indeed the top of the bull market that started in March of 2009. The bear market will last over the next 3 years and take the Dow Jones into the 9,000-10,000 range.  Ushering in a severe US recession.

In such a recessionary environment we should anticipate massive labor force losses as businesses give out pink slips by the millions. Just like they did in 2007-09.

As such, we should anticipate the unemployment rate to go much higher. Let’s be EXTREMELY conservative and assume that the upcoming recession will only retrace 50% of the 2010 unemployment high of 18% as per Chart 2.

This puts our true unemployment projection at 15.25% by 2017 bear market bottom.

Reason 3: ObamaCare

I wrote a detailed analysis about this yesterday. The Congressional Budget Office on Tuesday said that the Affordable Care Act will contribute to the equivalent of 2 million workers out of the labor market by 2017, as employees work fewer hours or decide to drop out of the labor force entirely. 

doctor-obamacare-investwithalex

With the US labor force being roughly 155 Million people, a cool 1.3% of people will lose their jobs in one form or another due to ObamaCare alone. Thanks Obama.  

However, if you read my analysis on February 4th, you would note that I effectively argued that ObamaCare losses are likely to be close to 4 million jobs and not 2 million. Effectively putting additional job losses at 2.6%.

We are now at 17.85% unemployment by 2017.

Reason 4: Productivity Gains, Technological Improvements, Outsourcing & Robotics

It costs about $2.5/hour to outsource your job to either India or the Philippines. Robotics are pushing the envelope for blue color workers and some products out there can achieve a $2.81 hourly run rate…..today. With constant improvements in this new field, some estimate the hourly cost to be down to about $1.50/hour over the next few years.

How can anyone compete with that? Well, you can’t.

Further, productivity gains and other technological improvements will have a significant impact as well. Again, let’s be on the safe side and assume the 4 points above will cost an additional 3 Million in job losses or 2% of the total labor force by 2017.

Putting us at 19.85% true unemployment by 2017 bear market bottom.  

CONCLUSION:

When we get there, the US Government will never admit to this number and will use every accounting trick in the book to hide the reality. Yet, you know better dear reader. Just like today’s unemployment number of 6.7% is not indicative of today’s true unemployment picture, 2017’s true number will be hidden behind the veil of “Economic BS”.  

What can you do? Other than ensuring that your job is safe…..absolutely nothing.  That is the sad part.  As far as I am concerned the scenario above is already baked into the cake and there is nothing anyone can do. Even praying to Jesus Christ won’t help. 

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4 Reasons Why The US Unemployment Rate Will Be At 20% By 2017 Google

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What You Ought To Know About America’s Unemployment Problem

post-unemployment

Reuters Writes: Help wanted: Obama calls on CEOs to help fix jobless problem

WASHINGTON, Jan 31 (Reuters) – President Barack Obama will meet on Friday with a group of chief executive officers who have agreed to make sure their companies do not rule out hiring people just because their resumes show they have been out of work for a while.

More than 300 companies have agreed to a one-page list of “best practices” for recruiting and hiring people from the ranks of the long-term unemployed – a group that has struggled to find work in spite of an otherwise improved economy. “It’s saying that those who are long-term unemployed should get a fair shot,” said Gene Sperling, Obama’s top economic advisor.

The U.S. jobless rate has remained stubbornly high at 6.7 percent, but Sperling told reporters the rate would be closer to 5 percent were it not for the roadblocks to finding work for those unemployed for six months or more.

Read The Rest Of The Article Here

The whole notion of Obama calling on CEO’s to “help fix jobless problem” is an idiotic notion to begin with. A PR stunt. It’s identical to throwing fire crackers at a massive cargo ship and expecting any sort of a result.

The unemployment problem is a function of the overall economy. Business will start hiring when they hit capacity and start growing again. You might scratch your head and ask, well, isn’t our economy is growing fast? At least that’s what the media keeps telling us.  

NO. Again, the recovery you see is artificial. Driven by credit and speculation. Even the primary beneficiaries of this so called recovery (financial institutions able to borrow money for free) are for the most part not hiring. Why? It’s a complex issue. For some it has to do with technological improvements, for others with outsourcing and even robotics.

Yet, the main issue remains. There is no “TRUE” economic growth and too much uncertainty to warrant any kind of a hiring binge. By anyone.

Then there is the big issue of 6.7% unemployment. The number excludes those who have given up looking for work and those who are underemployed (part time, but want full time). If you add both categories into the pool, the true unemployment number is likely to be between 15-20%. That is a massive problem for the economy that is “supposedly” back to its pre 2007 levels.

Is there a solution? I don’t see it. If anything, the situation is about to get a lot worse. As my stock market work clearly indicates we are on verge of a severe bear market and another economic recession.

This will do nothing but make the unemployment problem a lot worse.     

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Is 30-40% Unemployment The Future?

The Economist Writes: Coming to an office near you The effect of today’s technology on tomorrow’s jobs will be immense—and no country is ready for it

robotics and job distruction

INNOVATION, the elixir of progress, has always cost people their jobs. In the Industrial Revolution artisan weavers were swept aside by the mechanical loom. Over the past 30 years the digital revolution has displaced many of the mid-skill jobs that underpinned 20th-century middle-class life. Typists, ticket agents, bank tellers and many production-line jobs have been dispensed with, just as the weavers were….

Read The Rest Of The Article Here      

The article above is an interesting “must read” for anyone with a job. While I agree with the overall premise of the article they have missed a few significant points.

First, as productivity and technology improves over the next decade, what will happen to all of the “white collar jobs” that our economy used to, and to a certain extent, still supports. Will there be another advance, either technological or otherwise, that will eat up excess labor force as it did in the 21st century? That is a difficult question to answer. While I am looking incredibly hard to find some sort of a catalyst, as of right now, I don’t see anything. Maybe it will and maybe it won’t. However, the article is missing a few other points.

Robotics & Outsourcing: Having lived in Asia for a few years, I am here to tell you that outsourcing will take a large bite out of US labor force over the next few decades. Why should I hire an American and pay him at least $15/hour when I can pay a Filipino worker (who is just as good) $2.50/hour. This is basic economics. Plus, robotics are advancing so rapidly now that in many cases the cost of labor is being pushed into the $2/hour territory. I believe you would agree that such a cost will be pushed even lower over the next decade as the cost of technology drops further. Will anyone be able to compete with $0.50/hour robots?   

Finally, there is the question of the US Economy. As I have stated repeatedly on this blog, the state of the US Economy is dismal at best. The unemployment rate is being under reported. The recovery we have experienced thus far has been driven by nothing more than speculation and massive credit infusion. When it ends and the bear market starts, the unemployment rate will surge again. Sadly, I do not see any outcome to reverse my position.    

I know I have asked more questions than I have answered. Yet, a clear trend is evident. There is a tremendous amount of pressure on the US labor force. All of it is negative and none of it is going away anytime soon. If anything it will intensify over the next two decades.

So, is 30-40% unemployment rate possible? While it seems extreme, I wouldn’t rule it out. Anything is possible. Some sectors of Greek and Spanish economy are already there. One thing is for sure. Make yourself as valuable as possible so your job cannot be axed.

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Is 30-40% Unemployment The Future? 

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Still Unemployed? Don’t Worry, Many Others Will Be Joining You Soon

Reuters Writes: U.S. job growth weakest in three years

 unemployment investwitalex

WASHINGTON (Reuters) – U.S. employers hired the fewest workers in almost three years in December, but the setback was likely to be temporary amid signs that cold weather conditions might have had an impact.

Nonfarm payrolls rose only 74,000 last month, the smallest increase since January 2011, and the unemployment rate fell 0.3 percentage point to 6.7 percent, the Labor Department said on Friday. The unemployment rate was the lowest since October 2008 and in part reflected people leaving the labor force.

Read The Rest Of The Article Here

WOW. Really? Due to cold weather? I am shocked.

The real reason behind this is rotten fundamentals of the US Economy that are getting worst by the day. Please don’t get me wrong. I am acutely aware of how the US Government and our financial media “propaganda machine” portrays recent gains in the stock market. According to them the economy is doing great, everyone should join hands and sing kumbaya as the stock market takes off to infinity and beyond. Making us all wealthy in the process.

Yet, the reality is quite different. Even thought they have pumped a tremendous amount of money into the economy, it is getting weaker by the day. There is no pricing power and businesses are not hiring due to uncertainty. I continue to see this in the quarterly reports that I read. No matter what they want you to believe, the jobs are not coming back anytime soon. In addition to poor economic conditions, productivity gains, outsourcing, technological advances and even robotics are all taking a tall on real job creation.  

The bottom line is this. If you have a good paying job….treasure it. If you don’t, try to get whatever you can.  As the bear market starts in 2014, corporations and businesses throughout the US will hand out pink slips by the million. Just as they did in 2000-2004 and 2007 – 2010.  I wish that wasn’t the case, but the reality can be harsh sometimes.    

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Still Unemployed? Don’t Worry, Many Others Will Be Joining You Soon