Okay, we’ve had some time to dig through and digest this morning’s jobs report. We’ve gotten over our initial surprise, we’ve read all the various takes on it from the Street, we’ve looked at what the markets did in response, we’ve put the broken shards in our mouths and chewed on them, to get the real taste of it all, and we’ve finally got out big picture take-away.
This report blows.
There really is no better way to put this. Today’s jobs report was awful, and not just because the initial numbers themselves were bad. The revisions to last year’s numbers were bad as well, and if you’re looking now for a trend, it’s this: the economy isn’t creating near enough jobs, not by a long shot.
That will have, as the econoboys like to say, ramifications.
Okay, quickly from the top: the economy added 36,000 jobs, the unemployment rate dropped to 9%. The first number is bad, the second number is good. But the reason the second number even exists isn’t good: the unemployment rate dropped because the labor force declined. The labor force declined because half a million people left the labor force.
If we took three million unemployed Americans, and dropped them into the Grand Canyon, the unemployment rate would plummet, know what I mean?
The economy added only 36,000 jobs in January. That’s an awful number, and while the Street’s writing it off as snow-related, ask yourself this: did snow prevent the creation of 200,000 jobs? Because we need to be adding somewhere north of 200,000 a month, every month, for years, if we’re going to get the unemployment rate down somewhere where Pa Joad wouldn’t recognize it.
Lets say the snow did somehow prevent a couple hundred Americans from finding jobs (we don’t buy it, it’s total spin, but whatever, let’s roll play,) and that pent-up demand results in a big jump in payrolls in February. Let’s say February brings in, says, 230,000 new jobs. You still have to average the two months out, which puts you at around 130,00 some-odd jobs a month; still barely enough to keep up with population growth.
Of course, next year we’ll probably find out that this year’s numbers were too high, when the BLS does its annual revisions.
Because more important than either of those headline numbers were the revisions to last year’s numbers. This is where the trend really comes into focus. Up until about three hours ago, we all assumed the economy created 1.1 million jobs in 2010. Not enough to even whittle down the unemployment rate (unless the Grand Canyon solution is being employed), but still a positive number.
The BLS explained that in December 2010, there were 130.2 million working Americans – 483,000 less than originally reported.
One loyal reader suggested we start calling this funemployment. Anything to make it seem better than it is, right?
As Barry Ritholtz explained this morning, the monthly number is subject to heavy revisions, and what you should be really be looking at is the trend. Looking at what we’ve seen over the past 13 months, what kind of trend do you discern? A strong one, or a weak one?
(Image: Library of Congress)