U.S. employers added 146,000 workers in January, less than expected, BLS reported. The unemployment rate fell to a three-year low of 5.2
percent as more people dropped out of the labor force.
As to the ever-decreasing unemployment rate, that’s thanks to NILFs – People who are Not In Labor Force. Once a claimant exhaust benefits and stops looking for work, they actually make the unemployment data look better. I’ve been working with a friend at Bear Stearns on this, and I may have an interesting analysis of the BLS data sometime in the coming months. Suffice it to say, the low data point much less healthy than it appears. (See the most recent Augmented Unemployment Numbers, or our previous discussion on the subject).
I will continue to take "the Under" against my Economist friends until that becomes a losing trade regarding the employment situation report. And, I continue to be astounded by the Dismal Scientists’ capacity for self-deception. It reminds me of that wonderful exchange between Jeff Goldblum and Tom Berenger in the Big Chill:
JG: I don’t know anyone who could get through the day without two or three juicy rationalizations. They’re more important than sex.
TB: Ah, come on. Nothing’s more important than sex.
JG: Oh yeah? Ever gone a week without a rationalization?
The bottom line is that we are continuing to muddle through the what looks like the worst post-recession job creating recovery in history, and much of the dismal set continues their ongoing rationalization.
Incidentally, we have Merrill Lynch to thank (via Alan Abelson) for this fascinating chart:
The sooner economists go back to their models and figure out a) why this is so, and 2) why they have been so wrong for so long, the better off we all will be . . .
Security and Securities
Up And Down Wall Street
Barron’s Monday, February 7, 2005