NFP stinks — and Some People Still Don’t Get It

Today’s NFP number stunk the joint up: 75,000. That’s half of the monthly population growth, meaning the percentage of people working (relative to pop) actually went down, if we are to believe this data. 

Astonishingly, some people STILL do not understand the data or the context of the weak job growth within this recovery. To wit, my friend Cody Willard – a telecom strategist – writes:

"Surely, Barry, you’re not seriously trying to rekindle your argument about "job creation is not what it is typically at this phase of a recovery."

That statement has been a cornerstone of your bearish rants for the last couple years. Yes, I know you’ve been a "trading bull" and what not, and rightly so, but this economic argument of yours has been, in my view at least, wrong for the last few years and now that job creation is finally starting to slow — years after your repeated flagging of how this "recovery" (You still call this a "recovery" btw?)"

Ahhh, poor Cody. He is lost in a sea of data, unable to see the truth. He believes the spin.

Rekindle? Just because you close your eyes, the boogie man doesn’t disappear.

Hey Cody, please cite me some data revealing this to be an above-average private sector jobs creation recovery. Hell, I’ll take average.

You won’t, because you cannot.

Cody is engaging in several analytical foibles, but the best way to describe it is "ignore reality." But his subjective error does not change the objective reality for the rest of us: By any honest measure – e.g., NY Federal Reserve or Cleveland Federal Reserve research — this has been the worst modern jobs recovery on record.

This is not a meme I am pushing or a Bear story I fabricated.

It just “is.”

This doesn’t mean you run out and short everything; as I wrote last December, one should Never Confuse Economic Analysis With Trading.

But comprehending the reality of the economic situation is important. Why does this matter?  What Cody fails to consider is the importance of understanding the specifics of how a recovery comes about, and how it compares to prior recoveries. What it means as the massive government stimulus that goosed the economy begins to fade. What happens when the Pig is finally thought the Python?

I expect that as we begin to slow, there ain’t a whole lot of fat to get sliced. As unemployment starts ticking up, it will not be pretty. It suggests the next recession will be more severe than the last one. 

Yes, Virginia, there is inflation. And yes, Cody, this has been the worst Jobs recovery since WWII. But if you want to believe in Santa, who am I to disabuse you of that notion?

>

UPDATE:  June 2, 2006: 12: 47pm

Cody and I finish the debate below

>

Cody responds:

 

That Rocking Economy From the Past
6/2/2006 12:42 PM EDT

Barry, nice job ignoring the points that
you’ve been trying to make using your repeated bearish rants about how this job
growth cycle wasn’t up to a handful of other job growth cycles that you’ve
measured using the incredibly silly and faulty data provided to you by a bunch
of politically motivated bureaucrats.

Nobody’s arguing that the results of the way you’ve bothered to measure job
growth show that this cycle pales in comparison to a few recent ones in the past
50 years. And that’s relevant to my investing decisions how?

The part that I’ve always taken issue with and that I continue to take issue
with has nothing to do with your use of government data. It’s all about your
economic conclusions based on that data. Such as, in the post I linked to
earlier this morning, when you wrote in April of 2005, "And as I have lamented
over and over again on this site, an economy unable to create new jobs at a
robust pace — like this one has failed to — is not a healthy economy."

It was indeed a healthy economy.

Do I think that today’s economy is as healthy as it was last year when we
debated its health? No. That’s partly why I remain mostly in cash.

Do I think that today’s job growth number means that this economy is doomed?
No. That’s partly why I will be looking to start buying stocks again soon.

The job growth during the last few years was plenty to keep this economy
strong and to keep the earnings growth of my favorite stocks going strong. That
is what matters, not whether you’ve found a way of determining that payrolls as
measured by the government are growing in the same way they happened to when
Elvis or when the Beatles or when Pearl Jam reigned.

To which I reply:

 

Now we get to the Heart of the Matter
6/2/2006 1:19 PM EDT

Ahh, Cody, now we get to the heart of our
economic differences.

In my analysis, this has been an extremely aberrational, stimulus driven
economy. It’s relied on government handouts — big tax cuts, deficit spending,
two wars, ultra low rates — as opposed to the normal organic growth we have
seen under normal circumstances.

You think "It’s rocking."

My frame of reference is 1973 (I disagree with those who think the 1929
comparison is more apt). This framework is part of the reason I expect there to
be major economic dislocations in the future.

You claim it is "indeed a healthy economy."

The gov’t stimulus during the past few years was sufficient to keep the
economy moving forward. Earnings growth has been driven in large part by
government spending, by overseas demand, by corporate cost cutting, improving
efficiencies and productivity gains.

The consumer has exchanged 3 trillion dollars worth of home equity for
assorted "stuff." Their savings rate is negative, and their real income has lost
ground.

This is what you describe as a "strong economy."

As to Equities, many studies have shown that the ideal entry for stocks is
hardly when earnings growth is terrific but softening; Rather, it’s when year
over year S&P500 earnings gains are poor, but improving.

Time will tell which of us is correct. I think we will know by January for
sure who’s right. Dinner’s on the loser…

Cody’s reply:

Re: The Heart of the Matter
6/2/2006 1:37 PM EDT

Hey, Barry, don’t put words in my mouth there, buddy. I said it WAS a rocking
economy last year when you said it WASn’t. That’s past tense.

Aberrational? Oh, as if there’s some standard of normalcy for the economy?
LOL. What I wrote is that you have been dead wrong in lamenting the health of
this economy FOR THE LAST FEW YEARS. Past tense, see? Yes, I am now worried that
this economy IS no longer healthy. Present tense, see?

Fun stuff, man. Love the debate.

My turn:

Potato, Po-tah-toe
6/2/2006 2:21 PM EDT

So we both are now saying the economy is decellerating and heading for trouble?

It appears our differences is how we got here: I say its been a long
time coming, ’cause she never was that healthy to begin with; you say
the economy WAS rocking but is now a cause for concern.

So where do we really differ? I still adhere to the belief that
understanding the actual health of the economy beneath the government
data. Is this a healthy expansion? Where is the growth? What sectors
are doing well and why?

I believe the key to understading what could happen in the future is
how we got to where we are now. Again, my analytical read is because of
the government-stimulus driven strength, any subsequent weakness may
potentially be severe. I tend to agree with Northern Trust’s Paul
Kasriel, who has said, this is an "accident prone economy."

What say ye?

Cody’s last word:

Potatoes…or carbs?
6/2/2006 2:32 PM EDT

Barry, that’s two posts in a row that you’ve put words in my mouth. Sigh.

Look, I am concerned about the health of this economy for the first time in a
long time. That’s far different from being in your camp of (STILL, I might add)
saying that we’re headed for trouble.

My last words:

We do disagree!
6/2/2006 3:33 PM EDT

I don’t want to put words in your mouth, Cody. I am merely inquiring as
to where we have key disagreement. I think our discussion today has
clarified where we are at odds.

On a related note (and answering Richard Suttmeier’s question), a study
done by Asha Banglore (also of Northern Trust) back in April of 2005
found 42% of all new private sector jobs were Real Estate related.

This has been fun, Cody, and I am looking forward to checking out your
new digs next week. Enjoy the weekend, and be sure to cacth tomorrow’s
linkfest (now with more niacin than before!)

 

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What's been said:

Discussions found on the web:
  1. erik commented on Jun 2

    barry,

    do you still suspect that we will visit lower lows over the coming weeks as previously suggested. looks to be following a classic abc pattern with the indices? take care.

  2. trader75 commented on Jun 2

    Come on Barry, you know you’re just jealous of the Codester ’cause he’s a Teen Beat magazine cover model and you’re not:
    http://tinyurl.com/fc7hr

  3. gildo commented on Jun 2

    devils in the details my boy…….resource utilization is going to drive the fed higher and higher……solid wage inflation…..softer job creation are the contributing factors as outlined by the report

  4. DBLWYO commented on Jun 2

    As Barry implies we need approx. 150K jobs/month to net out zero for new job creation against labor force historical growth + ‘natural’ long-term growth; or at least that’s the figure of merit.

    If you are so inclined you can download the payroll data and look at the statistics as far back as you care to. And even graph them courtesy of Exel. Having performed that little exercise I’m happy to say, but very unhappy to know, that new jobs were < 150K until Q304 and have been oscillating around net new of ZERO since then. If you then look at cumulative net new jobs since then we are still in the hole - that is we've not replaced lost jobs - by approx. 1.8 Million jobs. And people wander/wonder why consumer demand is flattening and headed down ? As(again) Barry has pointed out this 'recovery' has not achieved organic growth where internal factors self-reinforce increases in spending or hiring.

  5. SINGER commented on Jun 2

    Does someone have a quick def. of STAGFLATION and are we either going there or there already???

    Just because the economy slows doesn’t necessarily mean that inflation goes away does it??

    Esp. if the money creation minus M3 reporting continues..

    Thanks

  6. Michael C. commented on Jun 2

    The only data that I specifically remember Cody citing is when he says that GOOG is the fastest growing billion dollar company in the history of the universe or that CSCO just made all-time high revenues even surpassing the dot com era. And he will italicize “all-time high.” And he enjoys the technology out there that is ongoing.

    But hard economic data I have never really heard him elaborate upon.

    I enjoy both your and Cody’s commentaries as you guys are great for trading.

    I also think alot has to due with your natures. It seems to me that Cody is an optimistic appreciative country boy by nature that enjoys the fruits of technology. You, of course, also enjoy technology, but by nature are more of an “economist” and skeptical.

  7. Bob A commented on Jun 2

    maybe we should call this a “bushovery”

  8. MASH commented on Jun 2

    Cody the punk just needs a good haircut, then maybe we listen to his crap.
    Barry remember to wear a nice tie when on CNBC very important (show biz) stuff!!!

  9. B commented on Jun 2

    Cody suffers from the ill you mentioned a few days ago. Bull market babies? I can’t remember what you called it. He’s not old enough to have lived through a time when markets didn’t go up forever so he’s basically a perma-bull. And because it appears he hasn’t studied history or the wisdom of those who benefitted from living through these times, ie Buffett, Mamis, Livermore, Graham, Grantham, Donchian, Deemer, Murphy, Edwards, etc., he’s dangerous.

    Buy the dips Cody. Or as I like to look at it, the Pavlovian response of the retards is to buy the dips. Time and again they are rewarded for doing so in a bull market. That conditioning creates a self-reinforcing delusion that works until it no longer works. Then the bear takes his money and doesn’t give it back. I am da bear.

  10. Uncle Jack commented on Jun 2

    hey, anyone who rates his own iMac as a “6” is out to lunch.

  11. Mike M commented on Jun 2

    I agree. Economic growth has been fueled by the debt explosion, not employment and real income growth. Quite unsustainable.

  12. Michael C. commented on Jun 2

    Speaking of Cody, does anyone have his performance numbers for his newsletter or fund?

  13. me2200 commented on Jun 2

    “this has been the worst modern jobs recovery on record.”

    I agree with you Barry. How can anyone argue. The mantra of the early 2000s was to move jobs offshore. We did that in droves. And now we have the trade deficit to prove it.

    This just in: foreclosures are jumping in CO.
    http://thehousingbubbleblog.com/?p=791

    If you think the jobs number was weak this week, just wait until half the housing sector is laid off.

    The market topped on May 10th. Deal with it.

  14. jab commented on Jun 2

    Barry,

    I take you over Cody 99 times out of 100. But this time I disagree with everyone that keeps harping on the “jobless recovery”. In the last recession unemployment never went up that much. Unemployment stayed at a low so it should not be surprising to have a lower level of new jobs in the recovery.

    That being said I do think the recovery is not that solid and have been fueled mainly by loose monetary policy.

  15. me2200 commented on Jun 2

    I’ll bet $20 that the emerging markets sell off again over the NFP numbers. And then the hedgies will have to cover more margins, and on Monday we will sell off.

    Everyone seems to be forgetting the weak vehicle sales numbers we got yesterday.

  16. dude commented on Jun 2

    While many domestic jobs are outsourced the job growth is not a direct indicator of economic health. You can produce and consume things without employing people in this particular country. Yes, consumption could be outsourced, too.

  17. me commented on Jun 2

    “Surely, Barry, you’re not seriously trying to rekindle your argument about “job creation is not what it is typically at this phase of a recovery.”

    Let’s hear Cody and Paulson tell that to the 2700 at Heinz, 5,000 at Sun and 16,000 at Intel.

    I would argue that you can count on one hand the times during the last 5 years revised job creation equalled the AVERAGE during the Clinton years.

    And how lame is the 150,000? Every year the population increases and still we only need 150,000 to absorb new workers.

  18. Michael C. commented on Jun 2

    Cody counters you Barry by saying…”It was indeed a healthy economy…The job growth during the last few years was plenty to keep this economy strong and to keep the earnings growth of my favorite stocks going strong.”

    Does he cite any numbers? No. And to what earnings growth is he referring? AAPL MRVL? He is so adamant yet so very vague. He says that government statistics can be politically tweaked, as if earnings numbers cant’?

  19. donna commented on Jun 2

    The real fun is going to be as the real estate and construction jobs go, and we add those folks back to the labor pool….

  20. B commented on Jun 2

    Ok, for those who say this is not a jobless recovery, how about another statistic to slice it a different way to show you how precarious this recovery is.

    Top three job creation areas this cycle?
    1) Real estate
    2) Mortgage specific finance jobs
    3) Retail

    So, from this what can you draw? Our economic growth this cycle is predicated on building houses, financing houses and finally……………furnishing our houses.

    Forget about the NARI statistics on house prices still going up. That is total bullsh*t. They are either twisting data to not take into account square footage costs, nominal pricing or YOY pricing or some other twisted measure. They have a vested interest in keeping this market going as long as they can. It’s like asking the fox if he’s been in the hen house. Housing is cooling. If it really cools, where do all of these jobs created this cycle go? I’ll tell you. Bye bye. More importantly, what happens to the consumer psyche?

  21. Lord commented on Jun 2

    It really hasn’t been a recovery at all. Only a recovery in profits.

  22. Bob A commented on Jun 2

    I don’t know about where you are Donna, but where I am the housing jobs are mostly Mexican and mostly illegals, so I wonder if the loss of those jobs will show up in any official numbers. For that matter, when we have 10,000,000 illegals working in this country, what the frig meaning does 50,000 ‘official’ jobs have ANYWAY???

  23. Bynocerus commented on Jun 2

    Lotta Cody haters in the crowd. And although I disagree with him on the issue at hand, I happen to think Mr. Willard is a very good trader. He’s the yin to Barry’s yang.

  24. Bob A commented on Jun 2

    I think the editors at Real Money and CNBC put Cody up to his contrariness just to create drama.

  25. sell_the_dow commented on Jun 2

    If you had listened to Cody Willard you would have bought MSFT at 27:

    http://makeashorterlink.com/?U2513243D

    Somehow Cody doesn’t strike me as a trader at all. More like someone who is on CNBC everyday because of some powerful family connection (hence Kudlow’s disparaging nickname The James Dean of Telcom.)

  26. trader75 commented on Jun 2

    I think some of this stuff goes back to one’s point of origin. The guys who cut their teeth in the technology world seem to be congenitally optimistic to a greater degree than other market participants–maybe because they spend so much time checking out cool gizmos and thinking about progress.

    Altucher seems to be another one… really good stuff most of the time, but he also has a bit of that techno-gloss going.

    The mildly annoying thing about tech-head commentators is how they casually apply their narrowcast views of tech-land to the rest of the world, and how often it just doesn’t work. Apple and Cisco may be great companies, but hwo much of the US economy do they represent? Extrapolating trends from Silicon Valley to the rest of the country is like using Pixar as a model for understanding the rest of Hollywood. It’s just goofy.

  27. B commented on Jun 2

    Come on Byno. Don’t be a sycophant or I’ll steal your canned green beans. I doubt anyone on here hates anyone. Especially someone they don’t know. But, I believe what people don’t like, despise or feel little tolerance of are the constant stories of never ending riches coming out of Wall Street. There’s never a bad time to invest in equities when it comes to Wall Street. And it appears there is a general crescendo in pumping right near the tops. You, of all on here, know that.

    Compare that to Richard Russell as an example. Someone who has lived through it all and heeds history, human behavior and those who were brilliant before him. Paraphrasing him – The smart investor waits patiently for his/her opportunity. Whether that be months or years. They feel no compulsion to always be in the game.

  28. Get Long Vega commented on Jun 2

    Cendant’s CEO was quoted in the press about a month or two ago. In short, he said NAR’s fluffy sales and price data are rubbish across the board. The housing market, he said, is much worse than NAR says it is.

    Cendant, in case you don’t know, owns a bunch of businesses, four of which are Century 21, ERA, Coldwell Banker, and Sotheby’s International Realty.

    The recovery has been led by the consumer, and the consumer has been led by housing, and housing has been led by real interest rates going down-down-down.

    Reverse the thesis, play it backwards…

    Willard: Are you crazy, God dammit? Don’t you think it’s a little risky for some R&R?

    Kilgore: If I say it’s safe to surf this beach, Captain, then it’s safe to surf this beach! I mean, I’m not afraid to surf this place, I’ll surf this whole fuc%ing place!

  29. trader75 commented on Jun 2

    I love the smell of napalm in the morning…

  30. B commented on Jun 2

    I love the smell of napalm in the morning. It smells like………..victory.

  31. B commented on Jun 2

    Ok, now that is too freaky.

  32. Bynocerus commented on Jun 2

    Didn’t realize I was a sycophant for saying I thought someone was a good trader. By that logic, Barry is gonna have a hell of a time digging us all out of his ass. Nice Apoc Now spoof, though.

    I do get the impression that a lot of people, both here and on other pro sites such as RM think that anyone who disagrees with them is retarded. I disagree with Cody quite a bit, but he’s made a bundle this year.

    You’re more than welcome to get those green beans any time. In fact, the wife looked at me last night and asked me to take them up to the attic; she has a lot of shit she wants to eat that there’s no room for in the pantry. We can fire up a few j’s and eat the beans when we get the munchies – lol.

  33. Mark commented on Jun 2

    So when the Blackhawk crashes and explodes in his alley Cody wants to be the first one to shout “Medic!”, eh? While it was taking fire from all sides and as it burst into flames and plunged from the sky, it wasn’t his concern, he was just “trading”. You da man, Code-ster.

  34. david commented on Jun 2

    Where did you get Cody’s performance data? I can’t believe he’s made any money in tech unless he has been short or selling lots of puts…

  35. David Silb commented on Jun 2

    My definition of STAGFLATION is high unemployment with high inflation but its fueled by a waivering Federal Reserve Bank.

    Oh Poul Volker. Where are you!!!!

    Paul Volcker
    (b. 1927)
    Paul Volcker has served as undersecretary of the Department of the Treasury and president of the Federal Reserve Bank of New York. His eight-year tenure as chairman of the Federal Reserve began in 1979, one of the most challenging economic periods in modern U.S. history.

    Now thats a resume leading statement.

  36. B commented on Jun 2

    So, did the Fed waiver in the early 70s when the cycle of interest rate bottoming and inflation pressures built much more rapidly than today and trancended wage inflation? I don’t see that. They jammed rates to the moon and cratered the economy. Exactly what people are calling for today except we don’t have wage inflation. Or at least not yet.

    Volcker was a great Fed Chair but there is some context that greatness may be created by the situation rather than the person. There is some argument Volcker had it easy. His job was well defined. Inflation was a mess and the markets had no confidence. He knew exactly what he needed to do and he needed to answer to no one to do it. He stopped inflation.

    Bernanke has a tougher job. Is it inflation? Deflation? Housing bubble? What does he do? It is less clearly defined. His mandate is price stability and that means deflation as well as inflation and full employment. So, what does he do here? Raise rates and surely crater employment and possibly cause a serious hard asset deflationary cycle? Leave rates alone and risk imbalances possibly building? And when the economy craters, if it does due to his actions, what does he do? Lower rates quickly to try to stave off what could be a deflationary mess and, thus, cause additional inflation to build in the system? Or just let the economy crater because there is no way out because the only answer to purge the excess is to take your medication and hope for the best.

    Bernanke was dealt a big bag of shit. Volcker had it neatly wrapped up with a bow tie and had it hand delivered. So, did the situation create the greatness or did the man? Or a little of both?

  37. trader75 commented on Jun 2

    Sad to say, but Volcker would probably be powerless today. We’re too far down the Keynesian path… the patient is too sick (i.e. too loaded with debt) to handle medicine that strong.

    Today’s data is just further confirmation of the box canyon Bernanke is in. Fight inflation and kill the consumer… or go easy on the consumer and let inflation rip. If the commodity boom goes bust and puts a nasty deflationary twist on things, it’s stimulus to the rescue. No other rescue mechanism available.

    Volcker probably thanks his lucky stars that he’s on the sideline right now. The old order of things is going to be swept away.

  38. me commented on Jun 2

    “Ok, for those who say this is not a jobless recovery, how about another statistic to slice it a different way to show you how precarious this recovery is.

    Top three job creation areas this cycle?
    1) Real estate
    2) Mortgage specific finance jobs
    3) Retail”

    Oh the CES model. Of the 75,000 jobs this month, 211,000 were the CES model.

  39. paul commented on Jun 2

    I think part of the key is Cody’s comment
    “The job growth during the last few years was plenty to keep this economy strong and to keep the _earnings growth of my favorite stocks_ going strong. That is what matters,…” emphasis added

    Cody is looking at a few stocks & Barry is looking at, well, ‘the big picture.’ Because you can identify a few good stocks doesn’t mean all’s well with the larger economy.

  40. Mark commented on Jun 2

    paul-

    That was the point of my comment about Cody “just trading”. He could care less if his partner had cancer. It was just a one night stand, man. It’s all good.

  41. Morgan commented on Jun 2

    Seems to me that Barry has been looking at fundamentals, and Cody has been looking at momentum – but momentum is dead.

    I’ve been almost perma-bullish on the economy and the markets – I think I called it a “boom” less than six months ago. So much for that. Initial jobless claims have been trending up for several months now – my pet indicator that things are about to go splat.

    Plus, the trend toward downward revisions to the NFP numbers continues. (Synergy, that, eh me? – the CES model has been consistently overestimating job creation).

    More job destruction, slowing job creation – seems like a bad mix to me.

    People keep telling me different things about what the run-up in commodities and assets means – all I know is it makes me verrry nervous.

    And we did have a brief yield curve inversion there, didn’t we?

    You ballsy fellas feel free to guess the top. I’m out.

  42. Get Long Vega commented on Jun 2

    I kinda disagree. I think Volcker had a tough job to do. The country was a complete shi7$how then. So sure, the easy thing to do is raise rates, right? It didn’t quite go down like that. Volcker targeted the money supply to combat inflation, and of course that in and of itself was very controversial. So he had to stick to his plan and literally break the back of the economy when everyone and their sister was begging him to lower rates, couldn’t he see the economy was on its knees? BEGGING. Take a look at the massive swings in interest rates vs. inflation back then. They were wild. He had the nerve to stick to a plan, which in retrospect sounds easy. But it’s not, I swear, it’s not. Just ask any neophyte trend trader how easy it is to stick to a trading plan. You can print your plan in the paper and guess how many people have the nerve to follow it through all its ups and downs. Plus, he not only had price inflation to deal with, but he had the whole banking lobby to deal with. Part of the reason inflation was so bad to begin with was the fact that demand deposit interest rates did not float back then!!!!! Can you imagine? Effing long rates through the roof and the banks didn’t have to pay squat to their funding base. So, if you are a banker, what do you do? EASY. You make loans until you can’t make any more loans. Think of the spreads!!! So that’s what the bankers did. Rates would go up and guess what? People would effing clamor for loans and the bankers squealed with delight. The economy was swimming in money. Volcker had to stop all that and the world HATED him. Carter, Congress, mom and dad, you and me, pretty much everyone hated him for driving the economy into the dirt. But he had to do it.

    Anyway, just another opinion…

  43. Get Long Vega commented on Jun 2

    “begging him to lower rates [VIA THE MONEY SUPPLY]…”

  44. Bynocerus commented on Jun 2

    As recently as ten years ago, Volcker was reviled in many financial circles. Interesting how perspectives change over time.

    Biggest development of the day is the inversion of the Fed Funds rate and the 10 year. Not very often when we get an inverted curve, followed by a normal curve, followed by an inverted curve, and historically, when we do, all hell is about to break loose.

    Still think we bounce to new highs in the next month, but watch out after that. 100% Cash in all accounts.

  45. john commented on Jun 2

    Let me ask this erudite crowd the following question (look it up I’m too lazy to find a different word for “erudite”). If I own a company in the US that sells a product in the US and instead of hiring 100 workers in the US to make that product I contract the job to a company in (whereever) then the 100 workers are not counted in the US job statistics. But the fruits of the labor that I gain from that contract produces profits for my company here in the US so I can claim that my business is “recovering” in the face of no job gains – yes?

    I’m serious – I really believe that the answer is pertinent to this discussion. That’s because it seems that it is possible to have a booming economy without the US labor force being directly involved.

  46. adam commented on Jun 2

    I’ve talked to managements of a couple of infrastructure-type tech companies in which I invest. They are very worried, but not about business prospects. They can’t find enough skilled help.

    One company is trying to hire 100 workers that it dosen’t actually need at present. Why, anticipation that it will be even more difficult to find workers later this year.

  47. Cherry commented on Jun 2

    What kind of skilled help? I got plenty of people I know need a “real” job.

  48. C commented on Jun 2

    “… it seems that it is possible to have a booming economy without the US labor force being directly involved.”

    They ARE involved…as consumers!

    The elephant in the room is Globalization. Our thinking and our paradigms still haven’t caught up. We pore over reams of data that only show us a fragment of the global picture. The “U.S.” is a convenient abstraction…kind of like the dollar (ahem).

    As for the REALLY big picture, may I suggest: “There is no spoon.”

  49. C commented on Jun 2

    “They can’t find enough skilled help. ”

    Anecdotal: I walked into the local employment agency yesterday and handed them my resume. I have lots of experience with MS Word, Excel, Quark and Quickbooks. They were practically falling over themselves to sign me up.

    I get the feeling there is a dearth of people out there with solid skills and work experience. Can wage increases be far behind?

  50. B commented on Jun 2

    Give them time. They’ll find plenty of labor. Most companies haven’t even heard of the business cycle let alone the concept of managing your business profitably through the business cycle.

    ie, Similar to the herd piling in to inflated assets at the peak, the herd of business executives are usually incorrectly enthusiastic and caught hiring at the peak. Remember what it was like for someone in tech in 1999 and 2000? Their salaries doubled overnight.

  51. muckdog commented on Jun 2

    That’s what makes the CC over at realmoney fun to read, though. Different folks have different ideas, and also different ways to make money. Except I’m not sure if that applies on Cramer’s blog comment thread.

    B, salaries in tech were WONDERFUL in the late 90’s. Before the globalization of those jobs, anyways. But it was a golden era.

    I think we’re near full employment and that’s why the job recovery hasn’t been that strong. It never got that weak after the one bad quarter in 2001. We have slow and sustainable economic growth. The danger is that if we suddenly needed tons of workers, we probably would see the wage binge like we did from 1999-2000 that would get the Fed really moving on those rate hikes.

  52. VJ commented on Jun 2

    They had to add 211,000 “IMAGINARY” jobs just to get the number up to a +75,000.

    Goebbels, paging Josef Goebbels…
    .

  53. whipsaw commented on Jun 2

    per VJ:

    “They had to add 211,000 “IMAGINARY” jobs just to get the number up to a +75,000.”

    I assume that you are referring to seasonal adjustments, altho I had not actually seen that figure, and was wondering when somebody was going to point that out. For my own part, I will offer the generally thankless observation that US unemployment figures are a joke since they omit anyone who has given up looking for work in utter despair. One consequence of that convenient convention is that as an economy grinds down over a protracted period, “unemployment” can actually appear to be improving the worse things get.

    I have been viewing things as heading into stagflation since the first of the year. All of the elements are there- maxed out debt load, burgeoning energy prices, the malaise that a long, unpopular war and loss of confidence in the honesty and competency of govt. brings. If you are old enough to rewind to 1972-74, you may agree.

    The main differences now are that we have not seen Bush experiment with wage and price controls like Dick did and the media has become nothing more than an arm of the corporate state. There is also the small matter of no longer producing anything in the US that is useful except weapons systems and commodities. But the end game is the same and I suspect that we are looking at a decade of general decline.

    So on that note, have a nice weekend!

  54. VJ commented on Jun 2

    ‘whipsaw’ posted:

    “I assume that you are referring to seasonal adjustments…”

    No.

    The reference was to what this administration has titled the “CES Net Birth/Death Model” of adding completely imaginary jobs to the monthly unemployment report. Go here and scroll down:

    http://stats.bls.gov/web/cesbd.htm

    Given the present Labor Participation Rate, there is NO basis for estimating that the employment numbers are underrepresented by hundreds of thousands of jobs every month.
    .

  55. whipsaw commented on Jun 2

    ah, I see. Very interesting, more govt. fraud, thanks for the heads up.

    But what were the aggregate seasonal adjustments? I did look at the full text employment report but never saw a net total.

  56. jcf commented on Jun 2

    10-year yield closing below FF today also another distressing indicator.

  57. jcf commented on Jun 2

    Oops. I see Byno got there first with the latest inversion.

  58. juan commented on Jun 2

    For a diferent, and in my opinion more complete, analysis of ‘stagflation’, one which looks to multiple causalities, try this paped by Fred Moseley.

    ‘The United States Economy at the Turn of the Century’
    http://www.mtholyoke.edu/~fmoseley/moseley1.html

  59. whipsaw commented on Jun 2

    per Bynocerus:

    “Still think we bounce to new highs in the next month, but watch out after that. 100% Cash in all accounts.”

    Since the market is full of some pretty stupid people, I am inclined to agree about the new highs, but have a timing problem. I have a bucket full of SPY, QQQQ and IWM puts and am comfortable with almost all of them since they have expiries between Sept and Jan, but I’ve got one SPY that I paid too much for that expires in July. I’m not sure if that gives me enough time to ring the bell and am thinking that maybe I should dump it on the next deep dive before euphoria sets in again for a few weeks?

    Otherwise, I see a severe ass-whipping coming to the longs notwithstanding whatever electioneering efforts are made in Sept-Oct. Everything is fundamentally brokedick already, regardless of what Bernanke may do.

  60. alex commented on Jun 3

    Barry,

    I have commented on this before, but here goes: Since the last recession millions if illegals have arrived and found jobs in the U.S. Maybe you live in North Pole, Alaksa but for the rest of us – we have eyes. You don’t believe the goverment on inflation statistics and I don’t either, but you do believe the government on jobs. Please!! The government doesn’t count the working illegal aliens in either the establishment survey or the housegold survey. Illegals are working here in the millions. Get used to it.

  61. pseudolus commented on Jun 3

    I’m not a economist, but here’s what I see as an ‘outsider’. I think the unemployment numbers are too low. Many folks have just dropped out of the job market. Also, many people are ‘disemployed’ i.e. they are working at jobs below where their education/work history levels would seem to indicate they should be. And don’t forget those burger flipping jobs are now counted as ‘factory’ employment (or did they drop that line of reasoning?)

    Plus, I have noticed recently, a surge in pawn shops opening and ‘pink slip’ and ‘paycheck’ loan outfits popping up on tv. These I would think indicate a worsening of the economy for the average guy. Most of the bloviating I hear about how wonderful the economy is doing is all done by talking heads on tv who are, no doubt, heavily invested in Wall St.

    If you will observe, most news outlets have dropped almost all coverage of labor issues. There used to be a labor section in many newspapers (even whole newspapers) but these have vanished and we rarely get any labor news unless it is effecting some corporate bottom line.

  62. Econbrowser commented on Jun 3

    Indications of slower growth

    This week’s data paint a picture of slowing growth.

  63. snook007 commented on Jun 3

    Boy’s. turn me back on ya and your at it again.. Hey, whatever happened to that phantom numerator known as productivity over unemployment….so many variables underpinning our economy that’s not accounted for. The work force is changing, has been for a while to favor productivity over gross employment. I bet half the unemplyed retiries, like myself, still write good checks to the IRS and pump tons of $ into the economy. I could go on. What worries me more is I am hearing more companies coming to terms with employees, unions, etc. on *longer term* employment agreements, which rightly or correct me if I’m wrong, implies wage inflation is coming. I think one needs a Cray computer to track all of the variables. Beary, Cody: you boys behave.

  64. masking commented on Jun 3

    Mark , you up to no good w/ your negativity to Cody… what have you done lately

  65. Mark commented on Jun 3

    Let’s be real here. I mean, has there ever been a lamer debate in the history of mankind? Talk about “noise”. You guys are arguing the semantics of a number that moved the market a whopping 12 points and is relatively meaningless in the grand scheme of things. So, the number was a little lower than some people thought. Big f’ing deal. I though this blog was the “The Big Picture” and not the “Every Day Data Dependent Blog”.

    Santoli summarized this argument beaitfully in Barron’s this weekend when he blamed the Fed for forcing traders to focus on the meaningless everyday onslaught of economic data that the CNBC’s of the world throw our way…..ITS POINTLESS IN THE LONG-RUN!

    I respect you Barry, which is why I am disappointed to see you involved in this playground battle royale with Backstreet Boys meet Wall Street (Codester). I mean, c’mon. The dude hasn’t had a haircut since the internet bubble burst. And what is a “telecom expert” worth these days anyways? Cody is a young Cramer apprentice and perma-bull who can find any reason to shove MSFT, AAPL and any other tech name down your throat. Let’s be real here Barry. Cody is a tech focused perma-bull; the antithesis of everything your blog stands for….

    C’mon Barry, you’ve got bigger fish to fry…..Get back on topic my man.

  66. B commented on Jun 3

    Settle down Mark or people will start thinking that I am posting under your name. lol.

  67. Nancy Kramer commented on Jun 3

    Hey Barry:

    I found you again!!!
    Your blog looks great & I love your amazon wish list…I left Cardozo almost 3 years ago and my husband & I are
    publishing a monthly magazine on the LES with online version as well. I am enjoying my next career…

  68. DealBreaker.com commented on Jun 5

    Barry vs. Cody

    The Big Picture blogger Barry Ritholtz has been engaging Cody Willard on todays unexpected low employment numbers. Willard says that Ritholtz’s argument that the last couple of years have been a jobless recovery is wrong. But those are the details….

  69. L’Emmerdeur commented on Jun 6

    Cody is making a classic error. He believes that short-term changes can derail a trillion-dollar economy in one or two quarters.

    Just as a supertanker making a course adjustment does so over a distance of kilometers, so an economy as large as that of the U.S. does not go from “rocking” to “troubled” in a short period of time. The decision to change course 20 kilometers ago is how the supertanker ended up on an iceberg taking on water. Similarly, the decision to turn the US dollar into paper mache (repeatedly since the mid-1990s, but especially so after the 2000 collapse and after 9/11) is now bearing its poison fruit.

    Remember, the French royalty and aristocracy did not lose their heads over decisions made in 1792, but developments spanning the whole of the 18th century.

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