I’m out of pocket at 8:30am, so feel free to post comments about NFP and any related data . . .
Back in the Saddle, with a few quick notes and charts:
100k job loss! We now have had out 1st 100k month, in that the revisions for June brought the number from 51k to 100k even.
Unemployment Rate: now has a 6 handle on it — 6.1% is the official number. Bureau of Labor Statistics Commissioner Keith Hall stated that while
previous joblessness gains were concentrated among teens, last month
"workers age 25 and over accounted for all of the increase in
unemployment."
Temporary Help: Was off 1.5% from July to August, and down more than 9% from August 2007.
Household Survey: Over the past 12 months, the number of unemployed persons has increased by 2.2 million and the unemployment rate has risen by 1.4 percentage points, with most of the increase occurring over the past 4 months.
Real GDP: ISI noted that the recent level of continuing unemployment claims is consistent with a 1.0% Real GDP in 3Q. In light of this report and the recent revisions, I would guess that is optimistic.
Recession: William Poole, former president of the
Federal Reserve Bank of St. Louis: "It certainly increases the probability that we really are
in a recession. It is a weak number, including the
revisions.”
Birth Death Adjustment: August 2007 = 102k; August 2008 = 125k — There is an almost a reasonable explanation for this: B/D relies in some part on State incorporation filings. 100k people get laid off, and a big chunk of them start working for themselves as freelancers/independent contractors. They incorporate so they don’t lose their house if the business goes belly up.
Hence, the more layoffs, the potentially greater B/D adjustments.
>
Monthly/Yearly Changes, NFP
chart courtesy of Barron’s Econoday
>
NFP Yearly Changes, with B/D
chart courtesy of Jake at Econompic
>
Sources:
THE EMPLOYMENT SITUATION: AUGUST 2008
BLS, Septmber 5, 2008
http://www.bls.gov/news.release/empsit.nr0.htm
-84000
6.1%
B/D added 125000
oy.
Looks like the coast is clear for the Fed to cut again . . .
The unemployment rate rose from 5.7 to 6.1 percent in August, and non-
farm payroll employment continued to trend down (-84,000), the Bureau of
Labor Statistics of the U.S. Department of Labor reported today. In August,
employment fell in manufacturing and employment services, while mining and
health care continued to add jobs. Average hourly earnings rose by 7 cents,
or 0.4 percent, over the month.
-84,000
6.1%
Downward revisions to June, July.
minus 84,000 and doofus Joe Kernan on CNBS this am….”not too bad”…my fondest wish would be for all this airheads on that lousy channel get their walking papers….then I would like to hear their comments……
Fed funds now pricing in no chance of rate increase till early 09.
I can’t believe this is a surprise to anyone.
I am wondering….have we ever gone from plus 3.3 per cent gdp to negative 3.3 per cent gdp in one quarter??
Just a thought..
I think that Steve Leisman looks less and less happy every time he is on at the same time as Rick Santelli…Santelli’s read of the tea leaves is basically right, and poor Steve has to sit on the air and look happy about his poor prognostication every week…
Maybe he should have majored in something besides journalism…
Bruce in Tennessee
The birth/death adjustment was +125,000, including 16,000 new construction jobs and 9,000 new financial services jobs. These are all fake. They didn’t happen and will be adjusted out a year from now. The real job loss is over 200,000.
june revised to -100k from -51k
Come back Barry. TODAY.
This is no time to be out of pocket. We need you TODAY. Live blogging, site traffic mentioning, asshat calling, numbers apart tearing, TODAY, especially TODAY, more than any day TODAY.
Since there are literal (New England Patriots) chearleaders on CNBC this morning, it must have been a great report. Plus, I’ve been led to believe there’s always a bull market somewhere and that the taxpayer is about to give Bill Gross a bailout and a pony.
The u-6 figure of 10.7% is much closer to the real unemployment rate…. 10.7%
84k and the number was COOKED! From a friend much smarter than I…
In August the BLS once again generated an unrealistic number of jobs via its Birth/Death Model.
Though 84k jobs were lost, the hokey B/D model created 125,000; last August its created 102,000 jobs.
Once again, and it has been the case for most of 2008, the BLS’s ridiculous B/D Model is creating more jobs per month than it did in 2007, when the economy was far stronger.
http://www.bls.gov/web/cesbd.htm
If it had been a great report, we’d see Kudlow up there instead cheerleading. Since nothing to pump… CNBC once again showing its colors.
We’re lucky GDP was capped at +3.3% – if it had come in much higher we’d all be out of a job.
with the expected manipulated gov’t reporting, what is the real unemployment rate?
CHICAGO (Dow Jones)–A bleak jobs report pushed U.S. interest rate futures prices over the edge Friday, eliminating expectations for an increase in the key short-term federal-funds lending rate for the remainder of this year and into early 2009.
The September through February federal-funds futures contract prices rose to about 98.00, equivalent to the current 2% funds rate. The November and January fed-funds contract moved above the 98.00 level, pricing in very slight expectations for the rate-setting Federal Open Market Committee to reduce the funds rate. The November contract recently priced in about a 4% chance for a quarter percentage point rate cut to 1.75%, while the January contact priced in about a 10% chance for an ease to occur by the end of this year. The final three FOMC meetings for 2008 are scheduled for Sept. 16, Oct. 28-29, and Dec. 16. The February fed-funds contract recently priced in a little less than a 10% chance that a quarter percentage point cut will happen by the FOMC’s first meeting next year, set for Jan. 27-28.
household survey down 342k mo/mo!
Goes to show how completely “cooked” the GDP figure was. The credibility of gov’t stats is disappearing faster than home equity.
Incredible…. they actually added construction and financial jobs this month…
thanks Stuart, just read your post.
GrumpyOldVet– Ditto. No Doubt a couple of the CNBS Ass-Clowns– the July 14 bottom callers– will turn todays ‘Market Action’ on it’s ear and claim it’s yet another ‘buying opportunity’– especially in Financials.
But hey. So What.
Because as most everyone here would agree, they’re Irrelevant to this Market.
The Financial Press, are bringing out the bottom callers once again! But the Callers, always use sentiment data to support their arguements. If they would only look at the Macro picture then it would become obvious that this Pig warrents no lip-stick.
A comment I haven’t seen anywhere is that the birth death model is actually ADDING jobs at a faster rate this year than last year, even though we know the economy is slowing down since last year. This is how blatantly absurd this calculation is. So not only is the model questionable in absolute terms, relative to last year, it’s skewing/torturing the real data even that much worse. Stunning to still hear analysts accept at face value this data. Must be card carrying members of the flat earth society.
http://www.bls.gov/web/cesbd.htm
Stuart is completely correct. Looking around does anyone see ANY job creation going on? It is one way traffic out the door. These tools at BLS have been claiming ADDED jobs in construction and finance in the last few months. Do they think we are stupid..?
Game on today. Mortgage delinquency data at 10, I think it is…
$ weaker after an incredible run. Watch gold start to move.
This is going to be one of those days where the news is all negative and the DOW goes up 150 points.
Where does one find revisions?
From what I’m hearing, combining the revisions with the August number puts us well past the 100k mark.
Click ‘Jake’ to see the usual charts Barry posts.
Note the Birth / Death numbers… the reported figures will continue to get worse as the B/D still report a gain year over year.
Read this summary and weep:
http://stats.bls.gov/news.release/empsit.nr0.htm
BR,
Do you really think the average laid off construction grunt is going to start his own biz and incorporate? I just can’t see that affecting those b/d numbers that much.
The recession argument is now officially over. Talk of interest rate hikes are off the table. Some are now talking for cuts…. fickle these analysts are.
Someone, mentioned that part of the higher unemployment number was because of the “Emergency Unemployment,” benefits that George, the Bush, signed. Obviously to help the economic numbers before the election – perhaps some consumer spending? Definitely is “bush league,” if you ask me.
What I want to know is when will the over-all investing public finally see through the smoke and mirrors?
MO- The avg construction grunt has been laid off for awhile. The ones being laid off now are corp types, financial types, etc. There is nothing in their fields to apply for so they start consulting, financial planning etc., otherwise known as slow death.
Even if the B/D numbers are correct and it’s a bunch of newly unemployed people incorporating, it still doesn’t mean that they’re actually working and making money.
Good news for the Republicans, most poeple will vote b/c of Palin’s skirt and not on the issues, ie.. the economy Stupid. I find it amazing how everyone i wowed by this woman, and don’t pay attention to all the wrong Republican policies that caused this and will continues this.
Bush=Coolidge, McCain=Hoover, 1920’s 2000s….Here we crash again…
$$$Sheik
Will Cramer blame the BLS for his bogus July 15th bottom call? I can’t wait for the backtracking to begin. Actually, I’ve noticed a little hint of backtracking and revisions of earlier statements the other night. The foundation has been laid.
Why does Cindy McCain look like Paris Hilton 30 yrs in the future…. does she have a movie also?
Martin Feldstein still has same opinion: been sliding into recession since the beginning of the year, the jobs number is consistent with this.
Surprising how realistic the Boston Patriot’s owner is. Guess that’s why he’s rich.
Though I’m a Demo, have to agree with Feldstein’s assessment of the Obama plan at the end.
Jobs Report Task Force
XLF sitting on very weak support here. It seems doubtful that we can get through an entire day without some new writedown news, bank failure rumour, or credit market meltdown story.
The picture on “prime” jumbo ABS is not looking so rosy, so IB exposure to bad paper could still rise further, and keep on rising through 2009, as unemployment bites and forces more delinquency and an inevitable rise in personal and corporate BK.
Larster – b/d adjustment – 16K construction and 9K Financial. But I was just typing fast and used construction as an example – people are getting laid off in many fields.
As for Finance – I know of a great many people who basically have their year-end bonus as a salary and, who now know they will get NO bonus this year. They are working for free – they aren’t laid off because they are working at no cost for their employer and they don’t quit because they have no where to go. But come January…
Looks like i picked the wrong week to quit sniffing glue.
…so IB exposure to bad paper could still rise further, and keep on rising through 2009, as unemployment bites and forces more delinquency and an inevitable rise in personal and corporate BK.
Posted by: leftback | Sep 5, 2008 10:15:35 AM
lb,
no reason to hedge that statement w/ ‘could’, it’s, simply, a Fact.
“What I want to know is when will the over-all investing public finally see through the smoke and mirrors?”
Posted by: Concerned Citizen | Sep 5, 2008 10:01:50 AM
CC,
remember, the vast majority of them rode the ’01-’02 Schlitterbahn right to the very bottom, with the manta: “We’re in for loon(g)-term”
Delinquencies are up, loans continue to deteriorate – I am sure Barry is getting all over this:
http://calculatedrisk.blogspot.com/2008/09/mba-record-foreclosures-delinquencies.html
Hmm. I wonder if the big funds really want to be long the banks going into the weekend? But wait, is the PPT on duty today?
“How sweet it is, to be short WaMu….”
If the S&P breaks 1214, Katie bar the door.
Could anyone update the charts of establishment vs household from this old post (http://bigpicture.typepad.com/comments/2006/07/redux_household.html). I think it’d be valuable to see how the two series are relating to one another now.
The maritime industry (ship building, offshore jobs, offshore supply boats) is one sector of economy going great guns with a severe shortage of qualified people. Companies are advertising for workers via billboards in LA. & Tx coast.
Mike,
“Looks like the coast is clear for the Fed to cut again…”
I’ve said for years now that we have a national economy that cannot function unless the federal funds rate is under 2%. Clearly, there is something fundamentally wrong with a national economy that cannot function unless the federal funds rate remains under 2%.
.
In looking at the big picture, one of the things that could be done here is add an increased excise tax to imported gasoline…
WAIT, DON’T THROW THE TOMATOES YET…!
If we are truly interested in getting away from foreign oil dependence this does a couple of probably useful things….
Keeps gas prices high, to prevent going back to the gas guzzler mindset.
Keeps us trying to innovate newer renewable energy sources…
Source of income for the feds rather than increasing personal income taxes…
Would encourage domestic exploration if only levied on foreign sources of oil…
And before you start attacking my momma, I am not a liberal pinko, I am much more a conservative nutjob…
Just a thought…We are going to have a slowdown anyway………..if gas goes back up, repeal it……spare me from unfunded rebates..
Bruce in Tennessee
If the S&P breaks 1214, Katie bar the door.
Posted by: Stuart |
Spot on, at least for the time being, and the XLF held as well around 20.6-20.7 or so. Looks like this level may hold, a good place to cut risk. It’s been a good week, why spoil it now with the PPT waiting in the wings…?
I am expecting the FED rate cut chatter to get louder by the hour. The $ seems to have ground to a halt for the time being.
The 16,000 new construction jobs are real; the GOP hired them to construct the gigantic cost-cutting-earmark-refusing-mavericky-reformer- executively-experienced facade around Sarah Palin. It was a massive public works job worthy of FDR, but heroic efforts won the day. Obama’s weak, diffident and dithering press releases will flutter themselves senseless against this mighty facade.
Hey leftback:
Things are lookin’ up. My SRS is down only 5% right now. At least I’m not having to worry about hedging it like I am my SMN and DUG :)
Market now making comeback today. In this bizarro world we live in, we’ll probably end the day up big.
I went thru the historical data and 8 straight months of negative jobs is a VERY big deal. OF the last 6 recessions, we only got to 8 in 3 of the 6, and each time was well after the recession was over.
Means this recession is nastier than 3 recessions, and will likely be longer than any of them too…
You guys worry too much, just read professor Bradly Schiller in the WSJ today. Don’t worry, be happy.
Job losses all in 25+ because the under 25s have no jobs — my teen and 20 something have never held a full time job, their friends who do are few and far between.
Financials just went positive for the day. Apparently the unemployment numbers were good for banks. Who knew?
Note that the U-6 unemployment rate (which includes discouraged workers and part-time workers who want full-time jobs) went up four tenths of a point as well. Most of the bite was full-time workers losing their job.
mick kelleher: “severe shortage of qualified people … advertising for workers via billboards”
What is the advertised deal? Move from your $NN job there to our $NN job here (roughly comparable salary), sorry no moving/housing assistance, sorry “heavy hitters” with 10 years industry experience only?
In addition to that, for “local” jobs not requiring a relocation, employers/contract body shops are under the impression hitting the freeway for 2-3 daily commute hours and associated fuel charges is no biggie either.
That’s the picture in the “mature industries” into which I have some insight, and I’m exaggerating only a little.
One cannot talk about shortages without talking about “price points” — at least when there are no hard legal requirements on applicants like mandated certifications for which there is effectively a quota not matching demand.
As I predicted yesterday, the Birth/Death model has redefined Chaos Theory. 16K in construction (of what exactly, only God knows) and financial (well, maybe the repo dudes are counted as financial jobs).
Factor in a household survey down 342K mo/mo (thx Vermont Trader) and Michael Donnelly’s review of the historical data (“8 straight months of negative jobs is a VERY big deal”) and no one with any vestige of intellectual honesty can pretend that something is fine, let alone everything.
We’re in a very deep steaming pile of enzyme-laden, bacteria-populated doggy fazoo…and it stinks big time.
And somehow, there are individuals who still want to be President?
Doesn’t the Birth/Death benchmark get an annual revision? When will that come? What will that do to the numbers we are seeing now?
John Doe,
“Good news for the Republicans, most poeple will vote b/c of Palin’s skirt and not on the issues, ie.. the economy Stupid. I find it amazing how everyone is wowed by this woman, and don’t pay attention to all the wrong Republican policies that caused this and will continues this.”
The essence of the argument in the book What’s the Matter with Kansas ?
.
i just noticed a Ad by Capital One that is giving 5.4% for a FDIC insured CD deposit.
few months back, i am sure those rates were around 4%.
i wonder if money has become too tight for most financials??