Non Farm Payrolls

G’morning. We awake this morning awaiting BLS’ NFP report. The consensus estimates of US job cuts is for 230,000, and a tick up in the Unemployment rate to 9.5%.

Unless there is a wild surprise, the good news is the 500, 600 even 700+k losses per month during the worst of it is now well over. Where I differ from most of the Wall Street establishment is their belief that the moves away from the horrific data series — 2 million job losses over 6 months — means that we are now on the mend.

Consider a different possibility: That we have settled into a longer stretch of moderate (by comparison) job losses. The way I interpret the most recent data is that the massive government activity is obscuring the ongoing economic weakness. While we are no longer in full blown panic mode, we are still showing serious job losses. My concern is that we are not likely to put up a string of positive numbers anytime soon.

Hence, one scenario the mainstream seems to be ignoring is a potential ongoing weak labor situation for quarters, if not years, to come. Job losses of 100-300k for several more months, and then moderating further, to 50-100k. By the time we reach breakeven — about 150k per month to keep up with population growth — could be late 2010 or even 2011. And significant job creation of 300k per month or greater could be a long time from now.

Recall that heading into the recession, the public, mired in their “Mental recession” got it right, while the so-called experts, economists and pundits were dead wrong. Here we are again, at another possible fork — and we see (as Mike Panzner pointed out yesterday) that once again, the cabal of perennial perma-optimists are bullish, while John Q. Public is decidedly more cautious. (My money is with John Q.).

If the public is right and the pros wrong, what might the labor market and jobless rate mean for foreclosures and consumer spending?


Employment Situation is released at 8:30am EST

For those of you who delve beneath the headlines, watch the revisions, hours worked, temp help, and Birth Death model for some deeper insight.

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