So while the commodity inflation story is still flourishing, the wage disinflation
story here in the United States remains fully intact. Average weekly earnings
managed to turn in a tepid 0.3% gain after two months of flattish results. This has
dragged the year-on-year trend down to a puny 2.8% from 3.4% at the turn of the
year and 4.1% in June 2007. With the inflation rate expected to approach the 5%
milestone in June, it means that in real terms, personal incomes (net of the tax
rebates) are moving deeper into the deflation doldrums. Thursday’s data were
consistent with unit labor costs running around a 1.2% annual rate in the second
quarter which is hardly a backdrop than can be characterized as stagflationary.
Signs of stress in the Household survey

Many other aspects of this report were troubling and we believe that the absence
of the oil price surge would have the Fed thinking about another rate cut, not a
hike. There is just a wealth of information beyond the nonfarm payroll report that
is contained in the Household survey – which, by the way, showed a 155,000 job
loss in June.

Within that report, we like to look at key measures of labor market stress such as (i) full-time employment, which sank 447,000 – a significant 4.3% slide at an annual rate; (ii) job losers who are not on temporary layoff jumped 3.9%; (iii) the number of folks who were bold enough to leave their jobs voluntarily, a key measure of worker confidence dropped 4.3% (iv) multiple job holders rose 1.5%, and this metric has surged at a 20% annual rate over the three months to June as an increasing number of households are trying desperately to make ends meet as the budgetary strains from food, gas, utilities and debt-service costs intensify; (v) the median duration of unemployment, which rose to 10 weeks from 8.3 weeks and underscores the extent to which labor demand is contracting; and (vi), those working part-time for economic reasons shot up 183,000 or by 3.5% and has exploded at a 50% annual rate over the past six months – a clear sign of economic duress.

We’re always razzing the poor old consensus for its bum forecasts, often so very much off the mark, of monthly employment numbers. So we figure it’s only fair to be nice for a change and commend the consensus for being smack on target. And we’ll even refrain from pointing out that once in a very great while, the guy or gal with a blindfold on does pin the tail on the donkey.

Anyway, the going estimate on the Street for June was a loss of 60,000 or so jobs and, by golly, the actual number was 62,000. All you members of the consensus, stand, please, and take a bow (it may be a long time before you get a chance to do it again).

The unemployment rate, meanwhile, which had taken a huge jump in May, the biggest, in fact, in 22 years, held steady at 5.5%. Revisions to April and May swelled the earlier reported totals of pink slips by a combined 52,000.

The private sector lost 91,000 jobs, with, as you might expect, construction and manufacturing the heaviest hit. The good news was on the skimpy side: The biggest gains in hiring were by municipalities and states, and given the increasing financial pinch afflicting city halls and statehouses just about everywhere, that old reliable geyser looks due to dry up in a hurry.

Just for the record, governments of every stripe chipped in 29,000 to the job total. There were some 30,000 fewer temps working at the end of June than at its start, which tells you more about the economy than you’d like to hear. It’s also a bit of an evil harbinger for employment.

That insightful pair, Philippa Dunne and Doug Henwood, cited above, are invariably spot-on when it comes to parsing the monthly job numbers and we’ve passed along their conclusions, many a time and oft. Our only reservation, and a modest one, has been, kindly souls that they are, they were too forgiving of the Bureau of Labor Statistics’ birth/death model, which seeks to capture the jobs added and subtracted by, well, the birth and death of new firms. The device invariably strikes us as a fire alarm that works swell — except when there’s a fire. And in the overwhelming majority of months, it perhaps conveniently serves to bloat the total of jobs added.

As it happens, we now have reason to forgive Philippa and Doug for being forgiving. Here’s what they say in Friday’s review of the latest jobs report: “Although we usually shy away from pointing to mischief coming from the birth/death model, this seems to be one of those moments when we should overcome our shyness: It added 177,000 to June employment.”

Duly noting that the birth/death calculation is made without seasonal adjustment, they nonetheless observe that save for it, private employment would have been down a formidable 268,000 or so. Other absurdities: The birth/death model miraculously added 29,000 to rapidly vanishing construction employment, 22,000 to professional business and professional services and — get this — a whopping 86,000 to leisure and hospitality.

They comment dryly: “Given the weakness of the economy and the crunchiness of credit, we doubt there are enough start-ups around to match these imputations.” Exactly.

Since the dot-bomb bust, I have NOT sensed / felt / seen any great confidence in people with respect to their ability to quickly replace their job if quit their job or were fired / laid off.

My contruction crowd friends have done well in the last 6 years, but nothing like the 90’s. My tech friends are all over the hill and don’t dare lose their jobs, but, we do interact on occasion with the latest hot outta comp sci college 24 year old who thinks life will be up up up for ever ever ever.

this job market sucks, and it has sucked.

rmm.

“… Obama … should immediately start educating the voters on these data issues, if for no other reason than political self-preservation”.

He won’t do this.

Once elected, he’ll want to convince people that they’re better off than they really are.

Both parties are in this together.

“When did the B/D model come into play? … Has it been around 20 or 30 years?”

Surely you jest.

It was fully phased in by June of 2003. Just in time to mask the massive job losses resulting from the exalted supply-side economic miracle.

Can’t have reality clashing with their ideological hokum. Just wouldn’t do.
.

A report released by the Department of Labor Thursday highlighted the country’s weak economic state. There are now 8.5 million Americans out of work, and 62,000 jobs have been cut. Unemployment levels are at 5.5 percent. The economy has lost a total of 438,000 jobs so far this year.

But economists say these figures don’t offer a comprehensive picture of what is taking place; the numbers ignore the growing number of Americans who now work part-time because they cannot find a full-time job. If you factor in these underemployed workers and discouraged workers, who are not counted in the report, the Labor Department said total unemployment jumps from 5.5 percent to 9.9 percent.

ABC WORLD NEWS LINK

Wow. First she reports that it is the Big Oil companies that really do not want to build any new gasoline refineries, and now she reports that the Unemployment Rate is really 10%.

Sounds like someone needs to be ‘reassigned’.
.

I don’t expect the Right-wing media to wait for the election. To the big lies (a favored GOP trick) of Mr Obama being no different from all other sleezy politicians and Mrs Obama being “angry” (read uppidy – a classic charge against Blacks trying to rise in the White power structure), add the charge that the markets and the economy are in decline “in anticipation of” an Obama victory (I have heard this a little already – expect more).

Jim

I do not find the tax receipt based CES measure and no mention of it earlier. Any elaboration available?