Comments on: NFP: Even Worse Than Reported http://www.ritholtz.com/blog/2008/12/nfp-even-worse-than-reported/ Macro Perspective on the Capital Markets, Economy, Geopolitics, Technology, and Digital Media Sat, 21 Nov 2009 15:19:29 -0500 http://wordpress.org/?v=2.8.5 hourly 1 By: Laurent GUERBY http://www.ritholtz.com/blog/2008/12/nfp-even-worse-than-reported/comment-page-1/#comment-134922 Laurent GUERBY Sat, 20 Dec 2008 12:41:30 +0000 http://www.ritholtz.com/blog/?p=12239#comment-134922 A data point on unemployment: For the fourth quarter of 2004, according to OECD, (source Employment Outlook 2005 ISBN 92-64-01045-9), normalized unemployment for men aged 25 to 54 was 4.6% in the USA and 7.4% in France. At the same time and for the same population the employment rate (number of workers divided by population) was 86.3% in the U.S. and 86.7% in France. This example shows that the unemployment rate is 60% higher in France than in the USA, yet more people in this demographic are working in France than in the USA. Do you know of any study on the source of this effect? By default it just means unemployment contain about no information about the state of the labour market... A data point on unemployment:

For the fourth quarter of 2004, according to OECD, (source Employment Outlook 2005 ISBN 92-64-01045-9), normalized unemployment for men aged 25 to 54 was 4.6% in the USA and 7.4% in France. At the same time and for the same population the employment rate (number of workers divided by population) was 86.3% in the U.S. and 86.7% in France.

This example shows that the unemployment rate is 60% higher in France than in the USA, yet more people in this demographic are working in France than in the USA.

Do you know of any study on the source of this effect? By default it just means unemployment contain about no information about the state of the labour market…

]]> By: Jim C http://www.ritholtz.com/blog/2008/12/nfp-even-worse-than-reported/comment-page-1/#comment-131669 Jim C Tue, 09 Dec 2008 01:18:54 +0000 http://www.ritholtz.com/blog/?p=12239#comment-131669 The people leaving the work force can no longer be defined by "typically because they cannot find work." More people are retiring now. Over the next 3 years there will be a mass exodus launched from the workforce. Ask any major corporation that has been around more than 20 years and they will tell you knowledge management of those boomers retiring is a major issue for them. The people leaving the work force can no longer be defined by “typically because they cannot find work.” More people are retiring now. Over the next 3 years there will be a mass exodus launched from the workforce. Ask any major corporation that has been around more than 20 years and they will tell you knowledge management of those boomers retiring is a major issue for them.

]]> By: Winston Munn http://www.ritholtz.com/blog/2008/12/nfp-even-worse-than-reported/comment-page-1/#comment-131644 Winston Munn Mon, 08 Dec 2008 22:42:11 +0000 http://www.ritholtz.com/blog/?p=12239#comment-131644 Maybe if we all start referring to the "Out of Work" Index instead of the "Unemployment" Index we could get the MSM to report U6 instead of U3. Maybe if we all start referring to the “Out of Work” Index instead of the “Unemployment” Index we could get the MSM to report U6 instead of U3.

]]> By: sbailey http://www.ritholtz.com/blog/2008/12/nfp-even-worse-than-reported/comment-page-1/#comment-131612 sbailey Mon, 08 Dec 2008 20:46:33 +0000 http://www.ritholtz.com/blog/?p=12239#comment-131612 So Barry, a question or two. What, in particular to unemployment and NFP, would you have BLS do differently? For example, should it emphasize U-6 as much as U-3 in its press release? Is this a BLS problem or a journalist problem? What I see in the press release is BLS laying out some basic facts, and then presenting data. Included up front in the press release are the falling labor force participation rate, and the increase in involuntary part-time workers and marginally-attache/discouraged workers--all of the elements of U-6. If they did anything more, they would probably be accused of spin one way or another. The data is there every month for anyone to mine. Anyone familiar with labor market data knows that just looking at one or two statistics may miss some important parts of the story. What should they do about birth/death? BLS has shown that their March 2008 preliminary NFP estimates were spot on, so that (this year) their estimating procedures, which include b/d, worked well. I don't subscribe to Shadowstats, so I don't have the gory details about why Williams thinks that job losses have been undercounted by a million over the year. If the seasonal factors are off month by month, it all comes out in the wash comparing current month nominal with same month a year ago. Any details you could share would be helpful. And your reader JoJo99 is correct--one hour worked is counted as employed. But the perhaps unstated implication (I don't mean to put words in anyone's mouth) that there are millions who fit that description is incorrect. I've analyzed 18 years worth of individual wage records in the state of Washington, which include hours worked. The low-hours records are a small portion of the population. So Barry, a question or two. What, in particular to unemployment and NFP, would you have BLS do differently? For example, should it emphasize U-6 as much as U-3 in its press release? Is this a BLS problem or a journalist problem? What I see in the press release is BLS laying out some basic facts, and then presenting data. Included up front in the press release are the falling labor force participation rate, and the increase in involuntary part-time workers and marginally-attache/discouraged workers–all of the elements of U-6. If they did anything more, they would probably be accused of spin one way or another. The data is there every month for anyone to mine. Anyone familiar with labor market data knows that just looking at one or two statistics may miss some important parts of the story.

What should they do about birth/death? BLS has shown that their March 2008 preliminary NFP estimates were spot on, so that (this year) their estimating procedures, which include b/d, worked well.

I don’t subscribe to Shadowstats, so I don’t have the gory details about why Williams thinks that job losses have been undercounted by a million over the year. If the seasonal factors are off month by month, it all comes out in the wash comparing current month nominal with same month a year ago. Any details you could share would be helpful.

And your reader JoJo99 is correct–one hour worked is counted as employed. But the perhaps unstated implication (I don’t mean to put words in anyone’s mouth) that there are millions who fit that description is incorrect. I’ve analyzed 18 years worth of individual wage records in the state of Washington, which include hours worked. The low-hours records are a small portion of the population.

]]> By: Transor Z http://www.ritholtz.com/blog/2008/12/nfp-even-worse-than-reported/comment-page-1/#comment-131606 Transor Z Mon, 08 Dec 2008 20:27:20 +0000 http://www.ritholtz.com/blog/?p=12239#comment-131606 @AGG: Well said. I'd be curious to see what's going on with average household wages in real terms during the same period. Problem is, you start getting into CPI, another crap indicator. If you have to pay $2,000 a month for daycare, one parent giving up a $45,000 job to stay home makes some sense if the other parent gets good benefits at his/her job. Common sense tells you something isn't right when indicators show job growth and low inflation over a 25 year span of "prosperity" and yet, as Barry posted last week, private college tuition is breaking the backs of even "upper middle-class" families and is supplanting retirement investment. Conspiracy theorists would claim the Fed has been using smoke and mirrors but I've got to think it's just as likely monetary policy as we have known it will simply go the way of tonsillectomies and New Math. Stuff that seemed like a good idea at the time. @AGG:

Well said. I’d be curious to see what’s going on with average household wages in real terms during the same period. Problem is, you start getting into CPI, another crap indicator.

If you have to pay $2,000 a month for daycare, one parent giving up a $45,000 job to stay home makes some sense if the other parent gets good benefits at his/her job.

Common sense tells you something isn’t right when indicators show job growth and low inflation over a 25 year span of “prosperity” and yet, as Barry posted last week, private college tuition is breaking the backs of even “upper middle-class” families and is supplanting retirement investment.

Conspiracy theorists would claim the Fed has been using smoke and mirrors but I’ve got to think it’s just as likely monetary policy as we have known it will simply go the way of tonsillectomies and New Math. Stuff that seemed like a good idea at the time.

]]> By: AGG http://www.ritholtz.com/blog/2008/12/nfp-even-worse-than-reported/comment-page-1/#comment-131589 AGG Mon, 08 Dec 2008 18:58:59 +0000 http://www.ritholtz.com/blog/?p=12239#comment-131589 Someone needs to say it so here goes: We are now seeing the flip side of all the massive PR from the "perception defines reality" crowd. They convinced most people that things are good, better or best. Now that most of the news is bad, most of the people have gone from happy face to gloom and doom. So yeah, regardless of how accurate the doom and gloom is, most people will thinks it's worse. As other posters have mentioned, it's the wages that matter. Obama may "get it" but there's a whole bunch of powerful assholes that enjoy this economic cataclysm. So two or three more years of intense pain are coming. One item that hasn't been mentioned but should hasten a turnaround to better times after the pain is the fact that, unlike the 30s, the supply chain has computers with "just in time" inventory control. This is why "all of a sudden" you have lots of unemployment starting with China. When demand revives, they'll open the factories again just as fast. See, I'm not always gloomy. Someone needs to say it so here goes:
We are now seeing the flip side of all the massive PR from the “perception defines reality” crowd. They convinced most people that things are good, better or best. Now that most of the news is bad, most of the people have gone from happy face to gloom and doom. So yeah, regardless of how accurate the doom and gloom is, most people will thinks it’s worse. As other posters have mentioned, it’s the wages that matter. Obama may “get it” but there’s a whole bunch of powerful assholes that enjoy this economic cataclysm. So two or three more years of intense pain are coming.
One item that hasn’t been mentioned but should hasten a turnaround to better times after the pain is the fact that, unlike the 30s, the supply chain has computers with “just in time” inventory control. This is why “all of a sudden” you have lots of unemployment starting with China. When demand revives, they’ll open the factories again just as fast. See, I’m not always gloomy.

]]> By: rww http://www.ritholtz.com/blog/2008/12/nfp-even-worse-than-reported/comment-page-1/#comment-131575 rww Mon, 08 Dec 2008 18:37:37 +0000 http://www.ritholtz.com/blog/?p=12239#comment-131575 @Donna: extreme levels of unemployment have been baked in the cake for at least the past two years. I think most of us here have done our lamenting already. @Donna: extreme levels of unemployment have been baked in the cake for at least the past two years. I think most of us here have done our lamenting already.

]]> By: Mannwich http://www.ritholtz.com/blog/2008/12/nfp-even-worse-than-reported/comment-page-1/#comment-131569 Mannwich Mon, 08 Dec 2008 18:28:55 +0000 http://www.ritholtz.com/blog/?p=12239#comment-131569 @donna: Excellent point but several commenters (including myself) did mentioned the employment issue as well and the issue does have an impact (or it should in the real world) on the markets, does it not? @donna: Excellent point but several commenters (including myself) did mentioned the employment issue as well and the issue does have an impact (or it should in the real world) on the markets, does it not?

]]> By: donna http://www.ritholtz.com/blog/2008/12/nfp-even-worse-than-reported/comment-page-1/#comment-131566 donna Mon, 08 Dec 2008 18:25:05 +0000 http://www.ritholtz.com/blog/?p=12239#comment-131566 Well, the comments here certainly show the problem. BR posts seriously about unemployment and underemployment, but the commenters are only concerned with the dollars they can make trading today. Our country's entire problem, in a nutshell. Well, the comments here certainly show the problem. BR posts seriously about unemployment and underemployment, but the commenters are only concerned with the dollars they can make trading today.

Our country’s entire problem, in a nutshell.

]]> By: Mannwich http://www.ritholtz.com/blog/2008/12/nfp-even-worse-than-reported/comment-page-1/#comment-131558 Mannwich Mon, 08 Dec 2008 17:43:40 +0000 http://www.ritholtz.com/blog/?p=12239#comment-131558 @rww: Haven't we seen this script play out before or I am I just insane? The markets have rallied several times on prior bailouts (my head is spinning, there have been so many) and the prior stimulus plan only to then pull back bigger than before when the reality sets in that things aren't getting any better in the real world....... Like CNBC Sucks has said before: "this crash still sucks". @rww: Haven’t we seen this script play out before or I am I just insane? The markets have rallied several times on prior bailouts (my head is spinning, there have been so many) and the prior stimulus plan only to then pull back bigger than before when the reality sets in that things aren’t getting any better in the real world…….

Like CNBC Sucks has said before: “this crash still sucks”.

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