Details of January Non-Farm Payrolls
Let’s take a closer look at the details of the January Non-Farm Payrolls report, and see what data points leap out:
• Total job losses since the recession started in December 2007: 3.6 million;
• Over the past 12 months, the number of unemployed persons has increased by 4.1 million;
• Losses over the last three months: 1.8 million (Jan = 598, Dec = 577k, Nov = 597k);
• Unemployment rate for full-time workers spiked to 8%;
• For the first time since records began in 1939, there were three consecutive months of 500k + job losses;
• Job losses were broad based, with the diffusion index down to an all-time low of 25.3%;
• Household survey showed a record 1.24 million job plunge (Since data began in 1950)
• The calendar year 2008 saw 3 Million Job Losses;
• The employment-population ratio fell to 60.5%, down from 62.7% at the beginning of the recession, — the lowest rate since 1986.
• Unemployment rate: 16-year high (1992);
• January’s payroll drop of 598,000: most since December 1974;
• Payroll Revisions for 2008 were 400,000 more than initially announced;
• The 3.5 million job loss since January 2008 is the largest 12-month decline since the government started compiling those figures in 1939;
• U-6 Marginally attached and involuntary part-time workers: 13.9% last month — up almost five percent;
• The employment-to-population ratio was the lowest since 1986.
Also worth noting: Our “modest proposal” from last summer that U3 and U6 data should be reported has gained traction. The WSJ prominently mentioned U6 this month:
By some broader measures, labor-market conditions are even worse than the main numbers suggest. When marginally attached and involuntary part-time workers are included, the rate of unemployed or underemployed workers actually reached 13.9% last month, up almost five percentage points from a year earlier. The employment-to-population ratio was the lowest since 1986.
>
Previously:
Unemployment Reporting: A Modest Proposal (U3 + U6) (June 2008)
http://www.ritholtz.com/blog/2008/06/unemployment-reporting-a-modest-proposal-u3-u6/
Sources:
THE EMPLOYMENT SITUATION: JANUARY 2009
BLS, Employment Situation Summary
http://www.bls.gov/news.release/empsit.nr0.htm
http://www.bls.gov/news.release/empsit.toc.htm
February 6th, 2009 at 10:08 am
I think I found the answer to my question on the previous post.
If you take NSA total employed for Jan 2009 versus Jan 2008, there’s a loss of about 6 million. With the reported losses of about 3 million, there’s a gap of about another 3 million. It looks like this has “disappeared” to the “not in labor force” number, which has grown by about 3 million. I believe this is quite relevant . . . there are 6 million fewer working folks than there were 12 months ago . . . half of them resigned not to work at all.
Conclusion: rally!
-Mike J
February 6th, 2009 at 10:08 am
According to Mark Perry, “The labor force today is almost 154 million, or more than 65% higher than in December 1974 (92.78 million), so comparing today’s job losses to 1974 is meaningless. As a percent of the labor force, today’s job losses would have be almost 1 million before we would be at the same level as 1974. “
February 6th, 2009 at 10:20 am
Well, “the bottom” is most definitely in. It’s all priced in. Nothing to see here. Move along please.
February 6th, 2009 at 10:30 am
Once the market stops going down on bad news, there are no more sellers, and I would not be surprised to see a buying stampede in the next week or so. The W-shaped recovery may be operative here, and we may see the market rise into the 950-1000 range between now and late spring, only to see a pull-back in the fall as inflation returns.
February 6th, 2009 at 10:36 am
Dont worry the Stimuls Package/Bad Bank/Pork will save us all. If you would just wait a little. We could see 14K again.
God how did we get here. Where the hell is change? Something? Instead we get the same but in much bigger numbers.
February 6th, 2009 at 10:38 am
Far more important than the NFP is the fact that these jobs are not coming back. They relate largely to excess capacity in retail, finance, real estate, autos and even technology. That capacity was built to serve consumption that is simply gone for good (e.g. retail and finance) or consumption that will be served by increasingly capable foreign workers who are willing to accept a much lower standard of living (e.g. technology). It is the backwards nature of this recession that must be fully appreciated. It did not result from the Fed taking away the punchbowl, but from the Fed giving us all a spiked beer bong. Oh, and while I voted for Obama and share his utter disdain for the way Wall Street pays itself for incompetence, it is clear that he does not have a real understanding of the issues but instead accepts a lot of shallow liberal mantras about workers, spending, debt, etc. The cavalier way he has let back in the whole Clinton crew shows the shallowness of his understanding. I expect he talks to his staff about the economy the same way that Homer spoke to Marge about money : “That’s right, Roosevelt. Your Roosevelt’s happiness is all that Roosevelt.”
February 6th, 2009 at 10:38 am
One question, when you invoke comparison to historical numbers, are those figures adjusted to population growth?
February 6th, 2009 at 10:39 am
Well, the economic data continues to look pretty bad and I think it will be at least 4-6 months before the pace of the bleeding slows –’Spendulus’ or no ‘Spendulus’ (Laura Ingrams term for it– not mine). Interestingly despite all of the (supposed) buying by the FED of MBS and Treasuries interest rates on the 30 year fixed have popped back up again (expected I guess when the flood of applications to refi come in faster than what can be serviced…). We’ll see what effect this has on the Home data/Inventory in coming months, especially as more homes get put back onto the Market in the Spring.
So I say let the CNBS Orgasmic (Short Covering) Rally continue for a couple more trading days. Larry Kudlow and his fellow band of AssClowns (Luskin, Westbury, Kneale, Farrell, Forbes et al.) can have their Kume-By-Yah Circle Jerk LoveFest — Erin and Maria can go off to little corner by themselves and– you know– do their ‘Own Little Thing’ .
Then Mr. Market hands out another dose of Reality and bleeds down to Dow 5-6,000 along with the S&P 500 to 500-600…late spring/early summer. Just too soon in this Grizzly Bear of a Market to have put in a bottom. 73-74 was approx. 18 months, 2000-2002 approx. 32 months, Great Depression… well longer still.
February 6th, 2009 at 10:43 am
Agree with froglips. It is fearmongering to compare the 500K job losses in 2009 with 500K job losses in 1939. I know that there is some debate about the accuracy of unemployment numbers from back in the day, but, this type of comparison is very weak.
I thought the situation was bad enough that it didn’t need this kind of stuff.
February 6th, 2009 at 10:55 am
Things will get worse, but not right here, right now, and not in the way most people think. The Baltic Dry has recovered quite significantly and corporate and high yield spreads have come in a long way – that is a sign that the credit crisis part of this recession is over, and we are now entering the unemployment, reflation, stagflation path that should be familiar to those who lived through the 1970s. Adjust your portfolio accordingly. People still have to eat, heat their homes, and drive cars. It’s commodity time, dudes.
February 6th, 2009 at 11:01 am
> It is fearmongering to compare the 500K job losses in 2009 with 500K job losses in 1939.
This statement is absolutely true. However, it is VERY valid to compare the unemployment rate to the situation a few years ago of (alleged) ~4% unemployment.
On the bright side, NFP may deteriorate much further. Who is to say that we won’t get a monthly NFP of 2 million or unemployment at >10%. There is so much more leverage in the system now than in earlier economic contractions. Savings used to be 10% of income and recently went negative. Rosy assumptions killed off old debt/income ratios and risk went way up as rates went down. If you take a look at our collective assets and liabilities, it’s not a pretty picture right now. The economy will go where it will need to go. It’s just a matter of how long it will take and how painful the process is.
HCF
February 6th, 2009 at 11:02 am
leftback,
That was my entire game plan going into this year. I bought in heavy in November and December in hard assets and I’m going to use MACD to sell out and go short and to cash/fixed income in the spring based on the timing indicator.
I was beginning to think after Jan. that I might need to adjust this but I agree that we could see a rally soon here and a bunch of dumb money will pile right in.
Load up on some miners.
February 6th, 2009 at 11:02 am
I still think we are going to see a new low before the end of October of this year. I’m not bullish except in the very short term.
February 6th, 2009 at 11:05 am
Have hung part of my shingle on VLO, MOS (doing very nicely, thank you), ACI, and COP for that reason. Also GDX, GLD, DIG.
February 6th, 2009 at 11:08 am
love Bloomberg:
“U.S. stocks gained for a second day on speculation a government report showing the highest unemployment rate since 1992 will force Congress to pass an economic stimulus package. ”
in short the economic news is bad enough to warrant action which must be taken as a positive…how come that reasoning doesn’t work when I go get a loan?
February 6th, 2009 at 11:09 am
We’ll know we’re out of the woods for sure when the market goes through a sustained rally on something other than government bailout news. We’ve been here before and will be again before long.
February 6th, 2009 at 11:11 am
http://briefing.com/Investor/Public/Calendars/EconomicReleases/employ.htm
According to Mark Perry, “The labor force today is almost 154 million, or more than 65% higher than in December 1974 (92.78 million), so comparing today’s job losses to 1974 is meaningless. As a percent of the labor force, today’s job losses would have be almost 1 million before we would be at the same level as 1974
Well, if you look at this carefully, in the guts of the statistics…it looks like the number of civilians employed dropped by 1.239 million in January…
and the rate of loss of jobs that actually produce something…goods producing jobs…is 300% higher than September…319k loss
February 6th, 2009 at 11:12 am
Has anyone been tracking this as percentages of the working population? AKA “inflation-adjusted” job losses?
(for pedantry’s sake I suppose, it still feels awful whether or not the percentages are as historic as the gross figures)
February 6th, 2009 at 11:21 am
@ben22: Got my miners, refiners, and a bunch of commodities (oil, gas, ags).
You are right about the dumb money, it’s on the way. There might be another deflationary episode at the end of this but we are far from the Great Depression at this moment in time.
February 6th, 2009 at 11:23 am
Mannwich,
I have been in IAU for a long time for my play on eventual inflation. Can you tell me why you like GLD better?
BTW, my WFC buy a couple of weeks ago sub $15.00 is looking better and better. My April 20 calls are also looking OK today as well. IMHO WFC, JPM, GS and MS are the only big ones that aren’t nationalized eventually. The yield on WFC when I bought was over 10%. The only thing that hasn’t worked lately for me is my FXP (which I made a ton of money on in 2008). Looks like China and Hong Kong may have bottomed. Anyone playing those markets on the long side?
TIA
February 6th, 2009 at 11:26 am
@jdamon33: I’m not sure I do like it better. I actually like GDX as a play on the miners much better and might load up more there.
I had WFC and sold it for a profit a week or so ago. Back in at 17 or so but feel a bit dirty about it. Will take my shower later. I do think WFC is in for some more trouble but not yet. We can all play make believe the banks are solvent for a while longer with the latest bailout iteration. Hope to make some quick coin and take a nice, long shower to clean off the grime.
February 6th, 2009 at 11:35 am
WAIT A MINUTE, FOLKS. In January, the BLS is suppose to reconcile/revise the “birthing” of all those 2008 phantom jobs they added by adding the DEATHS. Are you telling me we created 400,000 MORE jobs last year than they reported? BULLCRAP! They subtracted 356,000 jobs. look>
http://www.bls.gov/web/cesbd.htm Is that the 2008 “death” revision? following me?
They’re saying they “underestimated” their birthing of phantom jobs in 2008, and they is NO DEATHING?
February 6th, 2009 at 11:39 am
@Jdamon: I have owned EWT for a few weeks since the Baltic Dry turned upwards. Looking good.
@Mannwich: Banks are a trade, not an investment, and we have to shower once a day anyway…
February 6th, 2009 at 11:40 am
@lb: I usually go TWICE a day when trading banks.
February 6th, 2009 at 12:04 pm
at the risk of sounding like a big fat jerk — folks, if you’re going to grace us with your super awesome winning trades, how about keeping us updated on your duds: eg both leftback and mannwich were neck high in bank/financial shorts as recently as two days ago (if we’re to believe their posts). did you bail? still holding?
February 6th, 2009 at 12:08 pm
bubba Says,
I have SSO and FXP. I tend to take profits on one and then wait for the other to become profitable then take profits on that one. So far (last couple of months), it hasn’t worked out for either. Last year was a swing traders chance of a lifetime, this year – not so much. I am probably down 20% on each.
My WFC trade (which I went big on) will hopefully put me in the black for this year. I am planning to sell out at $21 or $22ish.
February 6th, 2009 at 12:21 pm
Someplace today I read “those jobs losses overcame job gains in education, health care and government” or something to that effect. Education, health care and government? So we’re going to feed the elephant parasite more stimulus spending so the bled-dry puppy can buy groceries?
Are we trapped in a parallel universe where logic has become reversed?
February 6th, 2009 at 12:25 pm
@Jdamon33 — thanks for that. FXP? I hope your shorting. I think china has put in a short term (6 month?) bottom.
February 6th, 2009 at 12:25 pm
I wonder if the run-up in stocks from 1932-1937 was fueled by rising unemployment and bailouts.
Based on valuations (forward-looking PE), the markets are ridiculously frothy here, but I guess I could see things heading back toward the previous highs — certainly above 10K on the DJIA and upwards of 2K on the NASDAQ — if every time we get another month where between 500K and 600K people stop contributing to the economy and the government bailout bonanza gets cranked up another notch. Meanwhile, the global economy gets smaller and smaller. When the music stops a lot of people/companies/countries are not going to have a chair.
‘Cause I don’t see unemployment slowing down even a little bit between now and summer — maybe not between now and year-end. Wouldn’t want to be a college grad in May looking for work. Would like even less to be a 50-something unemployed person looking for work, with an under water mortgage and kids in college.
Amazing how everyone (apparently) believes that all we require is a sufficiently large stimulus, as if a 3-day dead corpse could be brought back to life if only it were struck by a sufficiently large bolt of lightning.
What if it turns out that the root cause of our trouble is too much debt? Will borrowing trillions for non-productive stimulus packages or bonuses for finance crooks help or hurt things?
And how long until this irrational exuberance dissipates and we come to realize that we’ve only made things (which were already incredibly horrible) worse? 2 months? 6 months? 24 months?
February 6th, 2009 at 12:28 pm
@bubba: I was never “neck high” in financial shorts (had a small amount of FAZ traded for a profit, got back in, probably buying more later next week). Not doing well now but it’s a small position and a hedge against another IRA mutual fund position that has high exposure in the financials. I AM “neck high” in SRS, QID and to a lesser extent EEV. Hanging in there. Not going well but I can be patient and will add on any major rallies.
February 6th, 2009 at 1:07 pm
RE: FXI–was trading on long side with success and is up again, but noticed a humongous 50,000 puts put on the other day. I’m staying clear.
also, look at KBR–the regional bank ETF–none have TARP– up smartly. [agree we retest the lows, but in the immortal words of the guy in Gladiator "Not yet; just not quite yet"]
February 6th, 2009 at 1:17 pm
I’m still having a tough time digesting the B/D adjustment – anyone?
February 6th, 2009 at 1:24 pm
@bubba
In my “side account IRA” (less than 15% of total IRAs), I am “neck high” in SRS and QID like Mannwich, riding out the rise and fall of counter-intuitive rallies on higher unemployment figures. TARP II, and 925 Bn stimuli prospects.
Continued debt destruction, downward pressure on CRE prices, falling demand for high tech.
February 6th, 2009 at 1:39 pm
Jdamon33
I was buying FXI in November along with my hard asset strategy.
I’m not buying the doom and gloom talk so much coming out of China and unlike us they already got a big infrastructure bill passed. Now all the bears can hit me with some stats.
I don’t own the Brazil etf, (EWZ?) but they have had a good start to the year.
Seems to me when looking at future growth prospects of us and them that the Chinese/Brazilian markets have really taken a big pounding and I’d rather be long than short if I had a time horizon of more than 3 years.
For what it’s worth, I traded around with FXP last year but that was one of the ultrashorts that got taken out by volatility and had a hard time providing that inverse over a stretch. I think you’d be better of shorting China differet ways.
For example, when the tech cycle ends, if BIDU has run up you could have a short position there as the multiple on a stock like that might still need to contract quite a bit before this is all over. Might be an easy way to make a good profit if we do indeed get a quick bounce into the spring.
I hate all banks and wouldn’t invest a dime of my fake paper money in any of them, for a trade or not I’d rather just be elsewhere.
February 6th, 2009 at 1:44 pm
Selling out of CAT today for a gain of about 11%
Don’t really love the stock but picked some up after the earnings announcement and job cuts, they shot down real quick and I bought at exactly $30.
that was fun.
@lb
When you say gas do you have nat gas at all? I played with XTO and CHK last year as well as some EP, I made some then lost some and ended up about flat on those trades. I haven’t really gone back into those much but maybe they are worth taking a look at? The futures contracts for nat gas are fairly high out to Dec. but nat gas had run up so much I’m not sure about it.
February 6th, 2009 at 2:03 pm
leftback Says: February 6th, 2009 at 10:30 am
Once the market stops going down on bad news, there are no more sellers, and I would not be surprised to see a buying stampede in the next week or so.
Stampede! Some sleepy bulls may be just about heading out of the stockade here.
@ben22 i own UNG, the seasonal trends favor nat gas in Q2 and then there is stimulus, $ decline and clean energy trend, so what’s not to like? Buy any dip below $19.
February 7th, 2009 at 4:58 pm
“Also worth noting: Our “modest proposal” from last summer that U3 and U6 data should be reported has gained traction. The WSJ prominently mentioned U6 this month:”
The WSJ change emphasizing how much WORSE things now are just happened to occur at the same time a Democrat took over from a Republican in the White House.
What are the chances? … naw, that’s just crazy thinking.
Must have been that ‘modest proposal’.