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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September 4th, 2009 at 7:57 am
Agree with your prologue, Barry. There is simply no way John Q. Public comes out of this quickly with such damage to their number one costly purchase, housing….Until housing stabilizes at a lower level, we’ll be here awhile. The shadow inventory that we’ve all been reading about appears as though it has a long way to go before it is worked down..
I notice from the media that states have now taken to furloughs on a much grander scale for state government employees…could it be that the private citizen and the state worker will come to an equilibrium as far as costs to the taxpayer, and that the only running open sore will be the national government employee?
September 4th, 2009 at 8:08 am
Maybe we’ll end up on the 35-hour work week plan like the Europeans to goose our employment statistics?
I’ll be watching aggregate hours, temp help, and revisions this morning (especially revisions). As Bush once said, “There’s an old saying in Tennessee — I know it’s in Texas, probably in Tennessee — that says, fool me once, shame on — shame on you. Fool me — you can’t get fooled again.”
Also, watch those TIPS. There was some interesting action there yesterday. Are the inflationists retreating?
September 4th, 2009 at 8:24 am
“If the public is right and the pros wrong, what might the labor market and jobless rate mean for foreclosures and consumer spending?”
Well… that’s a good question and I found another take on it on Seeking Alpha – Scary Drop in the Velocity of Money
http://seekingalpha.com/article/159814-scary-drop-in-velocity-of-money-is-deflation-knocking?source=article_sb_popular-
“Velocity of money is continuing its downward trend which began in 4Q 2007. Some believe we are experiencing deflation. For sure, there is no apparent inflationary pressure. But this begs the question, as the fall in velocity in 2Q 2009 was approximately the same as 3Q 2008 when the economic maelstrom was being revealed – is a recovery underway?”
September 4th, 2009 at 8:42 am
The majority of stimulus was used to save state and local governments, now without taxes coming in they are stuck…………imho, your dates are optimistic, without growth in sales we got bupkus, we will have uneployemnt running out en mass starting jan 1…………..i can hear it now…..stimulus II coming in q1 2010………….all because of employment…………and away we go
September 4th, 2009 at 8:45 am
Large revisions of the last two months…as far as unemployment…that is the reason why the rate increased to 9.7%….Now do you think this month’s 216k will be revised to a greater number next month?
…Hmmmmm?
But don’t worry, if you get a good education, you’ll do ok….unless maybe you follow the government’s plan and get too far in debt to pay off that education before you are 40…
http://online.wsj.com/article/SB10001424052970204731804574388682129316614.html?mod=rss_US_News
Students Borrow More Than Ever for College
Heavy Debt Loads Mean Many Young People Can’t Live Life They Expected
“New numbers from the U.S. Education Department show that federal student-loan disbursements—the total amount borrowed by students and received by schools—in the 2008-09 academic year grew about 25% over the previous year, to $75.1 billion. The amount of money students borrow has long been on the rise. But last year far surpassed past increases, which ranged from as low as 1.7% in the 1998-99 school year to almost 17% in 1994-95, according to figures used in President Barack Obama’s proposed 2010 budget.
The sharp growth is “definitely above expectations,” says Robert Shireman, deputy undersecretary of the Education Department. “But we’re also in an economic situation that nobody predicted.” The eye-opening increase in borrowing is largely due to the dire economic environment, which is causing more people to seek federal loans, he says.”
Four day holiday today folks! Yipeekayohkiyah….!
September 4th, 2009 at 8:51 am
It was a good article, Bruce……….take away, if you want prices to rise you provide credit and more credit and slowly she turns inch by inch……..
September 4th, 2009 at 9:06 am
@lb
Can’t you just “taste” it?! :-)
September 4th, 2009 at 9:47 am
“With both inflation and deflation perilously close to the terrifying figure of 0, and the sun’s radius still expanding inexorably on a daily basis, gold seems set to advance again today”, said Hans-Jürgen (“Hansi”) Oberscheißer, a commodity trader at Oberscheißer & Überscheißer Metallgesellschaft GmbH, this morning. “We also like the US unemployment figure of 9.7%”, he said. “This is very bullish for gold as unemployed Americans are known to order gold-plated faucets for their bath tubs, and gold hub caps for the Ford Pinto.”
September 4th, 2009 at 10:10 am
What a bunch of whiners.
September 4th, 2009 at 11:05 am
Bruce
I thought this quote from that article re: student borrowing was even more interesting, and disturbing:
“Also, the rising levels of borrowing may ironically be contributing to the accelerating cost of college, say some college-finance experts. Loans can give colleges an artificial sense of a family’s ability to pay tuition. To some extent, that false sense of security gets built into the assumptions schools make when setting prices, say experts. The idea is that as prices rise, families borrow more and more, spurring prices to rise further, which in turn requires more borrowing.”
It’s finally dawning on them what has been causing the inflation in college costs, it seems. Karl Denninger also highlighted this article in a good post:
http://market-ticker.org/archives/1404-Is-The-Light-Flickering-On.html
September 4th, 2009 at 1:27 pm
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