OK, let’s get this out of the way:

Consensus for today’s Payrolls are gains of 95,000, and a jobless rate of 9.1%.

By now, you know my leading indicators: Wages, Hours Worked, Temp help. Unless these improve, the actual number — from 50k to 150k — is mostly noisy, frequently revised data series that represents a net monthly change of about one tenth of one percent in a labor market of 143 million workers.

What matters more to me is the overall trend in employment data as it impacts the many aspects of the general economy. Let’s look at this issue in a Question and Answer format:

• Are jobs readily available? No.

• Is the economy creating enough jobs to reduce the unemployment rate? No.

• Are we even creating enough new jobs to keep up with population growth? No.

• Is the overall employment situation having an impact on Consumer confidence? Yes, negatively.

• Is this impacting consumer spending and retail sales? Yes, in a negative way.

• What is the likelihood the employment situation improves soon? Modest at best.

• Will the jobs report impact the thinking of the Fed? Only if its an extreme outlier.

• How about Congress? Their dysfunctionality prevents them from responding.

• What does this mean for the markets? Short of an outlier, very little.

• Isn’t the economy a key of earnings and therefore equity valuations? At times yes, but the economy is not the market’s driver these days.

• What is? Markets are being driven to the down side by European concerns and to the upside by excessive liquidity and an under-invested hedge fund community.

Thus, we continue to downgrade the significance of the monthly NFP, and stay focused on the ongoing trend, which has been disappointing to say the least. Keep watching the three internal components that are forward looking, and beware of any outliers.


Employment situation report released at 8:30am

Category: Data Analysis, Employment

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

20 Responses to “A Short NFP Q&A”

  1. mark says:

    Given the standard deviation of the jobs number, most of the numbers we’ve been getting are not different from zero. Not being a trader, wages is (are?) the number I look at as the most important to the longer term situation. It’s the key to the inflation/deflation debate.

  2. danno says:

    I am a small business owner and we do about $4mm a year in sales. From my perspective, the negative conditions are driven long-term by attempt to comply with endless rules. For example, I have to change my health plan to a less rich version from another supplier due to rates going up from Obamacare. But, it’s not that simple. The rules imposed on the insurance industry forces me to set up another one or two legal entities to allow differentiating health plans based on employee rank. This has been a real pain in the neck and I have spent a ton of time complying that should have been spent designing and implementing new machinery and expanding my client base.

  3. Chief Tomahawk says:

    Can’t we count the Occupy Wall St. movement as self-employed? Then we take that out of the unemployed number, design derivative products modeling their apparent productivity, and sell them across the world to hedge funds chasing performance, etc. Ought to be good for a pop, followed by a bailout.

  4. TripleSigma says:

    Fantastic post. Could not agree more.

    I dont know why the true unemployment numbers are not getting more coverage. 9.1% is very hard to believe.

  5. MayorQuimby says:

    Birth death added 104k fantasy jobs. Food stamp program up to 46 million from 44 million last year. Delinquencies are up once again (home) and student tuition defaults are rising. The government was the last bubble…the last place cheap credit could flow. Now the gvmt is stuck with soaring bills and debts which are unpayable and the real economy continues to erode and get crushed under the weight of easy liquidity become inflation. Alarm bells should be going off in everyone’s head but people see what they want to see not what is right in front of their eyes (giant chasm and the brakes are cut).

  6. Lukey says:

    Barry, regarding Congress’ inability to do anything, I’d be interested in hearing your thoughts as to what they might actually do that would help. It seems like some people think we are just a government stimulus program (or two) away from a return to prosperity. I’m not sure if you are in that camp or not.

    It looks to me like our economic problems are much too intransigent to be dispatched by simply more government intervention in the economy and a bigger budget deficit. In fact, I wonder if that isn’t part of the reason the economy is struggling to recover from the recent downturn. I’d certainly love to see you expand on that point.

  7. [...] …but it doesn't matter all that much anyway, here's why:  (TBP) [...]

  8. mathman says:

    Two things bother me about government stats these days:
    a) they almost always go back and “revisit” them – revising them (usually to the worse, as had been expected) so that they become “unbelievable” or better stated “inaccurate.”

    b) they rule out important factors that would otherwise have a more negative effect on that being measured – again making them a poor source for the reality of the situation.

    There are other concerns – what KIND of “jobs” are being created? By and large they are minimum wage or service sector jobs which don’t support living in current America (unless you sleep in a public shelter or lean-to in the woods and have no dependents, health care, transportation, insurance, etc.).

    Here’s an 11 minute education on the brain and why we live in such a paradoxical world (0f our own creation):

  9. NoKidding says:

    The revisions for the last few months were actually positive this time. The new data is not any more special than the old, but I was surprised by that.

    BR’s analysis looks spot on.

  10. MayorQuimby says:

    Math- the gvmt is trying to squeeze a glass of lemon juice out of a lemon PEEL.

    You are the lemon peel.

  11. Mike in Nola says:

    Very impressive use of the Socratic method. A lot of analysis packed into a very small space.

  12. econimonium says:

    dano’s post above is typical of people’s garbage about all of this. He’s making it hard to get around rules instead of just doing what he’s supposed to. If he’s really making 4mm in a small business, and setting up other legal entities, isn’t it just easier to PAY THE EXTRA MONEY? So he’s either really stupid, or he has no understanding of what to do, or worse he’s just screwing his employees. I live in MA and I happen to own a small business on the side with a partner. We have had what he refers to as Obamacare but I refer to as Romenycare for quite a while now. I find no differences at all except the truth that all health care is going up and it has nothing to do with these programs, and if you just comply or if the cost is too rich make your employees shoulder more of the cost. And I PROUDLY provide insurance options to ALL of my employees and pick up a share of it beyond what’s required. That’s why I have excellent employees who make us money. This guy sounds like a real treat to work for huh? That’s just what America needs! More people like him screwing his workers…or at least my interpretation of what was written.

    For God’s sake people will shoot themselves in the foot instead of just doing what they’re supposed to, so that they can bitch about their political perspective and be selfish. Repeat after me: there is no “burden” attached to health care laws or “regulations”. None. There is, however, a clear problem with DEMAND. And unless there is a goose to demand, this is going to continue to drag. You can make up all the crap you want but that’s the deal.

  13. rootless says:


    Birth death added 104k fantasy jobs.

    So, if you think the B/D adjustment is relevant for any conclusion to be drawn and a pure fantasy number, subtract it out and you get a payroll growth of about 70,000 last month, instead of the 80,000. Now what?

  14. theexpertisin says:

    Excellent observation on the jobs report. We are in a quagmire, and no political spin erases reality.

  15. rootless says:


    You are complaining about government statistics:

    a) they almost always go back and “revisit” them – revising them (usually to the worse, as had been expected) so that they become “unbelievable” or better stated “inaccurate.”

    Revising the data comes with the nature of statistical sampling. In the beginning, there is a limited data set. Then more data become available, and the statistics are revised with more comprehensive data sets. No government conspiracy here.

    How would you like to have it so that you would find the statistical data more “believable”? Would you like that the published statistics weren’t revised, even though more data sources become available with time? Or would you like that the government waits with publishing any data before the information from all the data sources is in? That can take years.

    Your claim that the statistical revisions are “usually” “worse” than the first releases doesn’t pass the reality check, e.g., for the monthly payroll numbers:


  16. wally says:

    The vast majority of excess unemployment will be soaked up when construction improves. That does not necessarily have to wait until single-family housing builds increase; multi-family build activity will also help that. The pressure for apartment construction has been increasing for about three years now; at some point it will start to break out. My guess is Spring of 2012.
    The only clinker here is that government construction spending has been deliberately throttled back to an extreme low level… and that will offset private construction increases to some degree.

  17. Molesworth says:

    BR: Markets are being driven to the down side by European concerns and to the upside by excessive liquidity and an under-invested hedge fund community.

    Thank you for explaining that. I was wondering about the upsides that seem just crazy to me.

  18. Greg0658 says:

    turned the tube off today .. off spreading my cheer on the strip sucking up some suds .. my most proudest aka “graphics” has been feeling like a pirahã of late with another week of taking the recyle bin out to the curb & fiilling the www with bits … is that clear enough aka our gross domestic product of late

    can’t beat em join em .. the detached* / not the scoundrels ….. I wish I could quit yous :-|

    * – maybe another word bit or 2?

  19. willid3 says:

    if you look for enough back, you noticed that wages for the most part (with only a minor up tick in the 1990s) have been on a downward slope
    thats what drove the big credit bubble, to make up the differences in incomes, if wall street hadn’t been able to dream up a method to make those loans (the ninjas, etc) by the new method of originate to sell model, the entire decade of the 2000s would have looked just like now.
    problem is with a credit bubble, when it bursts, it has pulled forward a lot of demand, that couldn’t have happened without it, so going forward demand will continue to crater (which is what drives a capitalist society. without demand, you will not be business long). it has also put the consumer (those who drive the majority of the economy, without which there will be no business investment, into heavy debt (many factors larger than the government debt).
    while businesses seem to be doing well, for now, unless some thing gets the economy going it will be temporary.
    and without domestic demand, and with plunging international demand, just where will it come from?