Thursday, 10/24/2013  Employment Data

I was going to blog about why I own gold.  I still may, but for this post the employment data was not good.  In the old days, before QE, this would have been a large drag on the stock market, and the market was down slightly.

Employment Data Yesterday

	Prior	Prior Revised	Consensus	Consensus Range	Actual
Nonfarm Payrolls - M/M change	169,000	193,00	185,000	155,000  to 240,000	148,000
Unemployment Rate - Level	7.3 %		7.3 %	7.1 % to 7.4 %	7.2 %
Average Hourly Earnings - M/M change	0.2 %		0.2 %	0.1 % to 0.3 %	0.1 %
Av Workweek - All Employees	34.5 hrs		34.5 hrs	34.4 hrs to 34.6 hrs	34.5 hrs
Private Payrolls - M/M change	152,000	161,000	184,000	154,000  to 245,000	126,000

"The payroll data and household numbers were mixed in September at the headline level but soft in detail. Markets were looking over their collective shoulder at the Fed. Total payroll jobs in September advanced 148,000, following a revised increase of 193,000 for August (originally up 169,000) and after a revised gain of 89,000 for July (previous estimate was 104,000). The consensus forecast was for a 184,000 gain for the latest month. The net revisions for July and August were up 9,000."  ECONODAY

The Obama Administration month after month is telling the readers in the USA that fiscal policy is fixing the jobless rate.  That the USA is not in a recession, and we are moving to "fully employed" (which the Federal Reserve has defined - arbitrarily it seems - as 6.5% per BLS (Bureau of Labor Statistics). 

Something seems terribly out of whack as the people applying for Welfare type programs continues to increase substantially.  The number of jobs being created is not even enough to employ the young people coming into the labor market.

As I've talked about in the blog, QE is transferring money from the lower layers of the economic stratum to the uber-rich.  

With the data being so bad, Wall Street bought the equity markets, driving the markets to new heights.  Yesterday it rested a bit, and today (as of 6:36 PDT) the market is above yesterday's close.  

Why is this?  Well from an outside observer's view, Wall Street sees bad news as good news for the stock market.  The rational (if it is rational) seems to be that the Federal Reserve will have to delay tapering.  Of course, the decline in the number of unemployed from 7.3% to 7.2% should be disconcerting. 

From Goldman Sachs: "this report makes it more likely that the Fed pushes the first reduction in the pace of its asset purchases into 2014... we think that March is the most likely date under our economic forecast."

What is very disconcerting to someone trying to understand the big picture is the Labor Force Statistics. (I attempted to put the graph here, but at the time of posting, Google has a problem.  Here is the link to BLS:  

http://data.bls.gov/pdq/SurveyOutputServlet

As we can observe, the labor force participation rate is back where it was in 1978. Does this not indicate that something is odd about the Obama Administrations communication that jobs are being created by the millions?  Would not the labor force participation rate be increasing if real jobs were being created?  

Possibly (actually factually) the unemployment rate (which is just those on the extended unemployment program) is dropping because people are dropping out of the work force; not because they got jobs.  BLS reports the U-3 number, and this is the number that is the HEADLINE number.  The U-6 number is the unemployment rate the BLS uses as the broadest unemployment measure.  This includes those forced to work part-time because they cannot find full-time employment.  Actually, if one was to go back to the '70s and '80s, and use the calculation for U-6 they used, the unemployment rate would be higher yet. 

The official U-6 number is 13.6% (although this is falling which is good news - not for Wall Street, but for my fellow man). 

What is not good news, is that unemployment should be falling rapidly if we were truly out of a recession.  Not only should it be falling, people on welfare programs (foodstamps, Social Security Disabled, full Welfare) should all be falling, and exactly the opposite is happening. 

Then why would Wall Street be up approximately 150% since the low in 2009?  As others have concluded, the Federal Reserve of the USA QE has driven asset prices out of sight (and it is not only in the stock market - it is also housing). 

 The results for the lower economic strata (below upper middleclass) are the value of the dollar has decreased, wages have decreased, and almost every consumable is more expensive since 2009.

Well, that is the way I see it. (And as the quote from Mr. Obama yesterday show, he also is beginning to see it.)

Post Office $5.6 Billion Default Raises Urgency of Reforms

The third default on the down-payment in just over a year underscores the necessity of much-needed reforms for the beleaguered Postal Service.

I don't have to tell you this is another piece of bad news, as the Post Office is part of Government.  This will not only require stamp price increase, but a bailout from the taxpayer.

This Just in For What it is Worth:

Since Congress reached a deal to suspend the Gov't's debt ceiling until Feb (just one week ago) the Treasury Dept has racked up $375 Billion in new debt. IF they continued on that pace until February, our national debt would reach $22.7 Trillion.

Wow... adds up quickly does it not?

Come on citizens...  This is crazy even for the most liberal socialized citizen out there.