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Friday, August 2, 2013

Unemployment Situation Persists Despite Data Manipulation

The new Bureau of Labor Statistics employment report holds dire news for Main Street, and may be good news for Wall Street but only for the moment.

The employment rate increased by only approximately 162,000, the smallest gain in four months.  This is anemic by any measure. However, most people will be fooled by only concentrating on the "headline" figure which is the announced unemployment rate.  This "jobless rate" has fallen from 7.5% to 7.4%.  But as some of us have been saying for years, the important data is not the number, but how it is calculated.  

If you think this jobs report is a sign of "economic growth" or a validation of the massive regulatory hit that the Patient Protection and Affordable Care Act (aka, ObamaCare) holds on the nation, go ahead and invest in equities. There are smart investors who will be happy to sell you -- at a price favorable to them, naturally -- what remaining equities they hold.  Losing money as an investor is part of the risk of being either an idiot, to be frank, or having an attention span disorder.

Here are some other conclusions to glean from the report. First, the employment figures for the last two months were adjusted downward by an aggregate of 26,000. Those figures weren't much to brag about, either, so the economy persists -- at best -- at stall speed.  Secondly, the metrics for both average workweek (hours worked per week) and wages per hour are down.

A plane at stall speed risks falling like a stone. Just consider the analogy.

Other interesting factoids:

Here's one to make you question the data. Black unemployment is down 1.1 percent from June to July 2013. That's a huge move. What explains that?  Oh, by the way, Asian unemployment is UP 0.7 percent and Hispanic unemployment is UP 0.3 percent month to month.  Remember, these are estimates from a small sample size.

The number of discouraged workers is estimated to be 15% higher in July 2013 than in July 2012.

So what will you believe? The data? Or your lying eyes?

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