As long time readers know, most of the employment data from the US government is extremely suspect so we're not going to analyze most of the report as garbage in, garbage out analysis is a waste of time. 5.[May 10, 2008: Finally Some Mainstream Reporters are Figuring Out the Spin from Government] We'll wait for the TrimTabs data to get a better look at reality; remember the data from this private firm is generally correct from the get go, whereas the government data is revised over a period of months and indeed quarters to eventually get to the same answer TrimTabs provides immediately. [Dec 6, 2009: TrimTabs Continues to Dispute US Government Payroll Data]
*If you are very interested in the topic and new to the blog we explained in depth why the government data is understating reality in this piece. [Apr 3, 2009: Real March Unemployment Rate Reaches 12.5%] I've since given up wasting any time analyzing it but my belief is true unemployment as measured like it used to be (before politicians got involved in helping smooth the data) is 14%+. [Oct 2, 2009: True September Unemployment in America Reaches Towards 14%; Our System is Broken]
Also remember there are actually 2 labor reports released today; one with the nominal numbers of jobs gained/lost and another that affects workforce participation and the unemployment rate; the latter showed some scary things but more on that later.
Traditionally at the beginning of a job recovery you want to see (a) workweek increased and (b) temporary jobs surging.
The workweek has been stuck between a (record low) 33.0 and 33.2 hours for much of this recession. After bouncing to the high end of this very narrow range in November, we remained at 33.2 hours in December. So that measures is neutral.
Temporary jobs have picked up the past few months, in October it was over 30,000; in November 52,000 and in December we see 46,500. While a positive there is no acceleration in temp hiring which we should be seeing.
Outside of those factors wages increased 0.2% which is at the top end of the range we've been seeing during the recession; recall we actually saw a few months where 0.0% wage growth was reported.
Now for the scary figure; the labor participation rate. This is where the unemployment rate is figured; remember in America if you are not actively seeking work for 4 weeks you no longer are unemployed. So all the people who have given up... well they simply get lost in the system. This is how the unemployment rate can stay stable or indeed even fall even if there are job losses.
What we saw in December was frightening - well over 600,000 Americans left the work force. I am not sure if we saw figures like those even at the height of the recession. At this point in the recovery people should be encouraged and ENTERING the job seeking process. Instead over half a million Americans just gave up. This is why the unemployment rate (which is vastly incorrect) stayed at 10.0%. I assume if the workforce participation rate was flat with November the unemployment rate would of surged back up 0.2-0.3%ish. (could be higher, I am just estimating) I can only wonder where these 600K+ people went to... I assume many just took early social security, are going onto welfare rolls, or applied for disability - all 3 areas of social services that are seeing big spikes in the recovery.
All in all, a disappointing report considering the trillions of spending we are doing to keep this economy on morphine. Also consider some people are being hired for the census, which will only accelerate from here until the summer and make the numbers look better than they are for the next few quarters. [Dec 20, 2009: NYT Economists See Lift in 2010 Census] Of course we are not even touching on the millions of MBA holders working at Walmart or holding temporary work. [Apr 2, 2008: The Underemployment Rate is Rising]
Once more let me stress just to break even with population growth we need to be creating 125,000 jobs a month. With the government constantly inflating job growth through it's fake figures in the birth / death model 4.[Jan 27, 2008: Monthly Jobs Report & Birth Death Model] today's -85,000 is more likely something like -200,000... I assume TrimTabs will put out a figure closer to my estimate than the federal government's handiwork. After 2 years of job losses this economy (if healthy) should be rebounding from such a dramatic drop and pushing out a couple hundred thousand jobs a month at this point.
That is bad for Main Street. However for Wall Street - remember, the less people working the more profits. Government keeps borrowing and handing out money, and hence consumers can spend (along with the fact many no longer choose to make their mortgage payment and are living rent free!). In the Wall Street Utopia there are no workers - because that's just added cost. This employment data should bode well for corporate profits in the quarters to come - benign wage inflation, little to no hiring and what there is is dominated by cheap temps, and away we go to prosperity.