Every news media I looked at it is trumpeting good news - while unemployment increased in January, we're thrilled that it was only be 20,000 jobs. Because of this, the unemployment rate fell to 9.7% amid, as we learn on CNN "hope the economy will add jobs soon."
What's buried in the middle of the report is the real news - that revisions in employment estimates show that we lost 1.2 million jobs more than the previously estimated 7.2 million. This was higher than predictions, which expected an additional million lost jobs. That means that one in every seven jobs lost since December '07 went uncounted.
This is also a useful reminder that the current fall in unemployment numbers is probably understated - generally speaking the pattern has been to revise jobless numbers upwards, and this only confirms how huge an understatement we've been seeing. We can expect, has has been the relentless trend, to see the jobs numbers revised downwards for January, erasing most of these gains. For proof, let's just look at December:
The payroll number for December was revised to a net loss of 150,000 jobs. The government had previously indicated that 85,000 jobs were lost in December.
Ok, so that's nearly doubled. Almost double the January figures, and they are still better than December's, but not nearly as impressive sounding.
The relentless Pollyanna story of the economy's recovery is simply not matched by fact - overwhelmingly politicians, economists and business people alike have wanted so badly to see a recovery that they have created one. The funding of trillions into banks and bailouts has given a market lift with little significance for real people - and to quote the Muppet Beaker on his insane growth formula, the results are "Madly Memporary."
Consider also where the jobs are coming from. Of the jobs that were gained in January, 9,000 were derived from the US Census. More than a million more census jobs will be created over the course of the next year, but all of these jobs are temporary - unless there is a substantial change in the economy over the course of the year, most of those people will go back to unemployment. Also note that the government was hiring - but temporary census workers. 8,000 government permanent employees, the kind with retirement benefits, were dumped in the meantime. Of the remaining jobs created, 44,000 of them were temp jobs. Economists find this encouraging, because many businesses use temps to hire permanently. But many businesses also hire temps to avoid creating highly paid, benefits receiving positions.
There's a lot of material out there on how this slight boom in temping is a good sign - the claim is that temp growth is a significant indicator of economic recovery for historic reasons. But, of course, the role of staffing and temp agencies as a sign of economic growth goes back only two recessions into the 1990s - before that, temporary agencies simply didn't have the same roles or range of roles in business. So these historic indicators are of limited value - they show what happens in a very mild recession, with a stable recovery and an economy that allows companies to cautiously add jobs, and then make them permanent - and maybe that's what will happen here. But I think it is important to remember that many of the indicators (including the birth/death jobs model that erased 1.2 million jobs) aren't that accurate in a long term, deep recession. Those temp jobs could be good news - or they could be evidence that when we do hire, people ,are getting crappy jobs, low paid, no benefits jobs, to replace good ones - and jobs that won't last, that will cast them back on depleted unemployment funds again.
As I write this, the Dow is back down below 10,000 again. Will this last? Who knows? But as long as the Pollyanna story keeps going, I have no doubt that someone will tell us that this is proof that the magic recovery is just around the corner.
Updated to add: Actually, I think The Onion has found a leading economic indicator that might actually work:
No wonder no one the man on the street voted for 90% more news anchor beheadings.
Well, as this article
indicates, they are obviously not reading your book ANOF, and similar books, in Washington.
Also, see Heinberg's latest at Post-Carbon or EB.
"As I write this, the Dow is back down below 10,000 again. Will this last?"
Good news for jobs = bad news for stock market. Also, bad news for euro = good news for dollar = bad news for stock market.
As someone who is temping and freelancing, I can say that at least in my little corner of the world, activity is a little better than it was, say, six months ago. I even see glimmer of possible permanent job ahead. And of course, "recovery" means more than just jobs. Businesses will be trying to ramp up production without new hiring. But without new jobs, then recovery will be hard to sustain. And "improving" conditions are a long way from "good". Even if new jobs start appearing, it will be a while before we see much improvement in unemployment.
I never did understand the euphoria over recovery with so many laid off.
Getting laid off will generally deplete the families assets, from check accounts to IRA's and stock portfolios. Assets representing decades of effort and planning disappear in months.
The economy might recover, and businesses stop folding. But families that experience harsher times, including losing the home, losing buying power, facing government program administration procedures - will never again participate in a consumer-driven "beat the Joneses" type lifestyle that the economy used to depend on. We still see today survivors of the 1930's Great Depression and their children that practice strange (to consumerists) economies and risk avoidances. We are creating, today, another such generation. That does *not* put money back into the economy just because an unemployed member of the family gets a new job.
If nothing else, the depression that always accompanies change, including starting a new job, will depress for months any willingness to accumulate "stuff" - even after the past due bills are paid.
Inflation in food prices since the downturn started is keeping things bad, economically at the national and family level. Additional taxes on employers and threats of new taxes dampen everyone's belief that things might get back to what we once knew - which is the fundamental lie that Washington, DC is telling, that everyone will go back to spending and living as they used to.
There is one way to encourage creation of new jobs. Reduce or eliminate corporate and business taxes, go to a simple, flat or VAT (value added) tax, and clear up frivolous but burdensome regulation. Oh, and ask the White House to stop organizing witch hunts against nearly-random targets. Like the gun industry, health care, non-Monsanto food producers, and people tired of the cost and obstructionism of organized labor.
Brad K - you will not find many people more pro-gun rights than I am, but I have not seen the White House do anything against gun owners in the last year, nor have I been particularly concerned that they will. Obama is a very cautious middle-of-the-roader and is not going to stir up that much controversy for anything he doesn't see as a top priority. And he has many bigger fish to fry now.
I teach as an adjunct at a community college. I guess that's why I've wondered lately that all the talk about recovery and new jobs hasn't mentioned (that I've heard) much about job training programs.
Is part of the reason why there is so much unemployment is because people don't have the right training for the jobs that are left? It's an over-generalization, I know, but wouldn't it be great if a person could get a grant (maybe covering two years of community college and childcare expenses) that wouldn't have to repaid if the person completed the program?
My fellow FRTAE blogger, Ky, told me yesterday that every single one of the temp-to-hire employees where she works (she is one) was changed to 'temp' a couple days ago - a strong sign that the company doesn't intend to actually permanently hire anyone, in our estimation.