The following are some of my quick reflections over the past weekend on last friday’s August 5 US jobs report that’s being hyped as proof of an over-heated labor market and therefore no there’s no US recession yet. But there’s a ‘bombshell’ within the Jobs Report that no one’s talking about, indicating the jobs creation is actually not robust and is actually hitting a wall. See if you can identify what the bombshell is in the report from my initial comments. (An article providing my full analysis of the Report will follow tomorrow, Monday, August 8). In the interim, here’s my initial reflections of the friday jobs report in some quick tweets: (chronological, from most recent first):
#Jobs: why the big gap in July in 2 US jobs surveys CES & CPS–CES, large corps, showing +1.6m jobs since March ’22 vs.CPS, smaller businesses, -110,000 jobs decline? Maybe big corps doing well or haven’t yet joined the jobs contraction while small-medium businesses already laying off
#Jobs: yes, jobs rose roughly by 5 million per Jobs Reports over past 12 months. But bigger fact is that jobs growth hit a wall this past spring, and is about to sharply decline as Fed hikes rates aggressively and US recession deepens. (Yes, Virginia, we are already in recession!)
#Jobs: Households Survey, CPS able A-8, in July Jobs Rept shows net DECLINE total employment of -180,000 from May ’22 thru July ’22. Thus, big gap between the 2 jobs surveys, CES & CPS, as CES (big corps survey), shows +528,000 jobs. So why does media report only CES and not CPS?
#Jobs: Govt monthly jobs reports are from two (contradictory now) surveys: the CES (larger corps reporting to govt) and the CPS (telephone survey of 50-60K households every month, reflecting trends in small businesses. (CES also has problem with seasonality adjustment since Covid)
#Jobs: Govt Jobs Reports don’t represent workers getting new jobs after unemployed. Reports reflect ‘Jobs’ increases not ‘Workers’ newly employed. Thus likely reflect rise of 800,000 part timer ‘jobs’ taking on second jobs (i.e. multiple job holders). This=sign of market weakness
#Jobs: think about this when reading 528,000 ‘new’ jobs created in July in latest Jobs Report: Full time jobs are declining, while part time rises by 800,000 in just July. And 263,000 rise in those with multiple jobs. Could it be business hiring mostly part-timers holding 2nd jobs
#Jobs: here’s another contradiction in latest US Jobs Report: the one job survey (CES) for large corps shows job gain since March of 1.6m. But the other survey of households shows, since March, a net employment drop of -168,000. So which is right? And why the big difference?
#Jobs: don’t get too impressed with 528,000 jobs ‘created’ (really just restored). Why? Jobs lag the economy’s current trend by 6+ months. Report says 32,000 new construction jobs but housing starts have fallen from 900,000 plus to around 570,000. Think there’ll be layoffs soon?
#Jobs: US Labor Dept Jobs Report today says 5.7 million workers still unemployed, in its U-3 category (full time jobs only). Same Jobs Report admits, in its U-6 category (includes part time, temp, gig, discouraged, etc.) that 11.8m still unemployed. Media ‘cherry picks’ the best #
#JobsReport: Key number is not the 528,000 or 3.5% jobless rate. It’s the 800,000 part time workers added, when there was no cut in average hours worked–so it must be mostly new part time hires. Means business growing cautious about hiring, substituting part time for full time
#Wages: How are households coping with the big fall in real wages (inflation up 9.1% over past year but wages only 5.2%)? They’re buying on credit in lieu thereof: consumer credit up record $40B in July after $100B in 2nd qtr. (Student loans now total $1.74 trillion; autos $1.36T)
#Jobs: In today’s Jobs Report, part time employment rises by 800,000 but average hours worked per week no change. Go figure. Furthermore, while official unemployment rate is 3.5% for full time workers only, it’s really 7.2% in same Report’s Table A-15 for all re. actual raw data.
#Jobs: WOW. Mainstream economists (and my) assumption of fewer jobs created last month was too low by 278,000. Reported new jobs 528,000. Watch Fed rate hike another 75 bps now & stocks contract. (But if 538k jobs added, why Job Reports’ Table A-8 shows 110,000 fewer jobs July?)
The job numbers are deliberately contradictory and misleading forcing economists to walk through a mine field of misinformation But the significant leap in debt tells the real story The lower 90% are being pushed down yet another rung on the economic ladder victims of brutal economic whiplash first price gouging by the Fortune 500 then interest hikes by the Fed