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Hooray the unemployment rate plummeted to 9.0%!

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February 04, 2011 – Comments (7)

Hooray the unemployment rate plummeted to 9.0%!...wait a second, the nonfarm payrolls number only rose by 36,000, 100,000 less than forcast.  Huh?

This morning's jobs report was a really strange mixed bag. 

The unemployment rate fell...that's good.

The country added significantly fewer jobs than expected last month...that's bad. 

Average hourly earnings rose...that's good.

The average workweek for private-sector employees fell...that's bad.

Odd numbers.  Sure the weather may have messed with things a little, but really the only thing that I can take away from this is to ignore the numbers ;).  Anecdotally it seems to me as though the economy is getting better, very slowly.  I think that there are opportunities to make money by investing stocks given the amount of money that the government is printing.  The "core" industries that many economists ignore when looking at inflation, food and fuel, should continue to do well in the near term.  With Brent crude over $100/barrel it's only a matter of time before oil hits $100 here in the U.S.  Plus, I continue to expect the prices of agricultural commodities to rise.

Economy Adds Few Jobs

Deej

7 Comments – Post Your Own

#1) On February 04, 2011 at 9:58 AM, OneLegged (< 20) wrote:

Don't forget the revisions which are ALWAYS downward and, indeed, where again this time.  The BLS initail reports have gotten to be a bit of a bad joke.

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#2) On February 04, 2011 at 10:14 AM, alstry (36.32) wrote:

Deej...

You simply don't need as many jobs in the Digital Age....

NFLX replacing tens of thousands of jobs at Blockbuster

email replacing hundreds of thousands of jobs at the Post Office

Online education replacing millions of teachers and professor jobs

Video conferencing reducing the need to travel....we are flying about 1/3 fewer planes than we did a few years ago....although offset by higher passenger counts per plane

If you can't see this trend yet....you will soon.....

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#3) On February 04, 2011 at 11:18 AM, russiangambit (29.40) wrote:

Yep, if we could just get all these unemployed people stop looking for work, move in with relatives and continue living off the food stamps we could get the unemployement rate down 0%. (sarcasm off).

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#4) On February 04, 2011 at 12:04 PM, Rehydrogenated (32.26) wrote:

Our company is doing great! A competitor with 60 employees went out of business so we picked up 3 new hires worth of accounts. Sucks to be the other 57...

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#5) On February 04, 2011 at 12:45 PM, leohaas (31.21) wrote:

Of course, there is a hundred ways to spin this. Or you can just impeach the numbers, if you don't like them (or who issued them).

Usually, I trust the official numbers (go ahead, call me naive). But this month in particular, I don't. This article on Bloomberg shows why:

"Bad weather prevented 886,000 Americans from going to work in the January survey week, the Labor Department’s survey of households showed today. That compares with an average of 282,000 over the previous five Januarys. Economists at Morgan Stanley said before the report a figure around 475,000 would be consistent with about a 50,000 reduction in overall payrolls."

The official numbers take seasonal fluctuations into account. But of course, it does so by adjusting the reported numbers with an average that is appropriate for the reported period. Because the weather has been a lot worse in many parts of the country, more than 600,000 extra people were prevented from going to work in January. I am not sure how to read this, but it does mean that the job numbers are less reliable than usual. The wildly fluctuating weekly unemployment numbers over the last several weeks support this claim.

We will just have to wait until a month with average weather (for the time of the year) to draw any conclusions. That could be awhile if Global Warming alarmists are right...

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#6) On February 04, 2011 at 5:29 PM, davejh23 (< 20) wrote:

I agree that the weather skewed the report.  However, without the weather effects, we might have added ~100K jobs and seen the unemployment rate increase to 9.5%.  Bad weather may have kept some construction workers home, but it also could have kept a large number of unemployed workers from looking for work.  I wouldn't be suprised to see +250K next month with the unemployment rate increasing to 9.6%...I could be wrong, the labor force participation rate chart is pretty ugly.  If the unemployment rate drops into the 8 range next month on the back discouraged workers (not a massive jump in jobs), I'd bet that we'll see a double dip in 2011. 

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#7) On February 04, 2011 at 9:50 PM, OneLegged (< 20) wrote:

There is a recent interview with Mr. Stockman on CNBC where he states that the number of employed people in the U.S. today is the exact number that where employed 12 years ago.  Holy dog poop Batman!

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