Saturday, January 5, 2013

Friday's Jobs Report Was Weak ... And the Outlook Is Weak, Too

Yesterday's jobs report was pretty much a ho-hummer.

After an upward revision to November's numbers from 7.7% to 7.8%, the December unemployment rate stayed at a very high 7.8%. 155,000 jobs were created in December, essentially in line with expectations, as slow growth economic growth continues to contribute to high levels of unemployment.

Although we've had improvement over the past year, the official unemployment rate today would be 8.3% and not 7.8% had the labor force and working-age population grown at the same pace during the past twelve months. Fewer people in the labor force equals a lower stated unemplyment rate. See Peering Into Fed's Jobless Rate Ball. 

And the broader unemployment rate which includes part-time and discouraged workers remained at 14.4%.

We have too few people working in the private sector, and too many people working in the public sector. Thus, it's an uphill battle to bring our nation's finances under control. And to do that, we need more output (such as in manufacturing and developing energy independence), more earned income and more tax receipts which would result from hiring the needed private sector employees to produce additional goods and services. This is the only sustainable way for us to bring a state of stability to our nation's financially and morally debilitiating deficits and debts. Economic growth led by growing the private sector and shrinking the public sector. Period.

But our elected aristocrats are not even focused on doing the right things yet, so be prepared for a long slog ahead, no matter whether you consider the unemployment rate to be 7.8%, 8.3% or 14.4%. Until the attitude of We the People changes, the behavior of the government officials will remain reckless and counterproductive. In other words, until We the Minions get "mad as hell and refuse to take it any more," it will be business as usual with the government knows best gang. And that ain't good. Not good at all.

Self government, anyone?

Tepid Job Growth Fuels Worry says this in pertinent part:

"The U.S. job market finished 2012 chugging along in the same low gear of the past two years, stoking nervousness over sluggish economic growth ahead as new risks from Washington loom over the coming weeks.

Employers added 155,000 jobs in December, in line with the average gains of 2011 and 2012....

But the latest jobs data indicated little potential for accelerated hiring in the new year. Growth is expected at best to continue at a moderate 2% pace, barring new shocks to the economy. Prospects for a stronger upturn, at least in the first half of 2013, remain slim. Many economists worry about losing even more ground, especially as lawmakers launch a potentially risky political battle this winter over raising the federal debt ceiling.

The U.S. economy grew at an average annual rate of 3.6% from 1950 through 1999 but has since slowed to less than 2%, prompting an economic debate over whether the post-World War II boom can again be duplicated.

Since the recession ended 3½ years ago, economists have been divided over long-run growth prospects after the downturn pushed millions of Americans out of the labor force. Looking forward five to 10 years, the argument goes, annual U.S. growth may reach a ceiling of 3% and unemployment could settle at a rate above the 5.7% annual average recorded during the last half of the 20th century. . . .



Four Years Later, 28,000 More Jobs places the latest jobless report in a longer term context:

"For jobs, the past four years have been a wash.
The December jobs figures out today indicate that (since the end of 2008) the number of people with jobs is up by 28,000, or 0.02 percent. . . .

Over all, Mr. Obama’s first four years narrowly — and preliminarily — escaped being the second four-year presidential term since World War II to suffer net job losses. The first was George W. Bush’s first term. . . .
The December figure will of course be revised for the next two months, and then will get a final revision in February 2014. Only then will it be clear whether the past four years had a net gain or loss in jobs."
Summing Up
Economic growth is painfully slow, and it's likely to remain painfully slow.
Unemployment is painfully high, and it's likely to remain painfully high.
Deficits and debt levels are painfully high, and they are likely to remain painfully high as economic growth remains painfully slow and government spending remains painfully high.
Political uncertainty will cause high uncertainly and low confidence for consumers as the government knows best gang continues to occupy center stage and scare the hell out of We the Minions throughout the first half of 2013 and perhaps beyond.
In other words, 2013 looks like it will continue to be slow going as it has been these past four years.
And that's the news.
Thanks. Bob.

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