Reality On Employment

Much excitement about the unemployment numbers last week, and a jump in the stock market as a result of them. Forget the stock market; it is completely detached from reality. The Fed is creating $85 billion per month, and the only place for that money to go is the stock market.

As usual, when the media says that, “236,000 new jobs were created and unemployment fell to 7.7%” they are conflating two entirely different reports; reports which use completely different data. The former is from the “Household Survey” made by the BLS which interviews individuals, and the latter is from the “Establishment Data Report” which surveys businesses.

There are several reasons not to combine data from the two reports. When one person is working two jobs, for instance, the Household Survey reports that as one person employed, while the Establishment Data Report reports two persons employed. Another example would be when a person moves from one company to another; Household data will not report that as a new job, but the Establishment will do so.

The unemployment rate is based on the Household Survey, and according to that data the economy added 170,000 jobs. However, the number of part time jobs increased by 446,000, so the reality is that the economy lost 276,000 full-time jobs. That is most decidedly not good news.

If you want to get an idea of just how badly economic recovery is failing to happen, take a look at what Mike Shedlock has to say about it at Mish’s Global Economics.

While the labor force has risen in the last five years by almost 1 million, the number of people employed has fallen by 5.3 million. People “not in the labor force” has risen by almost 10 million, and people on food stamps has gone from 26 million to 46 million, an increase of 77% in five years.

But the stock market has hit record highs, so we must be recovering.