The audacity of the Obama Administration to spin a systemic unemployment problem is nothing short of Orwellian. "Good news is good news". "Bad news is good news"! Is this the Audacity of Hope?
This morning, the closely watched jobs report came out. The Labor Department, which carried out its surveys at the same time that the snowstorms battered the East Coast, said in a report today that non-farm payrolls fell by 36,000 compared with a revised 26,000 drop in January.
While to most people, including all of us at Marko's Take, losing jobs AGAIN would seem like bad news.
But we don't live in Washington, D.C. where it's more important to "beat the spread" than to win.
Economists polled by Dow Jones Newswires were expecting payrolls to fall by 75,000, mainly because of the severe weather. So, the loss of "only" 36,000 jobs was a WIN! The January figure was revised from an originally reported 20,000 decline.
While jobs were LOST, the unemployment rate went DOWN! The unemployment rate, which is calculated using a different household survey, remained at 9.7% last month. Economists had forecast the jobless rate would edge higher to 9.8%.
A major factor in the "great" jobs number was care of Uncle Sam. Employment fell in construction and information, while temporary help services added jobs. Total government employment fell by 18,000, but that is mostly due to a decline in state and local jobs. The FEDERAL work force grew by 7,000, helped by an influx of Census workers along with the addition of 15,000 temporary workers!
Since December 2007, the start of the worst U.S. recession in decades, payroll employment has fallen by 8.4 million. So, what's another 36,000 jobs lost, unless, of course, you're one of those folks that are now jobless!
The White House continues to BLAME THE WEATHER!
Dr. Williams of ShadowStats (http://www.shadowstats.com/) has a far less sanguine view of the jobs situation than da boyz in D.C. According to Dr. Williams, "the weekly new claims for unemployment insurance numbers appears to have stabilized well off its peak at around an average of 470,000 per week, a level last seen as the current economic downturn was formally underway in early 2008."
Dr. Williams goes further on to say that "there has been some flattening out in activity, where a certain layer of layoffs has tended to run its course. Layoffs should start to rise again in the next couple of months. On the offsetting hiring side, the Conference Board’s seasonally-adjusted January help-wanted advertising (newspapers) was unchanged month-to-month at 10, while the seasonally-adjusted help-wanted advertising (online) declined".
So, this "great" jobs report (sarcasm intentional!) is likely to prove to be temporary, and as the second Dip of the Double-Dip-Depression takes its grip on the economy, the unemployment rate is likely to resume its rise. We hate to be the bearers of bad news, but we just tell it like it is!
Think we're in a recovery? Think the jobs news was really good news? TAKE ME ON!
Marko's Take
Episode 4 of our new YouTube series will be posted shortly. You can access it here: http://www.youtube.com/markostaketv. We are planning 5 more episodes in the near future and will publish a schedule of upcoming segments all based on Marko's Take. I hope you've had a chance to tune in and leave comments!
Marko - how do you square your view that we are headed for the second dip of a double dip recession and your recommendation to go long on gold ETFs?
ReplyDeleteAnon:
ReplyDeleteGreat Question! The DDD will be hyper-inflationary and may even take stocks up with it! In Zimbabwe, the latest and most severe episode of hyper-inflation on record, their stock market doubled an triple in one day!
Gold miners will benefit as hyper-inflation mania takes hold!
Marko
Why hyperinflation? Usually in a downturn pricing gets depressed. If the $ drops too much, won't foreigners flood the market with money buying things - goods, services and assets - providing a floor on how low the $ can go? Zimbabawe doesn't have an economy producing anything that anybody wants to buy, but we do.
ReplyDeleteHi Anon;
ReplyDeleteAccording to ShadowStats the M's are growing at rates of more than 100% annunally. Secondly, the Treasury and FED have no choice but to monetize our now $14 TRILLION in National Debt! There have been dozens of cases of hyper-inflation and, they have had mixed results on stocks.
Our best analog, in my opinion, is the 1970's, where stocks FELL as interest rates rose and PEs got squashed. However, the 1970's saw the last mania in Gold miners, and whether stocks as a whole ultimately go up OR down, I maintain my view that we will see $2500 to $5000 gold within a year AND than many junior stocks will have meteoric rises.
I really appreciate your insights...and I guess time will tell.
Marko