Wednesday, March 31, 2010

Yes, Virginia, There Is A Jobless Recovery

Every time economic statistics are released by an entity, other than the Bureau of Labor Statistics (BLS), we get a much better read on what's really going on.  Private company Automatic Data Processing (ADP), a  firm which handles payroll accounting for employers, released its employment report this morning and the results were dramatically at odds with the hype emanating from the White House.

Non-farm private employment decreased 23,000 from February to March on a seasonally-adjusted basis, according to the ADP National Employment Report®.  The estimated change of employment from January 2010 to February 2010 was revised down slightly, from a decline of 20,000 to a decline of 24,000.

The March employment decline was the smallest since employment began falling in February of 2008. The lack of increase in employment from February to March is consistent with the pause in the decline of initial unemployment claims that occurred during the winter.  I'm sure this is all the weather's fault (sarcasm intentional)!

The ADP survey covers only private-sector jobs, while the numbers produced by the BLS on non-farm employment, to be released Friday, includes government workers.  The addition of workers for the 2010 census is expected to lift federal government payrolls.  This makes any rise in employment suspicious, temporary and subject to substantial downward revision in the coming months after the census is completed.

The ADP number is very disappointing given the expectations of a 50,000 gain projected by economists in a Dow Jones Newswires survey.  The change in employment from January 2010 to February 2010 was revised down slightly, from a decline of 20,000 to a drop of 24,000.

Economists surveyed by Dow Jones expect the BLS will report that March payrolls jumped by 200,000 jobs, following a drop of 36,000 in February, when blizzards along the east coast cut into business hours and kept workers snowed in.  Should this report disappoint, at least we'll know the weather was at fault (sarcasm intentional)!

Other economic data, released this morning, was a bit more positive, however.

Demand for manufactured goods rose by 0.6% in February, to a seasonally-adjusted $383.53 billion, the Commerce Department said.  The increase is the 10th in the past 11 months.  Orders in January rose 2.5%, revised up from a previously reported 1.7% increase.

U.S. consumer confidence rebounded in March from a sharp February drop.  The Conference Board, a private research group, said this week that its index of consumer confidence increased to 52.5 in March, from 46.4 in February.

However, the index remains below its readings of December and January, as Americans remained concerned about jobs and, presumably, the weather!

Job losses since the beginning of the downturn in late 2007 have reached 8.4 million.

Regardless of the Friday BLS report, the more reliable private data continues to show that the "recovery" is a complete phantom.  Given that the massive stimulus of the Federal Reserve's "quantitative easing" is now ceasing with the end of the first quarter, one can only wonder how bad the economy will get once the heroine needle of monetary juicing is removed or even curtailed.

Marko's Take

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  1. the fed will not stop QE .Look how horrible the economy is with all the trillions they have thrown in .If they stopped ,we would probably fall into another recession ( still in one I believe ) or depression. The Fed may say they have stopped with the QE, but they will find another way to dump more trillions in, they will just call it something different,or just plain lie about it, like they do for everything else.

  2. Hey RD:

    Can't trust the Fed or administration to give us the straight story. I agree that the reported intention to stop QE is suspicious, and if the economy heads south, they have no choice to begin some form of economic stimulation.



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