Saturday, April 3, 2010

Jobs Report Well-Received, But Below The Surface - Fissures Emerge

With the stock market closed on Friday, Wall Street waited for the Non-Farm payrolls report, also referred to as the "Jobs Report", with baited breath.  Earlier in the week, optimism was running unchecked, as the hopelessly perma-bullish investor community began to predict that the number would be a blowout.

Then came the ADP (Automatic Data Processing) employment report, which showed that private sector jobs were LOST, not gained, and suddenly a more sober Wall St. began to ratchet down expectations. 

Even with the projections running above a hoped-for gain of more than 200,000 jobs, down from the 300,000 anticipated a week earlier, the final number still stunk.  Monthly job gains were a poor 162,000, of which 48,000, were made up of temporary census hires.

Therefore, as reported, March payrolls were up by a net of 114,000.  The latest data also included upside revisions totaling 62,000 to prior January and February reporting.  Part of the relatively stronger March report has been attributed to rebound effects from February’s blizzards.  There we go with the weather again!

Logically, any weather-related impact would be non-recurring.  But, who knows, maybe as the snow melts, we'll have floods to blame!

Dr. Williams, of the marvelous site ShadowStats (, believes that the government currently overestimates monthly payroll growth by at least 250,000, which suggests that more-accurate current reporting still would be very much in negative territory.  On the unemployment-rate side, the broader measures increased and the headline number would have too, except for some rounding and census hiring.

The trend of reported monthly decline has continued to slow sharply against prior-year comparisons, indicating a bottoming process.  The year-to-year decline in total non-farm payrolls narrowed to 1.7% (1.8% net of census effects) in March, versus an unrevised 2.5% decline in February and from a post-World War II record 5.0% decline in July 2009. 

The July 2009 decline was the most extreme annual drop seen since the production shutdown at the end of World War II, which reflected an annual trough of  7.6% in September 1945.   Otherwise, the current annual decline would be the worst since the Great Depression!

The Obama administration was jubilant over the tremendous news and couldn't wait to begin its ritualistic back-patting.  Have they forgotten that 8.4 million jobs have been lost in the last 2 years?  Oh, yes, that's all George Bush's and Ronald Reagan's fault!

Beneath the surface, however, a more dangerous trend and un-noticed by most economists, is the VERY ominous decline in liquidity as measured by the contraction in the broad money supply aggregates.  According to Dr. Williams, "real (adjusted for inflation), broad systemic liquidity, as reflected in M3 (SGS Continuing Estimate), continues to shrink year-to-year.  As of March, the series appears to be down by the largest percentage in modern reporting.  The negative effects of this liquidity squeeze on the economy should become increasingly obvious in the next month or so, including subsequent employment data, ex-census."

Historically, sudden, sharp fall-offs in money supply growth have been closely followed by both stock market sell-offs and economic decline.  In addition, this contraction bodes poorly for commodities, despite the recent strength. 

Here's to hoping everyone has a Happy Easter with a booming PERSONAL money supply!

Marko's Take

Please visit us on YouTube at  The very excellent Phoenix Film Group is now placing the final touches on our next episode on the legality of the Personal Income Tax.


  1. Marko,
    the whole report ,just like the rest of the junk that the government puts out is manipulated,etc to make things appear to look good .John Williams is correct, the real jobs figures are probably negative . Also if you look behind the numbers that you will see that Employment, Less than High School Diploma … rose +345,000 . And, also note that on a year-over-year basis: Number of Employed, Age 16-54, Both Sexes … fell by (-) 1,096,000 . Number of Employed, Age 55-64, Both Sexes … rose by + 171,000.This suggests that the largest change in the employment situation is growth in the employment of less educated people in the 55-64 age group, people that have been FORCED back to work, amid the macro-deflation in wealth (devastated retirement accounts) and a lack of adequate savings.Also what is downright SCARY is the number of People Unemployed for 27-Weeks or LONGER, which has SOARED into the stratosphere … sky-rocketing to dizzying heights above 6.5 million by rising +414,000 in March alone. In fact, the Number of People Unemployed for 27-Weeks or Longer has expanded by +102.0% versus March of last year, thus MORE than DOUBLING over the last twelve months, to a NEW ALL-TIME HIGH of 6.547 million, up from 3.241 million … for a nominal year-over-year increase of 3.306 million. Bottom line you have to read behind the headlines to get the real story ,something the media in this country is incapable of doing

  2. Happy Easter to you as well. Good work, and continue it on.

    I would like to see an article on how is it that Wall Street can pay back its TARP obligations so quickly. Where/how is this money being manufactured? It is a total skimming of the entire financial system, always has been this way, just would like to see some data, and how they are doing it.


  3. Hi RD and Mr. or Ms. Anon!

    RD, I'm writing more on the BS of jobs in Sunday's blog. But, yep, the crap reported is nothing but massaged and manipulated spin intended to paper over the masses.

    I'd like to cover TARP, but there is so little verifiable info. Here are a few thoughts. One, several of the recipients, like Government Sachs were forced to take the money and so never really needed it in the first place. You can probably add Wells Fargo and Morgan Stanley to that list. Of the remaining 6, they enjoy a privileged status in a completely non-competitive market.

    B of A hoodwinked the U.S. with their purchase of Merrill and had to go back for more funds, as you recall, costing Ken Lewis "Obispo" his job. Citibank kinda floors me as I think they are still in deep doo doo.

    Congress has asked repeatedly for TARP spending itemization and been refused. If they can't get it, it'll be tough for me to find out, barring a "Freedom of Information" lawsuit, but I'll keep looking.

    Happy Easter! Thanks for weighing in!



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