Blue World Employment Situation Report Analysis
Release Date: Usually the first Friday of each month
Release Site: www.bls.gov
Market Sensitivity: VERY HIGH
Management Value: VERY HIGH
Friday, September 02, 2011
Brain surgery is not rocket science to a brain surgeon©
Mr. Obama’s jobs plan better be a jobs plan that includes excluding the government from any further “help.” We already know we are going to hear about “stimulus” without calling it “stimulus.” We are going to hear about “shovel-ready” without calling it “shovel-ready.” We are going to hear about infrastructure, green, tax credits for hiring, etc. The content of this jobs address has already been leaked and, unless you suffer from Alzheimer’s, the ideas being touted as new are not new. In all fairness we can at least say euphemistic renovation of politically toxic buzz words won’t do any harm. The fear must be that the proposed double-down will get implemented. This is no longer theory, friends. We have the original forecasts recorded. We have a data pool deep enough for analysis and that analysis exposes unmistakable trends. Those trends are bad.
We don’t care what works as long as it works. By “works” we mean an economy that is in aggressive growth mode with rising GDP, falling unemployment, increased productivity, increasing personal wealth and ever-rising optimism and morale that encourages an environment driven by personal responsibility and motivated by the idea that reward will be determined by effort. In spite of some “experts'” proclamations to the contrary we have concluded that government spending and extended unemployment benefits will not promote those objectives. We also maintain the administration’s definition of “works” differs from ours.
The Devil is always in the details. We can begin with the downward revision of last month’s job gains. The headliner rate remained at 9.1%. The number of new jobs added; zero. That means none lost (net) either. Already some “experts” are saying “that’s great”, “it got no worse”, “we’re obviously turning the corner” and similar nonsense. We’ve been reading this report for a long time, folks, and we’ve never seen “0” at the end of that table. That, alone, is unsettling. There are, however, some noteworthy and ominous signs in the numbers. Those over 25 with a Bachelor’s and higher remain at a staggering 4.3%. Black workers’ unemployed rate jumped .8% overall with black men 20+ posting a horrifying full 1% jobless rate increase from 17% to 18% July to August. Those numbers are bad enough. The most concerning to us is the following: Goods producing, construction, manufacturing, retail and I.T. all posted net job losses. That has not happened in a long time. In addition, the number of hours worked per week and the hourly rate of pay had been on a long, steady, albeit, uninspiring rise. They both fell in August.
Businesses should not and will not hire while under a dark cloud of government animosity, regulatory uncertainty, high unemployment, tanking consumer confidence and deplorable demand conditions. A $20k per year employee costs a business double that to employ. No competent business manager is going to think a $2500 offset to a $40k loss is an incentive to hire. Only a forecast of improving demand is an incentive to hire. The government produces nothing, brings nothing to market and is not dependent on customer satisfaction for survival. Many in government seem to think the private sector works the same way. Hint: It doesn’t.
If you missed our post on The Confusion Suffered by “Experts” the link is below. It describes some reasons why so many headlines contain words like “surprised”, “unexpected” “shocked”, etc.
For us, our clients and our readers we remain defensive with our market investments and do not anticipate a change in that posture in the absence of any evidence of significant policy change.
Thanks for reading and, please, stay tuned…
Release Site: www.bls.gov
Every effort is made to ensure accuracy of data transcription but accuracy cannot be guaranteed. The official release site should be cross referenced. The analysis represents the opinion of Blue World Asset Managers, Ltd. who does not warrant or guarantee predictions based on its analysis.
©Blue World Asset Managers, LTD Friday, September 02, 2011