There is no such thing as a jobless recovery!

Monday, August 1, 2011

Ignorance is curable. Stupid is Forever©

There is no such thing as a jobless recovery!

There is Nothing “Wrong” with America’s Job Engine.  It’s Just Starved for Fuel

“What’s Wrong with America’s Job Engine?” Our Author asks.

Please read:

Our response follows:

It’s hard to know where to begin with this one.  How about here?  There is no such thing as a jobless recovery!  Jobless recovery is an oxymoron.  If we are “jobless” we don’t have a recovery.  It’s as simple as that.  A full seventy percent of our GDP is driven by consumer spending.  If unemployment is nine percent, and rising, where is the recovery?  We keep telling you there isn’t one, the recession is not over and the economic data continue to bear that out.  Consider the ridiculous “expert” driven GDP estimates.  The first quarter was revised down from 1.9% to .4%.  Then they have the nerve to suggest the second quarter at 1.3% (advanced estimate which will also be revised) was “unexpected.”  These guys have a better job than weather forecasters!

Of course CEO’s see no demand out there.  Did we mention unemployment is over nine percent and the consumer drives GDP?  GDP is a great proxy for demand so you can see it takes very little ‘smart’ to predict demand will continue to be low.

The author asserts that while output, profits and the labor force have grown over the past ten years the number of  employed people (jobs) has fallen.  They say you can get numbers to say anything…  Those assertions are utterly ridiculous as the graphics below will show.  The number of unemployed people has not followed the output earnings trend for ten years.  The unemployed have become so in the last two and a half years!



As you can see, after 2002 the number of unemployed workers actually decreased while the available  labor force increased.  It is only since mid 2007 that the rate of unemployed people has out accelerated the increase in the labor force.  Hard to deny policy and anticipation of policy affects economic activity.

To say that sales have come back as a general statement is moronic no matter who says it.  Can it be true in narrow examples?  Sure.  But we again refer you to the .4%/1.3% GDP numbers from today.  Sales HAVE NOT returned.

Construction and small business are not failing to hire early in the recovery because THERE IS NO RECOVERY.  They were not “crippled by the credit bust.”  They were, are and will continue to be crippled by a lack of demand…PERIOD.  The “confidence” factor referred to by the author is based on…anticipation of sustained DEMAND, DUH.

There is no “phenomenon” regarding a change in the way employers view labor no matter how many pointy headed “experts” in cubicles who’ve never signed a paycheck say there is.  Business has always strived to keep costs as low as possible.  That’s responsible management and always has been.  Nothing new.  But as technology advances the ability to do more with fewer humans continues to accelerate.  Does this support the author’s conclusion that technology is part of the “problem?”  NO!  All that technology has to be designed, manufactured, distributed, sold and maintained by somebody.  Are you going to try to tell us that the advent and rise of the PC a la Microsoft Windows™ cost people jobs?  If so, please regard yourself as an expert and stop speaking.

“Conthider theeth clueth”

A truly “thoughtful” paragraph.  May we reiterate; THERE IS NO SUCH THING AS A JOBLESS RECOVERY!!  You certainly can’t call it the norm.  I don’t know if our author just doesn’t know how to read a simple graph or was relying on “experts” who don’t know how to read a simple graph.

Here are the official stats from the Bureau of Labor Statistics (

Jobless recoveries are the norm?  Do the ’91 and ’01 recession/recovery cycles look jobless to you?  They don’t to us, either.  The only divergence we see is occurring right now and is in large part due to the fact that most cyclical recessionary periods last eighteen to twenty-four months.  We are moving deeper into uncharted territory every day with no indication of policy change on the horizon.  That will perpetuate the pain.

When will these guys understand that companies do not hire to be nice and fire to be mean?  Good executives manage the size of the workforce based on demand.  Managers who don’t have companies that go out of business.  Managers of yesterday did not keep “unneeded” workers.  A lack of technology required they keep a higher percentage of people.  Even then, as now, however, necessity is the mother of invention.  A firm’s first priority is to survive.  Remaining employees become committed to keeping their jobs by enhancing the survival prospects of the company.  They innovate, experiment and execute on new ideas that increase efficiency during and beyond the recession.  Does that mean certain “jobs” won’t be recalled.  Yes.  But if the company is more efficient in the face of rising demand new positions will automatically be created which, of course, leads to growth which leads to new hires with different job descriptions.  As to why layoffs were faster this time; data analysis continues to accelerate in speed, sophistication and accuracy.  The downturn started as then-Senator Obama became the clear frontrunner in 2007.  The policy priorities of his administration were obvious to those who invest real money and hire real workers before the election.  In other words, businesses could see it coming sooner than in the past and reacted appropriately.

“Experts” Groshen and Potter tell us when layoffs are permanent recovery is slower.  They get paid to elucidate these nuggets of truth.  No kidding!  But the idea that it’s because it takes time to review resumes is silly.  They talk of the evils of part-time and temps?  When things improve for real who do they think are the first candidates for conversion to full-time employment?  Could it be the temps already trained and experienced?  Resumes are the bottleneck to recover? C’mon!

Yes, responsible executives care about stock price.  They have to answer to the owners of the company, public or private.  Why the authors paint this as a negative is beyond me.  An even bigger mystery is how he can suggest that flexibility and stability are competing priorities.  A company that can’t be flexible can’t achieve stability.  Stability is never a guaranteed constant without a commitment to flexibility.  Flexibility is the currency that buys stability.  Just ask Borders and Blockbuster.  They continued to operate with 1980’s and 1990’s business models.  Their lack of flexibility lead to fatal instability.

We could go on for pages about the apparent confusion as to why a company may choose to hire overseas but we think our readers get it.  We do, however, have to comment on the idea that China’s increasing wages of up to 17% of U.S. wages by 2015 will spark a mass exodus back to the U.S.  We may start to see some movement in that direction but only an “expert” or one who relies on “experts” could think that a delta of 83% is insignificant when making payroll.

As to the yadda yadda on difficulty hiring adequate workers, does anyone believe the sentiment “ya just can’t find good help these days” is new?

At the end of the day small business is the true driver of jobs in the U.S.  That’s why the notion of “too big to fail” is a travesty.  Had those companies been allowed to meet their appropriate fate it would have created untold new opportunity for talented people to start over and do it better than before in businesses of every size.  As it is policy has created uncertainty, fear, terrible unemployment and a solid hesitation to start new businesses or invest in the growth of existing ones and there is no end in sight.

We don’t know how else to say it, folks.  Policy matters.

Thanks for reading and…stay tuned.

© Blue World Asset Managers August 2011






Progressives are not Progressive. Capitalists Are!

Thursday, April 14, 2011

Brain surgery is not rocket science to a brain surgeon.

Progressives are not Progressive. Capitalists Are!

Class Envy in America

Square Peg and a Round Hole

I started working on this post last week on general principal.  Then I happened to find and tweet the linked article below representing the opposite, and what I will try to convince you is the completely wrong view of the same issue.  No one controls the levers of opportunity and wealth over the rest of us, but the government is trying.  Those who say otherwise are whiny, excuse driven losers.

I grow weary of the oh-so-tired nonsense about the poor are poor because the rich make them poor and won’t let them not be poor.  How the rich getting richer at the expense of the poor is a social injustice  yada, yada, yada…

Historically there is tremendous precedent and justification for these sentiments in just about every other country in the world.  But not here.  In virtually every other form of government in history wealth and power were concentrated and controlled by the highest levels of government.  In antiquity that was usually a monarch whose wealth and power were a birthright.  A family’s class and social status were fixed by centuries of tradition.  It was the very, very rare case that one could make significant class improvement.  Descending was more common.  It usually meant you offended someone of a higher class and were demoted from wherever you were to prison or death.  This model perpetuated through the middle ages in one form or another and right into the 18th century.  The class system created a very justifiable class envy, class hatred and even class warfare yielding events like the French Revolution.

Monarchies are the ultimate example of small government. Forward to some more modern theories like socialism/communism which represent large, bureaucratic governments.  It is very important to remember societies built under either extreme form a pyramid of a very small percentage of a population on top controlling the rest below.

It is unfortunate that the concept of class envy was imported to the new world because the fixed class system and oppression were not.  What does it mean to ‘oppress’?  It means to hold down.  America was founded on the idea that no one is held down.  Everyone has a chance to succeed…and fail.  Not only does everyone have a chance to succeed and fail; they have unlimited chances to do both.  There are as many riches to rags stories in this country as there are rags to riches stories.  Even more, there are riches to rags to riches stories, rags to riches to rags stories and so on.  Is the bar to success lower for some than others?  Of course.  No one should say otherwise.  But how is that different among any species in nature?  The biggest, strongest lions get to eat and mate first.  The ones in the middle wait their turn, and the weakest die.  Frankly, I like our system much better.  You don’t have to be particularly smart, attractive, or strong to be successful.  Just look at Congress!  There is NOTHING unfair or unjust about our system.  It provides more opportunity to more people than any system in the world.  Many children of wealth and privilege fail.  Many children of failed parents succeed.  It is a simple matter of the will to try and never give up.  That’s what America is all about.  We started by beating unbeatable odds by winning a war against the most powerful nation on earth at the time.  We have been beating the odds ever since as a nation only because every individual is encouraged to beat the odds on his own.  No matter how we start out the odds of success are ALWAYS against us.  No fortune is too big to lose, and no odds are too big to overcome.  We the people of the United States of America are generations of the living proof!

I won’t say I’m Armenian-American because I would NEVER say I am anything before American.  I am second generation American born of Armenian descent.  For all you P.C. name maker-uppers and upgraders out there who constantly distill words like retarded, to gifted, to special, to challenged, to special needs, etc. need to realize that synonyms mean the same thing, carry the same meaning and can be used interchangeably as the same punch lines.  Please stop denigrating those you seek to shelter from manufactured denigration and, for God’s sake, realize not all black skinned people come from Africa!

Americans are not repressed no matter how hard anyone tries to convince you otherwise.  Disagree with me?  Try this.  Only two generations ago (circa 1910) my grandparents were among a lucky few to escape the then Turkish government-authored genocide against the Armenians that was to be the blueprint for Hitler’s attempted extermination of the Jews.  (Special note: not all Germans were Nazis and not all Turks endorsed the party’s actions. Entire races or nationalities are never to blame.) My grandparents came here without money, possessions or any ability to speak English AND they were dark-skinned enough to be required to use the ‘colored’ facilities in the South.  Once settled in Northeast Illinois my grandmother raised my father while my grandfather worked in the steel mills of Waukegan’s lake front.  He lifted 300 lb. bails of steel onto trucks morning until night his entire career until he succumbed to colon cancer when my father was only 17.  That left dad living in the ghetto with his non-English speaking mother, and no one else to care for them.  My grandpa didn’t know much about succeeding in America, but he had learned one thing.  Your best chance was college.  It was the last thing he told my dad to do.  My dad worked, took care of his mother, put himself through college, got a job, got married, built a house and moved to the suburbs.  He had two sons, both of whom also went to college, received advanced degrees and are now raising families of their own in stability, security and happiness.  Dad was only 30 years removed from war, genocide, illiteracy, immigration and poverty, folks.  That is a story told by MILLIONS throughout our brief history.  “But your grandparents weren’t slaves.” Actually, grandma was.  The most demeaning, traumatic kind of slave a girl can be.  Thanks for bringing it up.  Name the countries that have provided this level of opportunity to the very lowest, most oppressed, most persecuted classes in the world since the beginning of time?  Only The United States of America.  ONLY THE UNITED STATES OF AMERICA!

Anyone can try to get a job, try to start a business, try to improve their circumstance.  I mean try.  This is the land of opportunities not guarantees.  No one can guarantee success or failure.  We can, however guarantee an unlimited number of do-overs.  Only the United States of America.

There is nothing compassionate about creating dependence, as the progressives would have you believe.  There are two kinds of “progressives.”  Those who are truly well-intentioned, and those who understand the government-in-charge agenda, and take advantage of those who are truly well-intentioned.

Liberals are not progressive

Today’s self-described “progressives” believe the control of wealth should be centralized to the government and distributed according to their assessment of fairness.  Based on this model all those becoming dependent on the distributions become controllable and will vote predictably.  It is a painfully simple and effective strategy for a government inconvenienced by the need of citizens’ votes.  But think about that for a moment.  The government controls wealth and power.  The government decides who get loans for college and who doesn’t.  The government decides who qualifies for handouts and food stamps, etc.  The government decides what’s fair. Does this sound familiar?  Liberal and Progressive are used as synonyms.  The meaning of both has been perverted! Modern liberal theory is the OLDEST theory of government on the planet. There is NOTHING “progressive” about it!! Government in control of individuals.  The United States of America is the first societal institution to place individuals in charge of the government.  Capitalism was championed as a way for everyone to improve his circumstance based on any combination of luck, hard work and smart work.  Now, that is progressive! And it worked!  In less than 2 centuries we became the richest, most powerful nation on earth with a standard of living the world has never known.  Do you realize what an accomplishment that is?  We did in less than 200 years what competing societies could not and did not want to accomplish for human rights and standards of living in spite of thousands of years head start.

For those who think the U.S. is mean, greedy, unfair, oppressive, etc.  I don’t see you folks getting on make-shift rafts or sneaking across war torn borders at risk of death to get where you think it is so much better.   Are you prepared to tell all those truly downtrodden people across the globe still risking their lives to get here to stay home?  Are you prepared to trade places under temporary terms with any of those people so they can see how bad it is in America?  Go ahead.  See if they trade back.  Are you prepared to tell my grandpa and grandma they were wrong?

Our Founding Fathers, for the first time, put the people in charge.  They inverted the pyramid and created a place the truly repressed of the world have, do, and will always risk everything to get to.  Do we have classes here as the competing author above suggests?  Of course.  What he fails to realize, understand or admit is that our classes are not locked.  They have no ceilings above and no safety nets below.  To suggest otherwise is a slap in the face to all those who have successfully crossed between them.  I doubt you’ll find “YUPPIE” in a Libyan dictionary.  If you were born here be grateful or trade places with someone who would have been.

Are we perfect?  Of course not.  There is no such thing.  But we are a lot closer to perfect than systems that have the very privileged few, elected or otherwise, controlling the rest.  Don’t insult all those who have risen from lower or discourage those who are trying to rise.  Class envy does not fit here.  Success, class, and wealth are very personally defined.  Some consider themselves “wealthy” if they can pay their bills.  Some consider themselves “poor” if they can only afford a Porsche and not a Lamborghini.  The beauty is that neither is wrong in America!  You are free to pursue YOUR ideal definition of class and standard of living.  You are not subject to someone else’s idea about how well you live.   But they’re trying!!!

To disparage capitalism and our form of government is to assume you are smarter than our Founding Fathers.  You’re not.  They didn’t start a company.  They founded a successful nation.  If you still think your idea is better go start your own country then give us a call in 200 years.  Let us know how it’s going.

We always thank you for reading and…stay tuned!

Corporate Taxes: The False, The True and the Incredibly Stupid

Monday, April 11, 2011

Brain surgery is not rocket science to a brain surgeon.

Corporate Taxes: The False, The True and the Incredibly Stupid

Opening with the usual caveats of not attempting political commentary I always point out that ideology drives policy and policy drives economics.  It is, therefore, impossible to opine on one without regard for the other.  There are many Republicans who do not embrace the Tea Party and there are many Democrats who do not embrace the Obama administration so, while often used interchangeably, I always consider it important to acknowledge there is a spectrum of political opinion that does not always fit neatly within the Democrat/Republican liberal/conservative box.  Anyone who does not know that I am squarely in the conservative, low taxes and small government camp has never read my stuff.  That said, I make clear my observations and conclusions are based on real-life cause and effect analysis of current and proposed policy on consumer mood, employer sentiment, economic health and the investment and business climate.  How do I claim to not be making direct political commentary in spite of my earlier self-identification as a conservative?  Simple.  I don’t care what works as long as it works when it comes to policy.  I believe in every American’s right to life, liberty and the pursuit of happiness.  If a part of the pursuit of happiness includes wealth building through profit that’s great.  I loathe the vision that all wealth was ill-gotten when it is the least common of all wealth.  I despise policy that creates dependence disguised compassion, discourages independence under accusation of greed and the notion that elected officials I’ll never meet are more qualified to distribute my hard earned wealth than I am.

As promised, an article I tweeted out on April 4th, 2011 has prompted a blog post.  As those who follow me on twitter know I read a lot of content.  I tweet out content I consider to be particularly relevant, informative, entertaining and, often the most extreme form of entertainment, the hyper-stupid.  Like everybody else I react personally to much of what I read within a spectrum of pride, enrichment and gratitude to exasperation, anger and disgust.  I think this is the first time I have been moved to write what amounts to a response.  Believe me, the bar was high but this article tied so many bad concepts into such a neat little package I just had to unwrap it.

The link to the article is below.  While it is not very long my digest follows for those who don’t have time/care to read it in full.

G.E.’s LEGAL non-taxable status for 2010 in the face of a worldwide operations profit is a…wait for it…A SCANDAL.  The article above is the author’s response to the parent article in the NYT.  In short the author argues that the problem of multinational corporations not owing U.S. taxes legally cannot be solved by raising taxes on the multinational corporations.  They are, after all, too big and rich and important to fight with.  We should, instead, raise taxes on those who benefit from corporate profits.  In other words US!  We weak, nasty, greedy but easy-to-pick-on investors who receive evil profit driven dividends and capital gains should be made to pay for the non-taxable profit sins of the corporations we have the nerve to invest in.

Paragraph by paragraph, then…

1. The author moans that Jeffrey Immelt, G.E. C.E.O., was named to head the President’s Council on Jobs and Competitiveness.  When did it become a prerequisite for a savvy business leader to MAXIMIZE the tax obligations of his company?  A good executive hires tax staff to LEGALLY minimize the tax burden of a company.  It is an essential part of remaining competitive which makes it essential to staying in a position to keep and add employees.  Has our author forgotten about the payroll tax G.E., and all employers, are penalized for every paycheck they issue in this country?

2. Here we reach levels of idiocy often reserved for Biden sound bites and rarely seen in print.  He refers to a capital gain rate of 15% as “a giveaway” to the rich.  Let’s start with ‘rich’.  Rich is arbitrarily defined by whomever is using the word. This intellectually bankrupt baboon (apologies to all but the dumbest baboons) appears to define ‘rich’ as anyone who buys stock.  Is the rate of 15% ridiculous, as he suggests?  Yes. But it is ridiculously high, not low.  Corporations do not just hand out dividends.  In order to reap a capital gain or dividend you must invest in the company.  You must buy stock.  That means you have to RISK YOUR OWN MONEY.  How is the government justified in taking 15% of a return you made at your risk?  If the stock drops to a loss or the company cuts or suspends its dividend (AT&T, LU, ENE, etc) does the government turn around and offer to offset your capital loss by 85%?  Of course not.  They are willing to confiscate a double digit portion of your gain but want nothing to do with your loss.  Oh, you can use that loss to offset other income, you say?  That is the same as casinos boasting a 97% slot payout.  Many gamblers think that means they make money.  It means you can count on losing 3 cents per dollar.  The government doesn’t take risk, share risk, mitigate our risk and always comes out cash ahead.  A give away? No.  A giveaway is what government does with our 15%.  They give it to those who do not invest in order to create dependence.  That is where the outrage should be.  That is where the scandal is.

Now, about his assertion that the wealthiest 1% get two thirds of the dividends and capital gains.  Why would that be true?  Because they put the most at risk.  They also suffer two thirds of the losses.  No baboon tears here?  So, the top 1 percent is not a lot of people.  The rest of us number A LOT of folks who count on capital gains and dividends for everything from wealth building to college tuition to groceries.  We can’t go make a safe 15% on anything. But the government should be able to take 15% of our risk based return and decide how to spend it on others who take no risk at all?  OK, apologies to ALL baboons.

3, 4, 5, 6. Perhaps, medication… Our hero opens paragraph 3 by separating 2 “problems” identified but muddled in the parent NYT article and then spends 4 and 5 showing that they are not problems…for thinking people.  I will give him credit for using a compound word (footloose, para. 6).  To this guy, anyone who receives dividends or capital gains is rich, legal domestic tax minimizing strategy is a problem and wise financial policy of legally shifting profits to the lowest rate jurisdictions is something that needs to be dealt with.  Based on his ‘thinking’ we need a law enforcement crackdown on those who turn right on red after coming to a complete stop.

7.  Here we actually benefit from some observations that I would make.  Analysis and conclusions, however…  So, don’t try to battle the big multinational corporations because they are vital to domestic and foreign innovation, economic growth, investment, stability and employment.  Hey, their ability to continue to provide and enhance domestic and foreign innovation, economic growth, investment, stability and employment is based on their ability to generate ever-increasing profits, DUH (pronounced ‘DUH’).

8, 9. I do not agree that we should cut the corporate tax rate.  We should eliminate it.  Why?  Because then all multinational corporations would clamor to be here.  Why would it be good to have all those money-grubbing, greedy, evil, nasty corporations here?  A decent offset to the aforementioned (talked about earlier, Mr. Samuelson) adjectives (words used to describe other words, Mr. Samuelson) would be things like domestic and foreign innovation, economic growth, investment, stability and employment.

To listen to this guy and those like him you would believe there are two pools of people out there:   those who benefit from corporate profits (all rich) and those who are precluded from benefiting from corporate profits (all repressed and poor).  It’s simply not true.  ANYONE can invest in stock, take risk, share in upside and suffer from downside.  It’s all relative.  One man can afford 1000 shares of a stock that pays 5% and another can only afford 1 share.  They both took risk relative to their means and both make the same 5%.  What the hell did the government do to justify getting any percentage.  Why do we get zero if risk moves against, 5% if we are successful but the government gets 15% of our success?

How can we argue that lowering the corporate tax rate encouraging other corporations to come here and then soaking the people who ‘benefit’ from the corporate profits will stimulate anything?  THEY ARE ALL THE SAME PEOPLE.  Don’t you get it?  Stock in large corporations is part of the compensation package.  401(k)’s, retirement packages and pension funds all invest in other corporations.  Individuals invest in stocks in their personal portfolios.  The people who work for the corporations (yes, even top management are just employees) all benefit from a successful company.  The more profit the more employees, the higher base pay, the more raises, the more bonuses the more dividends the more investors and on and on and on.  The lowest level employee of any company can advance to the highest level of management with the proper motivation, performance, experience and education that the company will often PAY FOR.  Taking a ridiculous percentage of financial reward earned by any combination of hard work and risk is a disincentive to work hard or take risk!! If you follow my tweets and posts I won’t need to make any comment about the economists (experts) referenced at open of paragraph 9.  These are the types of ‘experts’ who keep telling us that increases in the cost of food and fuel shouldn’t count as inflation.

10. The first statement of paragraph 10 is silly, unsupported and unsupportable.  Then claiming that harming the economy by raising rates is not supported by history is a distortion similar to saying Don smoked for 30 years but it didn’t hurt him ‘cuz he didn’t die of lung cancer.

The stupid-amity to suggest that a 15% tax rate on hedge fund returns amounts to a subsidy that encourages “paper investing over real production” is beyond comprehension from one who endorses larger revenue streams for an institution, government, that produces nothing.  All a government can do is consume.  The only contribution to production is what it pays to the private sector to produce.

Now, how about those ‘unproductive’ paper assets?  Those paper assets are a favorite collateral of lending institutions whose capital our citizens and corporations rely on to continue to provide domestic and foreign innovation, economic growth, investment, stability and employment.  Just for the record, a corporation is just a piece of paper.  It is the morale, culture and performance of the people who work there that drives its value. These are the people our illustrious author and his trusted ‘experts’ recommend we penalize for working in a coordinated effort to help the overall company produce profit and, thereby, enhance their own opportunities for advancement.

11. Neither issue is scandalous, lowering taxes on one entity or group and “making it up” on another entity or group is the same net effect, disincentive.

To help the economy, simply reduce regulation, reduce taxes on everyone and everything, encourage the pursuit of profit and keep the government out of the way.  That is how America became the richest, most powerful nation on earth in less than two hundred years.  A remarkable feat accomplished not by well financed government, multinational corporations or economists theories floating out of cubicles.  It was accomplished by individuals who were told that the reward reaped by their risk and work was theirs to do with as they pleased.  What they pleased was the highest standard of living the world has ever known.  People who bear less intelligence than creatures lying on their backs at the bottom of ponds should try to keep out of it and let the rest of us carry the load.

Apologies to all creatures lying on their backs at the bottom of ponds.

We always thank you for reading and…stay tuned!

Employment Situation Summary for Friday, March 4, 2011

Employment Situation Summary

Release Date:  Usually the first Friday of each month
Release Site:
Relevance: VERY HIGH
Management Value: VERY HIGH

To learn about the official release please follow:
, March 04, 2011

Blue World Employment Situation Analysis


The Devil is in the details

OK, you know the words.  Wanna sing along?  The jobs data is uninspiring and that should continue to be of little surprise.  A significant deterioration? No, just flat.  There are simply no catalysts for robust growth.  On the contrary.  The health care law is still a wild card, banks are being forced to write down troubled loans (that means give away money), commercial debt is still the elephant in the room, commodities are soaring, there is turmoil in the middle East, U.S. military are being executed in European streets and politicians are running and jumping into hot tubs in neighboring states to avoid votes on cost-cutting they fear will pass.  HOW DO WE THINK PEOPLE WHO INVEST REAL MONEY, MAKE REAL PRODUCTS AND HIRE PEOPLE WILL BE INSPIRED?

To the numbers:

192,000 new jobs.  That’s the good news?  No, that’s the headline.  While we added those 192,000 jobs we removed 200,000 people from the unemployed count because they have not sought work in the last 4 weeks.  We know they are out there because they did look for work within the last 12 months but because they did not look during the last 4 weeks they don’t count.  What this means is that more people were eliminated from the count than got jobs.  That is how the rate (8.9%) continues to drop while the unemployment picture is not meaningfully improving.

The participation rate is down since last February and flat since December 2010.  The number of discouraged workers rose.  The number of workers whose primary and secondary jobs are both part time is higher than a year ago.  Average weekly hours worked, including overtime, are broadly flat across all workers (as opposed to non-supervisory) in tracked categories for the last 3 months.  Significantly, those with a Bachelor’s degree, or higher saw another uptick in their unemployment rate (4.2% to 4.3%) over January. Conversely, the unemployment rate in the less-than-a-high school-diploma category is trending down.  It improved .3% from 14.2% in January to 13.9% in February and from 15.3 in December 2010.  These ends of the educational/employable spectrum indicate the quality of jobs being filled which does not inspire confidence for a breakout recovery.  We have seen it reported that part time for economic reasons (poor demand environment) improved.  That’s true for the all industries category. If, however we look at non-agricultural industries (the more relevant figure) we see that the situation actually got a bit worse.

If you are looking to spin the report as “positive” or “encouraging” are there figures you can point to?  Sure.  But looking into the detail there is still plenty of reason for caution, too.

We remain in a very defensive posture with our investment strategies and will for the foreseeable future.

Thank you for reading and…stay tuned!

Release Site:

Every effort is made to ensure accuracy of data transcription but accuracy cannot be guaranteed.  The official release site should be cross referenced for accuracy and footnoting.  The analysis represents the opinion of Blue World Asset Managers, Ltd. who are not giving advice and does not warrant or guarantee predictions based on its analysis.

Employment Situation Summary for Friday, February 4, 2011

Release Date:  Usually the first Friday of each month
Release Site:
Market Relevance: VERY HIGH
Management Value: VERY HIGH

To learn about the official release please follow:

Friday, February 04, 2011

The “Labor Mess Monster”, close cousin to the Loch Ness Monster, Spotted in the U.S. Bureau of Labor Statistics Historical Research Tables and Graphs


Blue World Employment Situation Analysis

The jobs report is not “mixed” as reported in the headlines.  It is poor.  Three highly critical things have emerged as a result of this jobs report.  First is that there are more people disappearing from the available workers population than those getting new jobs.  That is why the unemployment rate is “falling” while the unemployment picture is not improving.  These are incredible phenomena.  Second is that the number of new jobs is inadequate to break even with new entrants by six figures (need about 150k/month) to break even.  The third and most horrific is what we have feared for many months, now.  The idea that businesses are so lean and efficient that there will be no need of rehires and job expansion has been articulated in the media.  The notion that, perhaps, high unemployment is the accepted new norm is chilling.  There is little need to go through the numbers because the story they tell is no different than that which we have elucidated over the past several months.  What is worth viewing is some graphically illustrated history for perspective.  This is an attempt to keep you from becoming complacent and comfortable with the idea that high unemployment is ok.  It isn’t and does not have to be a permanent reality.  There are those in our government that want this to be an acceptable situation forcing larger and larger segments of our population into dependence on government for a living instead of the private sector.

It is not only policy that can affect the economy.  Anticipation of policy is also a major driver as the following graphs illustrate.  Knowledge of the likely victory of an anti-private sector administration led to the accelerating job losses of the last 30 months.  A shift in policy toward a pro-business environment will cause a steep reversal of that trend.

This graph shows the deplorable labor conditions and duration of the recession of the early 00’s.  Note it tops out at about 6 1/2%, lasts about 30 months and then begins a convincing retreat lasting about 42 months.


This looks pretty bad but actually represents a fairly typical picture of a recession.

Now we take a step back and view it in relation to the current situation.  The monster exposed.

Spotted: The “Labor Mess Monster”


The rise in unemployment began in late 2007.  The acceleration coincided with the increasing likelihood that a candidate replete with anti-business campaign messages, pro-government rhetoric and a tidal wave of social spending priorities would win the White House.  The graph below shows this relationship in a way that is hard to argue.  The excuses regarding what they “inherited” should be discounted for reasons described at:

There is no business cycle reason for us to be nearly 40 months in to this with no light in sight.  Again, unemployment will remain high as long as there is uncertainty regarding the long-term outlook on tax policy, fiscal policy, political attitude toward business and the healthcare program’s future, in particular.  Look for a little more optimism now that the 1099 provision has been eliminated.

This graph shows the Real Clear Politics average of polls throughout the 2008 Presidential campaign from 12/07 – 11/08.  Unemployment rates are shown through today’s (2/4/11) release.

We watch the 25 yoa+ with a bachelor’s degree or higher group with great interest because these are the people most likely to drive spending on big ticket items, be decision makers and employers and strike out on their own to start new businesses.  They, as the graph shows, are unemployed at rates and durations never seen since the category was first tracked.


Again, there are no real surprises this month.  It is a poor jobs report that is perfectly predictable based on a lack of any meaningful catalyst to spur businesses to spend capital in pursuit of expansion.

We remain in a very defensive posture with our investment strategies and will for the foreseeable future.

Thank you for reading and…stay tuned!

Release Site:

Every effort is made to ensure accuracy of data transcription but accuracy cannot be guaranteed.  The official release site should be cross referenced for accuracy and footnoting.  The analysis represents the opinion of Blue World Asset Managers, Ltd. who are not giving advice and does not warrant or guarantee predictions based on its analysis.