Blue World Employment Situation Report Analysis 3-9-2012

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, March 09, 2012

Brain surgery is not rocket science to a brain surgeon©

Another month.  Another jobs report.  They’re singing in the streets…unless you work here.  I was on CBS Chicago WBBM AM 780’s (105.9 FM) Noon Business Hour today.  I actually said, “We don’t call it the employment situation report anymore.  We call it the yeah, but report.”  Due to that appearance we’re a little late getting posted today so we’ll hit the highlights.

Jobs grew by 227k and the stated unemployment rate was unchanged at 8.3%.  Those of you who follow us regularly understand how that can happen; add a quarter million jobs and not change the rate.  For those who may be new, the answer is simple.  Every month the number of employed people changes.  The number of people reporting as available to work also changes.  Because one is divided by the other, any change to either will affect the percentage.  The number of jobs added in February was fewer than those added in January.  The change in the labor force size also rose less than in the prior month at roughly the same proportions, so the stated unemployment percentage didn’t change.  I’m afraid that’s the last of the “good” news.  We’d like everyone to pause and think about how we’ve come to see an unchanged 8.3% unemployment as “good news.” 

The stated rate has, of course, gotten smaller due to a diminished labor force and, consequently, the labor picture is not improving.  For more detail on that please follow http://owl.li/8kHlp.  Nothing in today’s release changes our view.  In fact there is reason for heightened concern.  Here are just a couple of major points. 

  • ·         25 years old + with a Bachelor’s degree, or higher remain unemployed at 4.2%
  • ·         Wages are increasing at rates materially below inflation
    • o   this provides no confidence in future consumer spending
  • ·         Unit Labor Costs are up and productivity is down
    • o   this squeezes profits and the solutions lead to higher inflation/interest rates or slower hiring
  • ·         Trade deficit at 3 year high
    • o   driven by imports hitting an ALL TIME high
  • ·         Food and fuel costs are on the rise 

If you analyze these reports academically there is clear improvement in the labor market and the economy at large.  If you are a business manager or investor who deals with real money and real people the bias must remain cautious. 

We always appreciate your consideration.  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, March 09, 2012

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