Jan 08 2011

Beware Of Job Reports Over Holidays

Published by at 9:21 am under AJStrata's GUT,Measuring The Recovery

Holiday seasons are notoriously bad times to sample long term trends. If you want to measure productivity don’t do it on a short work week – especially if it is normal for people to take off early the last work day. Between Thanksgiving and Christmas people are usually at their most optimistic or pessimistic (depending on their situation). Views of the economy will be more extreme than the rest of the year. Consumer activity during this period does not reflect the consumer spending the rest of the year.

Same thing with unemployment and employment. People are either temporarily employed for a short time, or the unemployed are busy attempting to make the best of their holidays and putting off first time claims until later. Worst yet, compassionate employers prefer to wait until after the holidays to dish out the bad news of lay offs.

Each Holiday season this year has resulted in a blip of good news due to short work weeks. The December jobs report is no different:

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The employment survey, the normal focus of attention, showed overall growth in payrolls of only 103,000. That was well below expectations, especially after a disappointing November report and a remarkably high estimate from private- sector payroll processor ADP earlier this week.

Yet the household survey, from which the unemployment rate is calculated, sent a completely different message. It showed an extra 297,000 people in jobs and 260,000 fewer people in the labour force. The combination of the two was enough to cause a drop in the unemployment rate from 9.8 to 9.4 per cent.

The weekly job reports tell the same story. The last report of the year (12/30/10) showed a weekly decrease of 34,000 first time claims for the week of Christmas. The next report, covering the period between Christmas and New Years, showed the opposite trend with an increase of 18,000.

I guess the liberal news media is still trying to spin a silver lining for the Dems out of the black economic clouds that have built up from the liberal deficit spending madness. I tend to look at indicators like how many people are still on extended unemployment as compared to a year ago (the heart of the great democrat recession of the 21st century). By that measure the Jan 1, 2011 data shows nearly 3 times as many people on Extended Unemployment benefits now than a year ago (929,570 now as compared to 316,988).

The number of people on Extended Benefits is a long term number which does not shift due to number of work days per week. Therefore don’t expect some magical relief from the Democrat spending binges. The only way to fix this is to shrink government dramatically, and end the accumulation of generational debt that is crushing us. Until then, fuggettaboudit.

5 responses so far

5 Responses to “Beware Of Job Reports Over Holidays”

  1. WWS says:

    We are at the time where the economy, if it had been left to run its path without interference, would be picking up as the old imbalances would have been cleared away. Some of that underlying trend is still going to show through, in spite of all the foolishness we have done over the past 2 years.

    *BUT* – in all of the government’s attempts to ameliorate the downturn, we have created a new and even more dangerous threat to both unemployment and, through that, to our economy in general. It’s not just that the Federal Govm’t is effectively bankrupt, the problem is the States. While the Feds can continue to print money and pretend everything is fine, the States don’t have that safety valve. One of the dirty little secrets of the $billion dollar “Stimulus” bill was that large amounts of that money was simply transferred to large (democrat) state Governments to help them avoid making the hard choices. Now that money is running out, and what did they do with it? Just like a foolish man without a job who wins a modest jackpot, they didn’t invest it in anything – they spent it all on the equivalent of booze and cigarettes. Now the money is gone, and there is no way the new Congress is going to repeat the handout.

    What’s that mean to the economy? The States will have to cut back, of course, Ill, NY, and Cal being the biggest three in trouble. (Texas has a deficit, but it will have a relatively easy time dealing with it – that’s another story) There will be *many* municipal bankruptcies and defaults, and there may even be de-facto defaults on things like California debt obligations. (unilaterally stretching a payout from 2 years to 30 years is a defacto partial default)

    Many will say good! They need to cut back! and they do, of course. But when you add these states together, the very *first* effect of the cutbacks will be at least 500,000 people added to the unemployment rolls, and it could easily be more. This economy is not in good enough shape to take another 500,000 unemployed, especially when those are all people whose chance of getting gainful employment anywhere else is pretty much nil. (admit it, that’s why they were in the bureaucracy) and then add all of the additional housing defaults and drop in consumer purchasing power that will come as a result of this, and it’s hard to forecast anything but another strong move down for the american, and world economy sometime over the next 2 years. (but probably within the next 6 months)

    Politically, this is why I am still glad the GOP didn’t win the Senate. If they had, the MSM would have handed them the blame for the second half of this double dip recession. Now, instead, we will have congressional gridlock and Republicans can run the 2012 campaign on “Look what the Dem Senate stopped us from doing!” This is why they need to pass as much of Paul Ryan’s blueprint as they can, even though the Senate will kill it. To show what they would do if they were entrusted with both houses.

    There is going to be much economic (and physical) pain and misery in the next 2 years, because the only way to truly fix what’s wrong with us is going to cause a lot of pain and misery. No possible government policies can avoid that, although many can prolong it. (and have) Some states, such as Illinois and California, may need to completely crash and burn financially before they can make a comeback in a generation or so. There is no way around this; the only way around is through.

    p.s. – observers may have noticed gold, oil, and the stock market all going up strongly. Well, where did you think that extra $Trillion that the fed created was going to go? Not into the economy, just into asset inflation.

  2. Mike M. says:

    AJ, you don’t actually believe Obama regime numbers, do you? They seem to quietly revise them for the worse a few month later – on a consistent basis.

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  5. lurker9876 says:

    www, in that case, since you and I live in Texas, if I were in the Texas state government, I’d say good riddance EPA and get that offshore drilling off our own coast going. We’re going to need more offshore drilling AND build new refineries in order to generate more revenues for the state and be in a far better shape than the rest of the nation. Other conservative states should do the same.

    Increased federalism with decreased involvement from the federal government.