This is perhaps the fishiest, most suspicious jobs report I’ve seen yet. Nothing about it makes sense or is believable. This morning, the Bureau of Labor Statistics (BLS) announced that, in January, the economy added 151,000 non-farm jobs. (See the above link to the report.) That’s well below economists’ expectations, but not mine. What’s fishy about this number is the breakdown, which makes you wonder if the real number isn’t much worse.
The BLS would have us believe that, of the 151,000 jobs added in January, 58,000 were in retail and 29,000 were in manufacturing. Regarding the retail sector, all the data we’ve seen to date indicates that business was strong in November but slowed dramatically in December with sub-par holiday spending. It dragged GDP growth down to 0.7% in the fourth quarter – a number that will likely be revised even lower. Since then, the economy has slowed even further. Before the holidays, you couldn’t shop in a retail establishment without being pestered by aggressive sales people. After the holidays, you can’t find one to help you. It’s always been that way. Seasonal workers are hired for the holidays and let go once it’s over. The claim that retail added 58,000 jobs in January is just too unbelievable.
Even more difficult to swallow is the claim that manufacturing added 29,000 jobs. Manufacturing has been in a deep recession, thanks to a virtual shut-down of oil exploration and falling exports. There’s just no way that manufacturing, which has barely added any jobs in the last twelve months, went on a hiring binge in January in the face of such a dramatic slow-down. It makes no sense whatsoever.
But the implausibility of these numbers from the establishment survey portion of the report pales in comparison to what we got from the household survey where, it was reported, the employment level exploded by 615,000 jobs while the labor force grew by over 500,000. Isn’t it interesting how the two numbers jump all over the place month-to-month, but always seem to converge to prevent destroying the credibility of headline unemployment figure? These are numbers that are completely out-of-line with what’s happening in the real economy for the past two months.
I have my suspicions about what’s behind this.
- The Federal Reserve is desperate to break the equity markets’ dependence on monetary easing, and to fend off the growing belief that it’s become irrelevant in influencing the overall economy. Is it possible that they’ve asked the government to generate data that supports its mission to get interest rates back to “normal?”
- The president is in his final year and wants to keep his job “creation” record intact, in spite of evidence that, as he leaves office, the economy is sinking into recession, just as it did for Presidents Bush (W.), Clinton and Bush (G.W.) before him. Pulling the economy out of the near-depression of 2008 is a big part of his legacy, which would be tarnished if he leaves office with the data showing an economy that’s right back in recession where he found it when he took office.
- I don’t know if other states are enacting similar programs, but Michigan has recently begun advertising a new program called “Work Share” whereby employers can cut workers’ hours (up to 45%, if I remember correctly) and the affected workers can collect a proportional share of unemployment benefits without being counted as “layoffs.”
OK, so maybe the first two items above are just speculation from my cynical side, but can anyone blame me when we get numbers like these?