The new non-farm payroll job numbers announced this morning shocked everyone and I knew immediately that some in mainstream media (MSM) and blogisphere would do their level best to highlight any bad areas within the report which could be found - because you know it's Obama's evil administration who is to blame.
Yes, sarcasm on my part but that's what is hyped. That's what sells headlines. That's what gets people votes and coerces voters into their (political) way of thinking, rather than voters thinking for themselves (because that's a nasty process, they wouldn't lie to me and I just don't have time because I'm busy binging on Dancing With The Stars, Duck Dynasty and Kardashian episodes I missed!).
Sadly for these poo-pooers, there just wasn't any BAD areas in the non-farm payroll report. Period. Have fun keeping your head in the sand and drinking the koolaid.
(click on all charts to enlarge)
Where the consensus was that that U.S. would add approximately 200k-220k new jobs (btw included in those estimates were seasonal/holiday hiring), instead we got an eye popping 314,000 new jobs in the month of November.
Oh and did I mention, this was WITH a very bad (early) cold snap which left much of the Middle and Eastern U.S. in frigid temperatures and poor Buffalo blanketed with four feet of snow; some people people trapped in their homes the week before Thanksgiving? Yes and we STILL added over 300k jobs.
In fact folks what they won't point out to you is that the U.S. has had 11 straight months of consecutive job growth, which has not been seen since 1999.......and just think; the year isn't over yet.
Underemployment, or workers who have a part time position and are seeking full time status, OR those who are considered "over qualified" for the position they're applying for, is still high BUT improving slowly. This must continue to drop and it may take unemployment to drop further, maybe to 5% from 5.8% before we see this happen.
As Diane points out in this video, not all of the excuses from employers are more than just that, excuses. (You believed them? Oh that's cute)
The Feds Actions
Now there's really no disputing that the Fed's easy money policies stopped the crisis from worsening, however it also was added greatly to the wealth inequality which had already been slowly taking place the last 30 years..........right before your eyes (and you didn't even know it). From the Economic Policy Institute:
Wage inequality grew substantially over 1979–2007, lessened in the 2007–2009 downturn, and began expanding again in the 2009–2011 recovery. Trends over the next few years will determine whether wage inequality returns to or exceeds the heights reached in 2007 or 2000—or simply remains far higher than at any time in the 1980s and 1990s.
Instead what most of America has felt is this (below). No raise or nickel, dime, quarter per hour. I can hear my old boss now "it's a tough economy right now and we all have to do our part". All the while he's praying you don't realize they're raking in record corporate profits..........but that's a rant for another day.
In my mind there is no disputing the fact that the Fed's quantitative easing program and massive balance sheet expansion, made this recovery different from the one in the 1990's. As Diane Swonk, Chief Economist at Mesirow Financial said on CNBC this morning:
Unlike the recovery in the 1990's, this recovery lifted the yachts and the row boats were left behind.
Quite apropos Diane.
Now for those of you who have never taken an Economics class, after an economic downturn or recession in order to recover, companies refinance their debt, reorganize, cut costs, streamline, stabilize balance sheets and begin to create new jobs. This is typical and exactly what we have been witnessing. The last thing to recover according to Ed Lazear @ Stanford University at the end of the cycle............is wage growth.
Luckily (and quite coincidentally if you ask me) the plunge in crude oil and gasoline is coming at a perfect time. While there will most likely be job losses in the energy sector, these will definitely more than offset by the additional cash in American's pockets; which will..........be spent and flow into the economy.
I don't care what anyone tells you. Corporations don't create the need for jobs. Consumer spending and demand does.
When is the last time you saw any business over staff and be happy at operating at a loss? No. As demand rises, so do sales and with higher demand and sales = the need for more workers. Consumer spending represents 70% of U.S. GDP. 70%! Yes, consumer, you control job creation.
This NFP report may be an anomaly. Of this there is no doubt. Next month "this" report could be revised down and we may be back to 220k however this report did revise up the October and September NFP numbers which was encouraging. Still, we are not "out of the woods" nor does this report indicate a "lift off" of sorts.
Yes, we need to see wage growth now and this report revealed that average hourly earnings grew from 0.1% last report, to 0.4%. While that may sound meager to most, from an economists perspective, 0.4% represents almost 400,000 which can be created and I don't care who you are, that's a big deal.
It is my hope that lower gasoline costs will spur consumer spending further and then.......wage and job gains. I can certainly dream.
We still need to see further improvements in earnings and more constant (higher) job gains however this was a stellar report with broad based gains in the labor market; do not believe otherwise.
In my next post I will address the (dreaded) Labor Force Participation rate and why it's not the end of the world. It's a cycle. Reverting to the mean, if you will. Until then yes dear reader, the United States has improved. We've come a long way from the precipice and we're the cleanest dirty shirt in the world right now with an economy that is growing. Oh, and those 12 million jobs promised by both candidates in 2008 are definitely within reach.