Total nonfarm payrolls fell by 2.9 million in January from December. These are the actual numbers, not the Bureau of Liar Statistics seasonal fudge pack which usually obscure the truth, or completely mislead. In order to reveal how the current numbers stack up, it is only necessary to compare them to past years. Given that the BLS has dropped a thousand words from the labour force, here are the pictures. To begin with, January’s drop in non-farm payrolls is about the same as last year’s at 2.898 million versus 2.869 million. We’ll consign this year’s slightly worse performance to rounding error.
Private payrolls dropped by 2.4 million, which was also the same as last January. In these two measures it would at least appear that the situation isn’t getting any worse. But it’s showing no improvement. Stagnant is especially bad since the working age population is still growing.
Until last year, government employment had helped the numbers hold up to the extent that they could have been even worse if that were not the case. That prop is now being withdrawn thanks to state and local government budget woes. Government employment fell by 494,000 in January. Last year it only dropped by 464,000 in January. The growth trend in government employment has reversed.
States haven’t cut back much.
Local governments have. Local government employment has been downtrending since 2009. State budget woes are such that lower state employment ahead is in the bag.
The labour force shrank by 620,000 in January. Last year it rose by 264,000. If the BLS wants to lower the unemployment rate, like it did this month– presto change-o! This is how it’s done.
The total number of unemployed persons (by the BLS definition) rose by 940,000. This was a big improvement over last January when it was up by 1.4 million. Fewer people were unemployed. That’s good, right? Not if they were dropped out of the labour force statistic, which is what the government did. If people get tired of looking for work and stop looking, the government no longer considers them unemployed.
The total number of people not in the labour force rose by 395,000. Last year that number fell by 355,000. It’s nice that so many people were able to retire this year.
The ratio of employment to population fell by 7/10 of a per cent in January, dropping the ratio to a new low of 57.6% for this depression, and the lowest level in 27 years. Last year, the drop was only 4/10 of a per cent.
The labour force participation rate fell 2/10 of a per cent to 63.9%, also a new low, and the lowest level in 25 years.
Not wow. This number is also reduced by those dropped from the labour force. It’s another case of looking better than things really are because of that trick of reducing the size of the labour force. So before we conclude that this number is really less bad than last year, let’s see what kind of seasonal pullback we get through April. And more importantly, let’s stay focused on the only number that really matters–the total number of folks actually working full time. That dropped by 834,000 to 110.4 million, getting us all the way back to the levels of 2003.
It’s true that that’s better than last January when the economy lost 1.1 million full time jobs. But let’s put this in perspective. The first phase of Quantitative Easing 2 began in early August. The economy has lost 3.6 million full time jobs since July. That’s a lot less than the losses of the past two years, but worse than typical non recession years. Between 2003 and 2006 from July to January the economy lost between 2.2 million and 3.1 million jobs each year.
All in all, it appears that while Bernanke’s money printing machine in the basement is doing a lot to stimulate the trading profits of the commodity longs, it isn’t doing much to stimulate job growth. In fact the biggest gain in employment came in the first half of 2010, when the Fed was in the process of ending QE1. Maybe instead of printing money to deposit in primary dealer trading accounts, the Fed should print the money and put people on its payroll directly. However, now that we know for sure that Bernanke’s plan isn’t working, we also know from his past behaviour what his response will be, unfortuantely. Print more money. Great for commodity bulls, not so much for everybody else. This article originally appeared in the Wall Street Examiner, where you can follow the machinations of the Fed every week in the Wall Street Examiner Professional Edition.