December 5, 2008

The November Employment Report, with Comments (Updated, Carried to Top)

Filed under: Economy,Taxes & Government — Tom @ 11:45 am

Lead-ups:

  • Well, the econ indicators don’t point to anything good. The Institute for Supply Management’s Manufacturing (36.2%) and Non-Manufacturing (37.3%) Indices point to an economy, and thus a job market, that’s in the tank. Index readings above 50% mean expansion, and below 50% mean contraction. A reading below about 42% in each case indicates recession. This POR (Pelosi-Obama-Reid) Economy we’ve been living in since June, and which was called by yours truly in early July, is something else, isn’t it?
  • On the employment front, ADP’s National Employment Report Wednesday came in at 250,000 nonfarm private jobs lost, and only a slight upward revision (from -179,000 to -157,000) to its original October number. Two consensus predictions for Uncle Sam’s report both point downward — the Associated Press (unemployment to 6.8% and 320,000 seasonally adjusted jobs lost) and Reuters (340,000 jobs lost).

The Report (Bureau of Labor Statistics link) — Well, you can’t get much worse than this:

Nonfarm payroll employment fell sharply (-533,000) in November, and the unemployment rate rose from 6.5 to 6.7 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. November’s drop in payroll employment followed declines of 403,000 in September and 320,000 in October, as revised. Job losses were large and widespread across the major industry sectors in November.

Comments:

In the last three months, the POR Economy has lost 1,256,000 seasonally adjusted jobs; since June, over 1.5 million:

JobsLostIn2008thruNov

Nancy, Barry, and Harry must be so proud. It’s simply amazing what promising to choke off a country’s energy supplies (all three of them did so in June), promising to radically raise taxes (Obama did, and the others have been on board, for at least 18 months before the presidential election), and having a decades-in-the-making wreck of the housing and mortgage-lending industries come to a head (a Democratic Party group effort going back to the late 1970s) can do.

Never forget this: They broke it.

Now let’s see if they can fix it.

“Funny” thing: They can’t, and they know they can’t, without backing off many of the very things they promised to do. It’s already in progress: Obama’s punitive tax increases on the top 5% are being deferred, and Obama has dropped the windfall profits tax on “evil” oil companies that sent his crowds into spasms of applause during the campaign.

____________________________________________

UPDATE, 1:00 P.M.: A look at the “actuals” — that is, the NOT seasonally adjusted numbers — shows that the November decay is much worse than the seasonally adjusted numbers would indicate.

JobsLostIn2008thruNovNotSeas

The decay in January through June averaged 183,000. In September and October, as the likelihood of “something” happening become more possible, it went to 423,000 and 402,000. Then the wheels came off in November. Instead of the +313,000 that took place last year, employers actually shed 634,000 jobs — an ugly, stunning wrong-way swing of 947,000 jobs.

Gee, I wonder what “something” took place in November to cause this?

UPDATE, 1:00 P.M.: Also see this NewsBusters post for a critique of the predictably weak coverage by the Associated Press’s Jeannine Aversa. An excerpt from that post –

Based on my review of Bureau of Labor Statistics data (start here, and select the tables listed on the first line labeled “Total Nonfarm”), the negative swing of 947,000 from November 2007 to November 2008 appears to the worst one month year-over-year turndown since World War II (to be fair, other negative swings in the distant past are probably a higher percentage of the labor force at the time).

UPDATE 2, Dec. 6, 6:30 A.M.: Aversa’s 6:17 p.m. update yesterday starts thusly –

An alarming half-million American jobs vanished virtually in a flash last month, the worst mass layoffs in over a third of a century, as economic carnage spread ever faster and the nation hurtled toward what could be the hardest hard times since the Great Depression.

Actually, Jeannine, as seen above, 634,000 jobs vanished in a month where jobs have been added in 53 of the last 64 years. The job loss, even considered proportionally against the size of the workforce, is the worst November since 1960.

The “good news” is that 1960 was the year JFK was elected. Kennedy later surprised everyone and I suppose disappointed the leftists in his day by doing the right thing and cutting taxes across the board, leading to the prosperity of the 1960s. Oh to have history repeat itself.

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29 Comments

  1. Question for you, remember my comment on seasonally adjusted numbers IF employers didn’t do their usual seasonal hiring for the run up to Christmas? Why weren’t the seasonal numbers worse than the non adjusted ones if the adjusted ones take into consideration the usual hiring spike for the month???? When I pull up table A -1 and look at the numbers for Nov 07 verus Nov 08 I see the following:
    Employment Level NOT ADJ – 147,118,000 vs 144,609,000 a decrease of 2,509,000 jobs.

    Employment Level ADJ – 146,647,000 vs 144,285,000 a decrease of 2,362,000 jobs

    Unemployment Level NOT ADJ – 6,917,000 vs 10,015,000 an increase of 3,098,000 looking for jobs.

    Unemployment Level ADJ – 7,181,000 vs 10,331,000 an increase of 3,150,000 looking for jobs.

    Now let’s do the math that incorporates population growth from 2007 to 2008. Now we see how many jobs the economy failed to create in order to keep the status quo of Nov 2007.

    Employment Level NOT ADJ – 2,509,000 jobs lost vs Unemployment Level NOT ADJ – 3,098,000 looking for jobs, the difference is 589,000 jobs not created to accommodate the increasing population.

    Employment Level ADJ – 2,362,000 jobs lost vs. Unemployment Level ADJ – 3,150,000 looking for jobs. The difference is 788,000 jobs not created to accommodate the increasing population on a seasonally adjusted basis.

    That’s a big ouch! All because of the PC POR agenda.

    Comment by dscott — December 5, 2008 @ 2:50 pm

  2. #1, the seasonal hiring is VERY discretionary relative to other hiring, and you make a very good point.

    Comment by TBlumer — December 5, 2008 @ 3:10 pm

  3. One more thing, looking at the graph of the Not Seasonally Adjusted employment levels I notice that January is typically the low point for the next coming year, I assume this has to do with Holiday (T-day and Christmas) hiring and layoff practices. December, the job shedding begins and fully completed by the end of January. I predict significantly more job losses for December as a matter of historical trends bottoming out in January. The numbers we have to be concerned with is February, if you don’t see job gains there which historically always occur, we are in deep #$%#$%. I ran the chart back to as far as it can go, 1947, there is no precident of an uptick from Feb to May or June. Even in the periods of 1981 to 1983 and 1990 to 1993 where job growth ceased, the cycle always held.

    On the Seasonally Adjusted graphs we would normally be hitting bottom at this point for an economic downturn and any increase in unemployment would be strictly new people coming into the market with no new job to employ them.

    Comment by dscott — December 5, 2008 @ 3:12 pm

  4. #3, agree, which is why people should be paying a lot more than zero attention to the monthly actuals.

    Comment by TBlumer — December 5, 2008 @ 3:18 pm

  5. Blaming our current problems on “POR” is about as intellectually dishonest as anything I’ve ever seen on the internet. The problems in housing were apparent in 2004, as I reference here. If I recall, Republicans had a lock on just about everything in 2004 when the housing market was inflating beyond reason and evidence of a bubble was everywhere one cared to look. And yet you want to claim this is all because we’re not drilling in ANWR, or some such other nonsense. Please.

    Comment by Invictus — December 5, 2008 @ 5:54 pm

  6. #5, thanks for confirming that I’m on the right track.

    This is all well-explained here, AND was observed/predicted here and here in July. There is no credible alternative explanation that doesn’t have P-O-R and the D party in the thick of it. If the GOP is to blame, it’s for not stopping the train wreck sooner. But regardless, there would have been a train wreck with a D all over it.

    Comment by TBlumer — December 5, 2008 @ 10:07 pm

  7. This is the economy that the majority of people voted for in ’06 and reconfirmed this Nov. To now complain about job losses in this Democrat manufactured economic tanking is what is intellectually dishonest. It’s not like people weren’t warned, but apparently, this is the economy they wanted. Now they can enjoy it!

    Comment by Joe C. — December 6, 2008 @ 8:11 am

  8. Joe C.: Please elaborate on how the Democrats are responsible for this “manufactured economic tanking.” Extra credit for actual facts.

    Comment by Invictus — December 6, 2008 @ 3:05 pm

  9. #6, you want to talk about who predicted what, Tom? Do you really want to go there? Seriously? The writing was on the wall in 2004 — it’s in black and white and I’ve posted it on the internet for all to see. In November of last year I posted this picture of Wile E. Coyote running off a mountain path, suspended in midair and just realizing what was in store for him. My post was titled “Economy in a Picture.” Sure enough, final GDP printed -0.2 for Q4 2007. But what did I know? You continue to blame a Democratic congress that wasn’t elected until 2006 for SERIOUS problems that were plainly evident in 2004. It’s just beyond bizarre.

    Comment by Invictus — December 6, 2008 @ 8:00 pm

  10. #8, no what’s beyond bizarre is that grown adults can declare a recession to be taking place in a quarter with 2.8% growth, and further to acknowledge that GDP peaked in Jan, receded a bit and peaked at a higher level in June, and STILL say that it’s a recession — and because they’re the anointed ones, we’re just supposed to believe them. Horse manure.

    There is plenty of evidence on the record that the GOP and Bush wanted to do something about the housing/mortgage issues in 2004-2006. You’re blaming the guys who didn’t call the fire department quickly enough and letting the arsonists escape any accountability. Horse manure.

    But, as said earlier, the more you hold onto the idea that we’ve been in recession for a year, the more you simultaneously cling to the notion that the P-O-R economy goes back that far. You’re in a heck of a Catch-22, I’d say.

    Comment by TBlumer — December 7, 2008 @ 6:03 am

  11. Tom, at some point you must come to the understanding that a recession call is about more than GDP. Why you continue to cling to that is beyond me. There’s Employment, Industrial Production, Real Sales, Real Income, Aggregate Hours worked, and likely many other variables that are examined. Yet you focus on GDP as if it were the be-all and end-all. It is obviously not, and they say as much at their website. Would a bit more transparency on their part be welcomed? Sure. And perhaps some day we’ll get it. But for now, even an amateur like me was able to divine the call they’d make, so it really can’t be that hard.

    Yes, Tom, the GOP certainly did want to do something in 2004 regarding housing — George W. Bush sought to eliminate the 3% downpayment through his Zero Down Payment Act, presumably because $6,000 was too much to ask as a downmpayment on a median-priced $200,000 home. Yup, zero down, 100% financing. How’d that work out for us?

    There is no Catch-22, Tom. Republicans controlled the White House and the Congress right through 2006, at which point our economy’s demise was already a fait accompli. Instead of touting the housing numbers in his March 2004 radio address, Bush should have been alarmed by them and realized they were simply unsustainable. But politics dictated otherwise, and now we pay the price.

    Comment by Invictus — December 7, 2008 @ 9:19 am

  12. Okay, how high does quarterly growth have to be before you conclude “obviously, we’re not in a recession, and we aren’t going to waste our time looking at it”?

    Be specific, or don’t bother replying. In fact the only acceptable reply is a percentage with no other accompanying words.

    Waiting for the magic number …..

    My threshold is when real GDP growth is higher than pop growth or potential workforce growth, which is about 1.2% tops (probably 0.8% is more accurate if pegged against the potential workforce, which is not growing as much due to voluntary retirements). This is a concession beyond what the normal-people definition contemplates. 2.8% is over double or triple that. They shouldn’t even have been discussing it — or at most they should have declared a 3-4 month slump or recession had ended, if the data conclusively support it, which I doubt.

    I should also add the all the data isn’t even close to being in, which makes me wonder if this call isn’t historically early vs. previous calls.

    Comment by TBlumer — December 7, 2008 @ 10:53 am

  13. I have no magic number (and sincerely doubt there is one), Tom, and I don’t sit on the NBER’s Business Cycle Dating Committee (BCDC). However, I do know this much:

    1) They look at much more than GDP and,
    2) In comment #10 you refer to the fact that the BCDC acknowledged that “GDP peaked in Jan, receded a bit and peaked at a higher level in June.” For starters, the BCDC gets monthly GDP estimates from Macroeconomic Advisors that you and I don’t get (well, at least I don’t get it because I don’t need it and can’t afford it). Second, and much more importantly, those sitting on the BCDC no doubt inferred that the higher June GDP was a direct result of the $150 billion in stimulus the government had been doling out in the few months prior, without which they probably concluded GDP would have nowhere near as high. In other words, as we have clearly seen, Q2 was anamolous, a one-off spike due primarily to government intervention. The other metrics continued to deteriorate. Yet more support for the notion that GDP is not to be looked at in a void.

    Comment by Invictus — December 7, 2008 @ 12:00 pm

  14. #11, Except one little problem with your fait accompli, the Democrats handed this economic disaster to the nation in spite of the GOP efforts to head it off. You missed the part of who presented the fait accompli, the Democrats when they BLOCKED all meaningful efforts to reform Fannie Mae & Freddie Mac repeated when Bush came into office. Via force of law (CRA) and misguided lawsuits by ACORN (represented by Obama) banks were also required to make unsound loans to people who are economically disadvantaged and highly subject to any downturn in the economy. These are undeniable facts.

    It was the Democrats who insisted on the domestic drilling ban because of their constituency the environmentalists. Environmentalists are not a constituency of the GOP, even you recognize this. In insisting on outsourcing oil and natural gas to foreign countries bled the economy of every year, reaching a height of some $200 billion this year. Only an incompetent group of politicians would insist on this policy – Democrats.

    Of course it was the Democrats who derailed Bush’s plan to put the federal deficit on the path to balance. They insisted on spending more than revenues taken in since the GOP compromised repeatedly to get any legislation passed. Which is why I oppose all compromise with Democrats and dismiss the likes of John McCain for calling Socialist scum Democrats his friends. Who was responsible for this year’s budget – Democrats and why they intentionally overspent revenues by $400 billion and then the budget spiraled out of control. Your incompetent representatives the Democrats sucked $800 billion so far from the economy this year! by their deficit spending. EVERY dollar they borrow or tax in excess is money taken away from the private economy. YOU LIBERALS ARE INCOMPETENT and that’s why the term LIBERAL is a pejorative. Yes, your great salesmen, always overselling the crap you pedal.

    Comment by dscott — December 7, 2008 @ 8:31 pm

  15. #14 #13, oh so now it doesn’t count as “growth” unless it came from the “right” source.

    Anyway, stimulus payments are just transfer payments and aren’t part of GDP.

    Your BS just keeps piling up…. and you won’t tell me what level of growth makes it obvious that there’s no recession. Make commitment, man…..

    Comment by TBlumer — December 8, 2008 @ 8:57 am

  16. #15, Uhmm, you mean #13 not #14.

    Comment by dscott — December 8, 2008 @ 1:41 pm

  17. dscott, thx. As lousy as I feel right now, I’m surprised I can count that high.

    Comment by TBlumer — December 8, 2008 @ 7:48 pm

  18. Dscott and Tom, thanks for confirming for me that the inmates are running the asylum and have been since the elections in 2006. Every time I consider the current economic mess that’s radiated outward from the US to include most of the rest of the world, I remind myself that it didn’t have to happen. “Well-intentioned” liberals from another universe foisted the current fiscal trauma on middle-class working stiffs like me through the exercise of political correctness gone berserk. Then the resulting fluffy mortgages were bundled into “investments” and sold hither and yon to some of the best and brightest, the masters of the universe, scions of the Ivy League, who sought to turn a quick buck on instruments “backed by the feds.” The greed, stupidity, lying, malfeasance and incompetence are only surpassed by the current cowardly finger-pointing. And as I said, the blinking inmates are running the blooming asylum.

    Let’s establish a Resistance and do some serious obstructing in the coming months and years. It’s the least we can do….

    Comment by EXCELSIOR — December 8, 2008 @ 11:46 pm

  19. You folks truly live in a dream world, and I’ve got to admit I’ve never seen anything quite like it. How you can blame Democrats — who took control of Congress in 2006 while a Republican still controlled the executive branch — for a crisis that was obvious in 2004, is simply beyond me. The evidence is RIGHT HERE. It’s on pages 5-14, with charts and tables that you don’t need an MBA to understand. Not good enough? Here, go read what Nobel-laureate economist Joseph Stiglitz has to say about the whole mess. For God’s sake, people, get a clue already. Please.

    Comment by Invictus — December 10, 2008 @ 7:20 pm

  20. #19, Stiglitz is mostly wrong. I don’t have time for a dissertation.

    I saw the same stuff you saw in 2004. It was troubling and the GOP tried to do something (not enough) about the fundamental problems at Fan and Fred, and ran into a race-baiting wall. You’re blaming the people who didn’t try hard enough to fix it and ignoring the people who built it. Frankly, bleep you on that.

    As to the housing bubble and the subprime mess (the former is infinitely more important than the latter), IBD nailed it, as usual, as noted this morning here.

    http://www.ibdeditorials.com/IBDArticles.aspx?id=313718923222067

    The one thing you obviously don’t get is that GOP presidents may come along, but the lib-Dem-dominated bureaucracy mostly goes its merry way — unaccountable and impossible to exercise appropriate oversight over. It’s just too big; nobody can do it, and no one can force them to do what they’re supposed to do. It should be chopped down to about 1/3 of its current size.

    The other thing you don’t get is that a second tax cut in late-2006/early 2007 was exactly what was needed to smooth out whatever difficulties were coming, and of course with Dems in control that was impossible. But that wasn’t enough — oh no. They had to make starving the energy sector a core principle, promise punitive tax cuts, and build a case for bailouts without end.

    The GOP is a party in trouble, but the Democratic Party is incorrigibly addicted to power at any cost, including bringing down the economy if need be, the American worker and family (See: Big 3) be damned.

    Comment by TBlumer — December 10, 2008 @ 7:58 pm

  21. #20, Stiglitz is mostly wrong.

    What else is there to say in response to a comment like that? Then I guess so is Kroszner, so is Bair, so is Rokakis, and everyone else. In fact, I’d go so far as to say that just about everyone who disagrees with you is wrong. If I thought you cared a whit about the truth, I’d feel badly for you. But you don’t, so I don’t.

    Comment by Invictus — December 11, 2008 @ 6:49 pm

  22. Well, you’ll just have to get settle for testimony from a real eyewitness instead of a bunch of pinhead, agenda-driven economists. As I said, I’m in no mood for a dissertation, esp now that I have said testimony:

    Blame me for job losses

    Comment by TBlumer — December 11, 2008 @ 10:29 pm

  23. Interesting little tibbit: With the unemployment rate now expected to hit 9 percent without aggressive intervention,
    http://www.foxnews.com/politics/2008/12/12/obamas-economic-advisers-considering-trillion-stimulus-plan/

    It seems my estimate of 7% for December may come true, unfortunately. These people are so busy running in circles that they don’t realize they are only making the situation worse by meddling. If deficit spending could pump prime the economy then why didn’t the $400 billion federal budget deficit of 2007 keep us out of recession? If the $800 billion budget deficit in 2008 didn’t keep us out of recession then why propose another trillion? All their meddling has accomplished is to reallocate private capital to government directed spending, essentially robbing Peter to pay Paul. The economic down turn was not a result of decreased spending, it is a result of misallocated capital out of the domestic US economy.

    It really irks me that these morons don’t even understand what Keynes wrote much less followed incorrect fiscal policy. The purpose of taxation is to act as a BRAKE upon the economy. Borrowing by the federal government does the exact same thing. Why? The co-opting of capital flow away from private enterprise.

    Comment by dscott — December 15, 2008 @ 10:49 am

  24. Obama has said the package will include an initial tax cut and a massive infusion of funds for roads, bridges, water systems, school repair, spreading broadband access, promoting health-care information technology, improving energy efficiency in buildings, renewable-energy projects, and assisting struggling state and local governments. But the balance of those projects is still under debate.

    Has anyone done a study on the economic efficacy of each sector of the economy? The idea here is which sectors of the economy provide the most economic boost per dollar spent? Which sectors recycle money at the highest rate within the domestic economy? I would assume the efficacy would be based upon the salary per worker generated, not necessarily the GDP which includes the product or service.

    Most of our recessions in the modern era (since the 70s) have been as a result of oil price spikes, so the raising of oil prices in essence diverts capital from other sectors of the economy into the energy sector. By inference then the capital recycle rate with in the energy sector is less than in other sectors. What causes that? We know that this is a highly taxed sector of the economy on top of large amounts being siphoned out of the domestic economy due to foreign imports.

    Comment by dscott — December 15, 2008 @ 12:20 pm

  25. Maybe another more important idea, when the Bush tax cuts (essentially the recinding of the Clinton tax increase) first took effect what sectors of the economy received the greatest benefit in terms of employment and GDP?

    Comment by dscott — December 15, 2008 @ 12:23 pm

  26. 10 myths regarding the Bush tax cuts
    http://www.heritage.org/research/taxes/bg2001.cfm

    Looking at the GDP figures it seems Fixed Investments went up significantly, this tells me more money was available to invest in building and equipment which is the base of all business activity.

    From what I can tell all government GDP contributions are less than 13% of the economy, so even with the huge budget deficits, how does one expect to boost the economy by tinkering with only 13% of it versus the other 87%???
    http://www.bea.gov/industry/gpotables/gpo_action.cfm?anon=58578&table_id=23975&format_type=0

    Here is the dollar amounts by industry:
    http://www.bea.gov/industry/gpotables/gpo_action.cfm?anon=58578&table_id=23974&format_type=0
    There was a large jump in farming in 2004 and 2007
    Durable and non durable goods made a nice jump in 2004
    what is fascinating is vehicles took a hit during this period.
    Health care just grew irregardless at $50 billion/year

    Now employment by industry
    http://www.bea.gov/industry/gpotables/gpo_action.cfm?anon=58578&table_id=24013&format_type=0
    Interesting, employment in farming dropped over the same period as it made more money.

    I need to run a spreadsheet to see the efficacy using these numbers.

    Comment by dscott — December 15, 2008 @ 12:55 pm

  27. I ran a spread sheet, very interesting results. The economy is taking significantly less people over 10 years to produce GDP In 1998 it took 13.63 (thousands) to produce a billion dollars in GDP, in 2007 it only takes 9.44 (thousands) to make the same billion. A 30.7% reduction. These are not in chained dollars. I checked the inflation calculator, I get 27.2% over the same period.

    Some industries are more effected than others due to productivity gains. But the upshot is, IF one were to do a quote short term stimulous package, it should be one where you employ the most people for the fewest dollars for efficacy. That would be in hotels and restaurants, not road building. In terms of GDP it literally takes 4 times the amount of money to employ a federal worker than a someone in a restaurant or in terms of state government two times. Forestry and Fishing would be another area where you can employ the most people for the GDP created.

    Comment by dscott — December 15, 2008 @ 3:27 pm

  28. #26, I believe most of the work would show up as having been done by the private sector, e.g., nonresidential construction includes govt. buildings. Remember it’s goods and services produced, not bought. The const. firms are the producers in my example.

    Those BEA links will come in handy.

    Comment by TBlumer — December 15, 2008 @ 9:53 pm

  29. [...] in Pelosi and Reid’s House and Senate majorities, are the primary reasons why employers reduced payrolls by 634,000 in November, compared to hiring over 300,000 during November [...]

    Pingback by Pajamas Media » The Right Way to Bail Out the Auto Industry — December 18, 2008 @ 2:35 am

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