Economists Exult over Job Gains. Be Wary
By Don Bauder
Economists are rhapsodizing this morning (May 7) over April's rise in 290,000 jobs (224,000 after temporary Census workers are excluded). March job gains were revised upward to 230,000 from 162,000. The unemployment rate rose to 9.9% from 9.7% because, said the government, a flood of people entered the workforce. Economists are downplaying the bad news: the underemployment rate, which includes people who can only find part-time jobs and those who have been too discouraged to look for a job in the last four weeks, rose to 17.1% from 16.9%. Of the 15.3 million unemployed, a record 45.9% have been out of work more than half a year. The average workweek rose only 0.1 hour to 34.1 hours. In a healthy economy, this number is 37 hours, according to MarketWatch.
Today's report, in my own opinion, simply does not jibe with Wednesday's report of private sector employment by Automatic Data Processing. This report had private sector jobs rising only 32,000. One statistic that bothers me is the government's birth/death adjustment model. This is a computerized estimate of jobs created by small business that are not captured in standard reporting procedures. Again, this is a computer ESTIMATE -- it is not a count of actual jobs. The government estimated that 188,000 jobs uncounted jobs were created by small business in April -- larger than anything for many months. For example, the March number was 81,000. The Automatic Data Processing report indicated that of the 32,000 job gains in April, a mere 1,000 were in small businesses. Although this is not an apples to apples comparison, admittedly, those two numbers do not add up.
Jobs-jittery Americans Belie Improving Data
John Crudele
Tomorrow, the Labor Department will announce its monthly jobs report for April, a statistic that isn't very important to the general public but is urgent to Wall Street. Experts are predicting that about 190,000 new jobs were created in April, up from 162,000 in March.
After March, April will show job growth, followed by May, June and July. Not too bad, you'd think, except that Americans still seem to be in a funk about the economy, a fact confounding everyone from politicians to professors to retail store managers.
Have Americans been changed forever by the Great Recession? Or, are there other explanations as to why -- according to Thrivent Financial/Kiplinger -- 84 percent of the population is now worried about their finances, despite the alleged economic recovery and the fact that between 80 percent (the unofficial unemployment rate) and 90 percent (the official one) of adult Americans still have jobs?
To be sure, retail sales have improved from last year's levels and even from earlier this year. That was inevitable since 2009 was the dregs for anyone selling anything.
The stock-market bubble has also helped, although Wall Street's jitters of the past few weeks could have shareholders putting their wallets back in their pockets.
The Rutgers survey explains some of the things going on in people's minds -- if you lose your job and know it's damn hard finding another one, you will not be upbeat.
But there are other things screwing with the American psyche. For instance:
* Economists say 150,000 new jobs are necessary each month just to absorb people entering the work force. That figure probably increases during a month like May, when college students are leaving school and trying to find jobs. So growth of 190,000 jobs in April just won't be that impressive.
* About eight million jobs were lost during this recession. So the sort of growth we are achieving is really just a drop that is not going to fill up the bucket very fast. Worse, most of these new jobs are low-paying positions created by the Census Bureau.
* Springtime is when the Labor Department arbitrarily adds jobs to its count for positions it thinks -- but can't prove -- are being created by newly formed companies.
So whatever number the Labor Department comes up with, it's really just a guess. And people simply don't get rich from jobs that are nothing more than a figment of the government's imagination.
* The economic recovery may not be as strong as the government estimates, which aren't very strong in the first place. The nation's gross domestic product growth in this year's first quarter dropped to a 3.2 percent annual rate from 5.7 percent during the final three months of 2009.
That 3.2 percent actually equates to growth of only 0.8 percent from January through March (3.2 percent divided by four quarters). And the 3.2 percent growth is mostly the result of guesswork.
* Increases in income being reported by the government are misleading.
While the US Bureau of Economic Analysis says personal income rose a healthy $36 billion in March, that figure includes $24.9 billion in "transfer" payments -- essentially money that Washington is giving to people in the form of unemployment benefits and other forms of social assistance. About $13 billion of that gain came from jobless benefits alone.
Transfer payments were up just $7.3 billion in February.
People, of course, are more than happy to take the $24.9 billion. But those billions aren't going to make them feel better about their situation or go on spending sprees.
Looking at the Rutgers survey gives us a better idea of what people have been going through.
Today, 70 percent of those surveyed have been looking for work for more than seven months. Back when the original survey was done, just 48 per cent were looking for that length of time.
And more than half of those questioned said they don't think they will find a new job in the near future even though 73 percent said they would be willing to take a pay cut and 77 percent would be willing to change careers.
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