Spinning the unspinable – jobs report weak
President Obama is out telling workers at a trucking company in Hyattsville, Md that the new job numbers, 431,000 hired last month, shows the economy is “getting stronger by the day”.
Is it? It tells you something about credibility when you immediately question declarations like that, but that’s been the mantra for quite some time and it really hasn’t borne itself out as time progresses.
In this case 431,000 looks like a “good” number and seeing the unemployment rate drop from 9.9% to 9.7% would certainly seem to confirm that.
But the numbers really don’t support the spin. Of the 431,000 new jobs, 411,000 were temporary census jobs with the government that will go away at the end of the summer.
“The U.S. employment data was disappointing,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman, in a statement. Mr. Chandler noted that private-sector job creation, a crucial measure, reached only 41,000, compared with expectations for 180,000 and a three-month moving average of 155,600.
It only had a net gain of 20,000 private sector jobs, far below the 100,000 or so jobs necessary just to maintain the employment status quo.
As for the unemployment rate:
“The fact that the unemployment rate ticked down is not really good news,” he added, “as the decline in unemployment was not a function of more jobs but a reflection of people leaving the work force.”
The lack of private sector job growth is being hidden by massive hiring by government for the census.
“These new data do not present a picture of a healthy private-sector growth, and nothing closely resembling the job growth needed to dig us out of our very deep hole,” Lawrence Mishel, the president of the Economic Policy Institute, said in a statement.
He’s right – do the math. 8 million people have lost their private sector jobs since the recession began. As Mishel points out, these numbers don’t at all indicate an economy that is “getting stronger by the day”.
“You would need to be producing 150,000 to 200,000 jobs a month to be making a dent in this,” said Doug Roberts, chief investment strategist for Channel Capital Research.
When you begin seeing numbers like that – on a sustained basis – then you have some basis for saying the economy is “getting stronger by the day”.
Until then, it’s just so much spin.