December Jobs numbers disappoint

[Balta1701]

The December monthly job creation totals are in...108,000 new jobs. Predictions were for roughly 200,000 jobs in December. This is quite a bit less than what is usually taken as the number of jobs needed to keep up with population growth. However, the number for November was revised significantly upward in this report.

 

As I pointed out a few days ago, there's quite a few caveats to be taken with this data...the numbers for winter months are heavily seasonally adjusted to try to look at core job growth - they expect a significant number of temporary hires in November and December and layoffs of those temporary workers in January. So, This could very well be an artifact of people being more cautious during the holiday season and not hiring as many temporary workers, or it could be an artifact of them hiring more temporary workers earlier (which would push the November number higher).

 

Either way, I think the usual rule I've seen with these XMas season numbers is this...if the temporary job growth in the pre-christmas months disappoints, it will usually make the job number look better in January, because there will be less total layoffs (due to less people having been hired in the first place).

 

Either way, at least there's still growth, even though the growth still is sluggish. The real question though...is how these reports play into the federal reserve's decision on when to stop raising interest rates. That, at this point, is anyone's guess.

[southsider2k5]

And of course no where in there did you mention that the jobless rate actually FELL to 4.9%.

[Balta1701]

And of course no where in there did you mention that the jobless rate actually FELL to 4.9%.

Of course, you should know by now that I put absolutely no stock in that number whatsoever, because that number could very well be due to the continued decrease in the recorded number of people in the work force as people continue to drop out at record rates while on some sort of disability/government assistance, attend some sort of school, or simply stop looking for jobs. I think that number is garbage, to the point that I don't even bother comparing one month's number to another, because there is rapid change in the things not being measured.

 

According to the raw BLS numbers, the number of people classified as "not in the labor force" Rose by 250k during December. That alone is enough to push that number down...when you cut the total number of workers you're counting, even a constant number of jobs would produce a decline in that number.

[kapkomet]

The December monthly job creation totals are in...108,000 new jobs.  Predictions were for roughly 200,000 jobs in December.  This is quite a bit less than what is usually taken as the number of jobs needed to keep up with population growth.  However, the number for November was revised significantly upward in this report.

 

As I pointed out a few days ago, there's quite a few caveats to be taken with this data...the numbers for winter months are heavily seasonally adjusted to try to look at core job growth - they expect a significant number of temporary hires in November and December and layoffs of those temporary workers in January.  So, This could very well be an artifact of people being more cautious during the holiday season and not hiring as many temporary workers, or it could be an artifact of them hiring more temporary workers earlier (which would push the November number higher).

 

Either way, I think the usual rule I've seen with these XMas season numbers is this...if the temporary job growth in the pre-christmas months disappoints, it will usually make the job number look better in January, because there will be less total layoffs (due to less people having been hired in the first place).

 

Either way, at least there's still growth, even though the growth still is sluggish.  The real question though...is how these reports play into the federal reserve's decision on when to stop raising interest rates.  That, at this point, is anyone's guess.

And nowhere did you say anything about the jobless number from November being revised UPWARD by 90K, either, which results in a net effect of how many jobs they thought were going to be there are there any way - and the resulting umemployment rate down to 4.9%. Keep picking...

Edited January 6, 2006 by kapkomet

[NUKE_CLEVELAND]

For anyone following the stock market the Nasdaq and S & P are both at multiyear highs and the Dow is closing in on 11,000. Its been a great first week of the year for the markets.

[southsider2k5]

For anyone following the stock market the Nasdaq and S & P are both at multiyear highs and the Dow is closing in on 11,000.  Its been a great first week of the year for the markets.

 

I can even begin to tell you how big it would be for the stock market to close at or above 11,000. I went back through the charts for the last year, and there is so much resistance between 10950 and 11000 it isn't even funny. If the market can't break through that point, I could see it falling back to test 10000, because of all of the tests of these old highs that will have failed. If we can manage get through 11000, I am going to go out on a limb and predict a new high in the Dow Jones this summer. If we don't break 11000, we are going to be looking at Dow Jones 10k again.

[NUKE_CLEVELAND]

I can even begin to tell you how big it would be for the stock market to close at or above 11,000.  I went back through the charts for the last year, and there is so much resistance between 10950 and 11000 it isn't even funny.  If the market can't break through that point, I could see it falling back to test 10000, because of all of the tests of these old highs that will have failed.  If we can manage get through 11000, I am going to go out on a limb and predict a new high in the Dow Jones this summer.  If we don't break 11000, we are going to be looking at Dow Jones 10k again.

 

 

I think the January effect is the final catalyst to get it through 11K. That and the continued strong economy.

[Balta1701]

And nowhere did you say anything about the jobless number from November being revised UPWARD by 90K, either, which results in a net effect of how many jobs they thought were going to be there are there any way - and the resulting umemployment rate down to 4.9%.  Keep picking...

Yes I did. Read the first paragraph of my first post. And I just dealt with the "resulting unemployment rate" by dealing with the fact that I consider the unemployment rate statistic the DOL publishes to be a totally worthless statistic.

[NUKE_CLEVELAND]

There's no question right now that the economy is very strong right now. The talking heads on CNBC are using the term "Goldilocks" over and over again. Last time it was like this was back during the best of the Clinton years. Things are good right now.

[Balta1701]

There's no question right now that the economy is very strong right now.  The talking heads on CNBC are using the term "Goldilocks" over and over again.  Last time it was like this was back during the best of the Clinton years.  Things are good right now.

Well, that seriously depends on where you look. The GDP is growing, but the median income has fallen 5 straight years. The job market is improving, but health care costs are rising. Consumer spending is up, but consumer debt is also through the roof and savings are through the floor.

 

We're in a Goldilocks economy in the technical sense - low inflation at the same time as economic growth. But there has been something fundamentally different about this Goldilocks time as compared to the last time, which makes me very nervous about its future. It's been sustained in such a large part by the low-mortgage rate, high home-equity situation that it just doesn't seem as solid as the last one. Then again, maybe that's just my impression because I don't own a house.

 

Edit: 1 more point...the last Goldilocks seems to have had something similar to these concerns that I express, in the tech bubble - eventually it burst, but when it was going good, on the outside everything looked great. The expansion in the late 90's was sustained by venture capital being pumped into tech industries, which led to massive growths in employment in those industries without them producing any major profit.

 

Edit the 2nd: Decent summary table of some of these issues.

Edited January 6, 2006 by Balta1701

[southsider2k5]

Well, that seriously depends on where you look.  The GDP is growing, but the median income has fallen 5 straight years.  The job market is improving, but health care costs are rising.  Consumer spending is up, but consumer debt is also through the roof and savings are through the floor.

 

We're in a Goldilocks economy in the technical sense - low inflation at the same time as economic growth.  But there has been something fundamentally different about this Goldilocks time as compared to the last time, which makes me very nervous about its future.  It's been sustained in such a large part by the low-mortgage rate, high home-equity situation that it just doesn't seem as solid as the last one.  Then again, maybe that's just my impression because I don't own a house.

 

The irony is that this isn't any different than the stock market driven bubble that was allowed to go on for years too long. Much of the good times in the 90's were driven by equities that put tons of money in peoples pockets just like housing prices have. People also ran up tons of debt in the 90's, and the savings rates haven't changed at all. Not without coincidence, when the stock market burst, so did the economy. The one thing that saved things from being WAY worse and us feeling the full effects of the burst, were the tax cuts saving many jobs.

[Balta1701]

The irony is that this isn't any different than the stock market driven bubble that was allowed to go on for years too long.  Much of the good times in the 90's were driven by equities that put tons of money in peoples pockets just like housing prices have.  People also ran up tons of debt in the 90's, and the savings rates haven't changed at all.  Not without coincidence, when the stock market burst, so did the economy.  The one thing that saved things from being WAY worse and us feeling the full effects of the burst, were the tax cuts saving many jobs.

Given that the amount of money pumped into the economy by the tax cuts was relatively marginal compared with the amount of money pumped in by the boom in home equity and refinancing, I would disagree with that last statement...the one thing that saved things from being way worse was the massive stimulus pumped in by the Fed of lowering interest rates to be practically zero, allowing people to massively expand their debt holdings and pumping that cash back into the economy.

 

Edit: The effect of the tax cuts was not zero of course, and I don't mean to come off sounding that way...but the effect of the Tax cuts was in the shape of a normal keynesian stimulus - it wasn't just that the country was cutting taxes, it was that the country was cutting taxes while at the same time printing money while it was going out of style, thus pumping money into the economy in 2 ways - more money in people's hands through the tax cuts, but also more money in people's hands through the growth in government, combined with vastly more money in people's hands through the interest rate environment.

Edited January 6, 2006 by Balta1701

[NorthSideSox72]

The irony is that this isn't any different than the stock market driven bubble that was allowed to go on for years too long.  Much of the good times in the 90's were driven by equities that put tons of money in peoples pockets just like housing prices have.  People also ran up tons of debt in the 90's, and the savings rates haven't changed at all.  Not without coincidence, when the stock market burst, so did the economy.  The one thing that saved things from being WAY worse and us feeling the full effects of the burst, were the tax cuts saving many jobs.

 

As was pointed out in a previous post, there was a good article showing statistically how the tax cuts did little to help the economy (I think Balta posted). Instead, I believe that real estate boom was what pulled us out in such a hurry. And for some parts of the country, that's going to eventually bite people in the ass.

 

Fortunately, everything I've read says that Chicago is not nearly as "bubbled" in real estate as other major cities, particularly on the coasts. There are local exceptions here, of course.

 

Also, at least this real estate bubble has a little more equity foundation. Property and housing has serious real value, more so than stock in companies that simply ate other peoples' money. So I think the bubble burst won't cause as dramatic a downfall this time. And the equity markets are not as overinflated, IMO.

[NorthSideSox72]

Given that the amount of money pumped into the economy by the tax cuts was relatively marginal compared with the amount of money pumped in by the boom in home equity and refinancing, I would disagree with that last statement...the one thing that saved things from being way worse was the massive stimulus pumped in by the Fed of lowering interest rates to be practically zero, allowing people to massively expand their debt holdings and pumping that cash back into the economy.

 

Edit:  The effect of the tax cuts was not zero of course, and I don't mean to come off sounding that way...but the effect of the Tax cuts was in the shape of a normal keynesian stimulus - it wasn't just that the country was cutting taxes, it was that the country was cutting taxes while at the same time printing money while it was going out of style, thus pumping money into the economy in 2 ways - more money in people's hands through the tax cuts, but also more money in people's hands through the growth in government, combined with vastly more money in people's hands through the interest rate environment.

 

Damn. Beaten to the punch by Balta again.

[southsider2k5]

The housing boom would not have happened without the tax cuts. The tax cuts stopped way more people from getting laid off than actually happened. To post the figures of the money that was interjected from the tax cuts isn't the full story. The full story includes the jobs that DIDN'T get cut, the wages that DIDN'T get lost etc. If people don't have jobs, they don't buy houses. I'd love to see just one of those articles include some quantitative analysis that actually included how many jobs never were lost because of the tax cuts. The economy never fully crashed like it would have because of the tax cuts and then the interest rate cuts that came afterwords.

[Rex Kickass]

My cat smells like cat food.

[NorthSideSox72]

The housing boom would not have happened without the tax cuts.  The tax cuts stopped way more people from getting laid off than actually happened.  To post the figures of the money that was interjected from the tax cuts isn't the full story.  The full story includes the jobs that DIDN'T get cut, the wages that DIDN'T get lost etc.  If people don't have jobs, they don't buy houses.  I'd love to see just one of those articles include some quantitative analysis that actually included how many jobs never were lost because of the tax cuts.  The economy never fully crashed like it would have because of the tax cuts and then the interest rate cuts that came afterwords.

 

I would contend that the interest rate cuts were a much bigger factor than the tax cuts. It allowed current owners to get a lot of cheap cash, and allowed people to extend further to fiirst-time buy, or pushed some borderline people over the edge to take the plunge. The number of people who may have bought homes but would have lost jobs, but didn't because of the tax cuts, would seem to be very small compared to the number of people in the list in the previous sentence.

 

But I am certainly open to someone finding an analysis of actual job saving that is likely tied to the tax cuts.

 

And I did agree with Bush's one-time tax refund out of the surplus. It was a small move on an individual scale, but I think it was needed and smart at the time. It helped individual spending, though I am sure it did nothing for jobs.

[Mplssoxfan]

My cat smells like cat food.

 

Maybe so, but my cat's breath smells like cat food.