Dissin’ the jobs report


The September Jobs report finally came out after being delayed by the shutdown. Any way you look at it, a longer delay would have been better. According to the official Bureau of Labor Statistics (BLS) figures, the economy only added 148k jobs in September.

But there’s a lot more to it this time around lurking behind the scenes. The markets largely shrugged off the bad news and most of the reporting on the event was dismissive. It’s almost as though the anticipation was bigger than the event – like a disappointing Christmas (whoops! Can’t say that ‘round here!). Is it possible that financial reporting is starting to wake up?

Before we get into the spin, there are the numbers. Markets expected a gain of around 180k jobs, or at least something more on the order of the 166k reported by ADP earlier in the month. When that didn’t happen, the markets went up anyway. Once again, bad news is good news because it keeps the Fed’s Magic Money Machine buying mortgage backed bonds.

For our purposes, we finally learned that the gap between “headline” unemployment, or what the BLS called “U3”, and unemployment among 20-24 year olds has indeed closed a touch to 5.7%. Young people still have a shocking 12.9% unemployment rate, but it’s down from 13.7% at the start of the year. And this is the first strange thing that is starting to resonate in the press after a long wait.

Young people are not entering the workforce as they did in previous generations, largely due to this terrible unemployment figure. Remember that official “unemployment” only counts people who want a job – so kids who are in college are not counted as being part of the “workforce”. They’re staying in school longer in part because they can only afford so many credits at a time in order to avoid big debts, but also because they are getting advanced degrees.

Given that a full 41% of the workforce is over 55 years old, according to the BLS, when the big wave of Baby Boomer retirement hits starting around 2017, the kids that will enter the workforce then will be very well educated. They will also have lower expectations, given how rough things have been for them lately. Predicting a coming “Golden Age” after the year 2017 is getting easier all the time.

But the jobs report itself is coming under increasing scrutiny, too. The fact that it bounces around like crazy is starting to register, although the press is not particularly interested in why this is the case. Barataria has speculated that the reason is contained in the less respected but far more stable ADP report, which shows that job growth is coming almost exclusively with small businesses of less than 20 employees. The BLS survey method probably has trouble finding them in any given month.

For now, the extra wait for the disappointing report has created more of a shrug than curiosity. But the story of a restructuring economy is still out there.

The press’ souring on this report doesn’t stop there, however. According to a Goldman Sachs survey, more than 40% of Americans cut spending during the government shutdown. Data compiled before October is already old news. Between the shutdown and the gear up for the Holiday Season the jobs reports have already been labeled “meaningless”. It’s sad but true – we can’t tell much from them, at least not without comparing them to what was happening a year ago.

Barataria readers have already seen a comparison between the 2012 Holiday Season and the predictions for this year, which are all over the map. This gives us a baseline to continue evaluating jobs reports even if the mainstream press would rather throw up their hands and call them “worthless”. It’s an attempt to get past the problem that does appear obvious.

What can we say about this delayed September report? As always, the BLS report is more of a confirmation to those of us who find the ADP report more compelling, even if it does provide more and different data. Where it gets interesting is how the camp followers that used to traipse after each month of data somehow got their bad habits broken by the shutdown delay. Perhaps something good came of the shutdown after all?

(no, not really)