Preston Clive
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Preston Clive in Preston Clive - THE IRRITATED AMERICAN, Wielding The Digital Hatchet,

Jobs Report: LET'S PARTY!!!

The Feb. jobs report as it is tossed from federal helicopters with balloons & confetti (IMAGE: dailymail.uk)

Cheers; whoops of joy; the sky opens up and down onto a heaving sea of smiling faces comes a weightless avalanche of unending confetti; cue marching bands swiveling at the hip so all sides of the audience can catch a view of the trombonists sliding in and out--berrr-burrr-urrrrp.

What else could I be talking about from the news cycle of the last 24 hours but the release of the latest jobs figures? (The Reuters link embedded at the end of the previous sentence gives a good sense of the ins and outs of the report in terms of straight simple analysis, for those who have not yet had a chance to peruse the report and contemplate its meaning.)

In a nutshell, the numbers are as follows:

1) the jobless rate decreased from 5.7% in January down to 5.5% for February, the lowest since the spring of 2008 (those months prior to the infamous bank collapses.

2) Payrolls (farms not in the mix) increased 295,000 last month, versus 239,000 for January

These numbers appeared positively euphoric versus the expectations--in the same report hyper-linked above, Reuters mentions the fact that they had polled a number of economists to get a sense of their expectations for the jobs numbers for February: the consensus prior to the release of the report was a bump expected in the zone of 240,000; thus, the 295,000, just shy of 300K, blew the socks off of all those investors and economists who see only roses, never thorns.

Blipped right over in the article is the following sentence:

The data suggested the U.S job market continued to strengthen, although the drop in the jobless rate largely reflected people leaving the labor force.

What does that mean--"people leaving the labor force?" 

This is based on the concept of labor force participation. . . the number of people who are working versus those of the same age range who are available to work. The labor participation rate is sitting right now at 62.8%... 62.8% are working from the sum 100% able to work. This number is tickling down towards the lowest number on record since 1978. What that means is just shy of 93,000,000 people are not participating in the labor force, and thus not counted as "unemployed." Yes that's Ninety Three Million Able Bodied Souls Who Are Not Working Or Have Given Up.

When people drop out of the labor force it means a number of different things--some (forty percent-ish) retire early, others simply give up after exhausting unemployment benefits. Some move in with mom and dad, others marry a (wait for it) rich spouse, others mooch off of friends and live in their basements, others (I'm not kidding) engage in illicit activity which pays higher dividends than working the stock aisles at Walgreens (NASDAQ: WBA) or flipping burgers at Burger King (NYSE: BKW). Many of them just grow dismayed at the prospect of terrible back breaking work for 40 long hours and taking home somewhere around 300 bucks a week.

*    *     *

So here you see in action the mirages off of which false bubbles inflate: interest rates are now going to likely be raised in June, off of "great" numbers that are composed of big quantities of smoke and ash. Like trading off of a self-celebratory market touting its high collective value--a value that all but the stunted know is tremendously overbaked... Ali Baba (NYSE: BABA) anybody?... the idea of calling February a fantastic jobs month because of a dip in the jobless rate .  .  .  we are not surprised. 

But I don't run the Fed so don't worry about me.

Bye for now.

Preston Clive

3/6/2015***