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Unemployment Report July 8…U-G-L-Y!!!

Posted by Larry Doyle on July 8, 2011 8:42 AM |

Our ‘walking pneumonia’ economy is not making any real progress in terms of an improving labor market in the United States.

Consensus estimates for the July employment report (measuring June economic activity) had an increase of 105k jobs with many economists recently revising their estimates higher to 125k.

Their ‘guesstimates’ were not close as the non-farm payroll report released at 8:30am reflected an increase of a mere 18k jobs with downward revisions to the prior two months of 44k jobs.

Were there any hidden gems in the report? Not a one.

The unemployment rate moved higher to 9.2% from 9.1%. That increase was NOT due to an increase in the number of people looking for work but an actual increase in the number of people who lost jobs. Consensus estimates had the rate remaining steady to perhaps moving down to 9.0%.

The average workweek declined by .1 hour to 34.3 hours. That piece of data does not indicate any buildup in terms of orders.

Hourly earnings were flat vs an expectation of a .2% increase. The lack of any growth in wages will not help personal consumption and retail sales going forward.

Private payrolls did increase by 57k jobs but that was nowhere close to the expected increase of 125k jobs. Public payrolls declined by 39k.

What to make of this report?

For those who would want to make the case that the economy is in the midst of a double dip, this report adds significant fuel to that fire.

I would add that as the ‘sugar high’ provided by Uncle Sam and his sidekick Brother Ben (Bernanke) wears off, the natural state of the economy continues to be weighed down by the ongoing burden of private and public debts. While Washington tries to surreptitiously enact programs to devalue and/or restructure these debts, the weight of them continues to be a massive drag on the economy.

Does unemployment matter? Of course it does, although if we were to listen to Obama adviser David Plouffe we might not think so. What is this guy thinking? As The Hill recently reported, Top Obama Adviser Says Unemployment Won’t Be Key in 2012:

President Obama’s senior political adviser David Plouffe said Wednesday that people won’t vote in 2012 based on the unemployment rate.

Really? He’s an adviser? Our President may want to seek a little different advice.

The Obama campaign’s hope is that voters will feel the economy is improving in the fall of 2012, just as they did when Roosevelt and Reagan were reelected.

Remember, a basic principle of  ‘sense on cents’ is that ‘hope is a lousy hedge’.

That seemed to be at the root of Plouffe’s remarks on Wednesday, as quoted by Bloomberg.

“The average American does not view the economy through the prism of GDP or unemployment rates or even monthly jobs numbers,” Plouffe said, according to Bloomberg. “People won’t vote based on the unemployment rate, they’re going to vote based on: ‘How do I feel about my own situation? Do I believe the president makes decisions based on me and my family?’ ”

Plouffe does not seem to appreciate that ‘people vote their wallet’ and that first, last, and always, “it’s the economy stupid!!”

Today’s report once again highlights that our ‘walking pneumonia economy’ continues to struggle.

Navigate accordingly.

Larry Doyle

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I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets, our economy, and our political realm so that meaningful investor confidence and investor protection can be achieved.

  • fred

    We are between a rock and a hard place.

    Our economy is a stool that HAD 3 primary growth drivers all dependant on massive amounts of leverage: real estate, gov’t spending, and consumer spending.

    Everyone knows what happened to the real estate market, consumer spending was levered off the real estate market and the gov’t has been on a non-stop spending binge since the mid 1980’s.

    According to Keynes, now is the time the gov’t should step up spending but it can’t because of the massive debt accumulated while binging.

    So what’s left to “right” the stool, capex and net foreign trade?

    Domestic capex, has been limited to cyclical technology upgrades while the next “big thing”, cloud based computing, for all but a few, likely to be a deflationary event.

    So jobs and growth come down to net foreign trade in emerging markets such as China, Brazil, India, and Africa.
    Without getting into the specifics, it makes economic sense for US corps to retain capital offshore to build, hire and mfg, in or near these markets.

    So what can we do? We must continue to downsize to rightsize. Gov’t spending must be limited to essential infrastructure and ambitious Americans should become familiar with the concepts of frugality, learn a foreign language and study the rules of futbol.

  • cru82sader

    Now is the time for Boehner and the republicans to hold firm to conservative principles in deficit negotiations w/ the disaster at 1600 Pennsylvania Ave. Slash spending…no new taxes….make this an election referendum. Obama is boxed….he is in a no win position unless the republicans give him a way out. Obama is a socialist disaster for our country and our children….the silver lining here is that he will not be re-elected unless the republicans fumble the ball…..which unfortunately they are very capable of doing….hopefully will not. Conservative, Tea Party platform is the way to grind out of this mess…

    • strong DITTO!

  • coe

    There is no foundation that should allow anyone to sugarcoat the bad news..I challenge anyone to look only as far as one’s own extended family and friends and would assert that each of us has an up close and personal story of many who are either unemployed – even chronically so, or underemployed..sure, some companies are reporting decent profits, but are those successes translated into capital investment and jobs formation – not nearly enough to turn the tide..Obama talks about streamlining the patent application process -huh! The construction and building sector – so important to the housing and consumer markets are woeful..the deficit is a crusher..the dollar is in perilous shape..we debate the debt ceiling as if we have a choice..the rating agencies remain ridiculously important, yet compellingly incompetent..sidebar – a friend suggested that someone with juice – eg Jamie Dimon – should have the cojones to announce that JPM would no longer suffer fools gladly – and let the marketplace decide whether their reporting was complete and transparent enough to allow investors to strike a value – the hell with the rating agencies – kind of provocative..but worth a thought? Romney is running an ad in PA showing Obama visiting a plant as recently as last year – pointing to the folks as a beacon of hope – roll the calendar forward and the plant has been shuttered and the folks laid are right again, LD, just what kind of placebo are the president’s economic advisors feeding him? Jobs are JOB 1..enough political rhetoric – let’s fix the economy – cut spending, invest in the right way, and do not screw with raising taxes – it’s pathetic, desperate, and simply won’t an unrelated announcement, it appears that the city of Newark is requiring all fast food places open after 9pm to have armed security/cops in place..we are edging ever closer to civil unrest in my opinion..we need to turn america around – or else the damge will be very difficult to undo!

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