I don’t consider myself a ‘Chicken-little’ investor. There are always opportunities, in both market directions. Experience has made me cautious at certain times, and skeptical of broad brush-swipes of opinion in the media, but I’m always looking for opportunities.
This particular headline suggested the content would be skewed towards a positive presentation of Friday’s jobs report. As a disclaimer, I will admit to being extremely skeptical about any of the monthly jobs reports, as I know all about the hedonic adjustments they make to every report which theoretically turns facts into a supposedly more realistic picture.
For the moment, I will allow the government their adjustments and I will give a little different perspective on the jobs report.
Let’s start with the statement ‘U.S. companies added 151,000 workers’. That sounds pretty good. The jobless rate fell below 5%. The jobs reports have been averaging about 200,000 new jobs each month for a few years now. Break out the champagne.
But let’s think about this.
The U.S. has about 148 million employed workers, and 10.5 million under/unemployed workers (from Table A-8 and the ‘U-6’ number from the Bureau of Labor Statistics). The U.S. has recently averaged a 0.8% population growth rate. Applying that growth rate to the number of U.S. workers says we need about 1.2 million new jobs a year, or 105,000 a month, just to keep up with worker population growth of U.S. citizens.
The number of immigrants coming in through the legal process averages about 1 million a year. Most of these are adults coming in under ‘green card’ status, so they are coming in for jobs. Therefore, approximately 83,000 new jobs are needed each month just to keep up with normal immigration.
So we need a minimum of about 188,000 new jobs a month, net of job losses, just to keep up with growth rate and legal immigration. This doesn’t consider getting the long-term unemployed back to work, or the numbers coming into the country outside of the normal immigration process, assuming many of them will be looking for jobs. And as far as keeping up with job losses, DailyJobCuts.com estimates the number of layoffs announced by major companies in January was almost 24,000. We may actually need north of 200,000 new jobs a month just to break even.
I don’t know, maybe I am a ‘Chicken-little’ investor. Friday’s jobs report of 151,000 new jobs doesn’t sound to me like we’re even treading water. We’re losing ground.
But say you are looking for a job. Now there were a bunch of new retail jobs last month, but those are hard to raise a family on. What you would really like is a good factory job, right? Well, there was good news for you in Friday’s report.
The jobs report said there were 29,000 new manufacturing jobs (a surprise, as everyone expected yet another loss). With the U.S. land size of 3.8 million square miles, that means there was one new manufacturing job for every 131 square miles. That’s roughly one new job for all of Atlanta, or ten new jobs for all of Rhode Island. And there will be 6.5 other people, each month, looking for the same job you are.
My analysis may be a bit unconventional, and some well-informed analysts and economists may find flaws with parts of my reasoning or specific numbers. Call me what you want. But one thing I won’t be calling Friday’s jobs report is ‘good’.
Of course, there's much more you need to know and many more stocks you can capitalize upon each and every day. To find out more, please click on the following link: www.markettamer.com/seasonal
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