No Inflation in the Employment Report

     The BLS Payroll Report was issued today showing 136,000 new jobs. Of this perhaps 100,000 are needed for population increase, thus the real net gain was about 36,000 which is almost nothing out of a work force (total seeking or holding jobs) of 160 million. Job growth is not occurring in prime aged males, thus risk that growth is in low paid jobs held by other groups; growth of low wage jobs not inflationary at this point because these job increases mostly went to high school drop outs. The least skilled sector of society have many problems like no reserves, no 24 month job history, bad credit, etc. so they can’t qualify for an A paper loan that increases

2019-10-04T08:57:06-07:00October 4th, 2019|mayflowercapital blog|Comments Off on No Inflation in the Employment Report

Surprise Jobs Increase is Misleading

   The headline new employment rose 224,000 last month, far in excess of the 171,000 three month average. The global economy is reducing its economic activity, so the increase in domestic jobs looks suspicious. Half the jobs gain came from the hypothetical birth-death model. Employment growth in five months from actual data from companies (not from the birth-death model) has been zero. Multiple job holders increased 301,000, if not for them, the jobs number would have been negative. Almost 60% of Household survey employment growth was from self-employed people. So these could be starving rookie independent contractor sales reps, not people with real jobs. The age 25-55 prime aged sector only increased by 29,000 last month and for the past

2019-07-05T17:45:04-07:00July 5th, 2019|mayflowercapital blog|Comments Off on Surprise Jobs Increase is Misleading

Low Unemployment Yet Declining Interest Rates: Why?

     The Employment report was released today by the BLS. The unemployment rate dropped to a very low percentage of 3.6%, the lowest in 50 years. But factory jobs growth stalled this year. Manufacturing and mining produced the growth of GDP in 2017 and 2018 and now that has stalled. Factory jobs in April declined by 4,000. These good paying jobs are worth more in terms of stimulation and growth than a low wage, entry-level fast food job. The Labor Force Participation Rate has been stuck near 63%, but in 2007 before the crash, it was 66%, which is 4.8% (as a percent of a percent) less than in 2007. If these missing workers reported to the government that they

2019-05-03T15:40:47-07:00May 3rd, 2019|mayflowercapital blog|Comments Off on Low Unemployment Yet Declining Interest Rates: Why?

Employment Report Very Misleading

   The monthly employment report released today by the BLS said 304,000 new jobs were created and the rate of unemployment went up to 4.0%. The U-6 discouraged person’s rate went up 0.7% from the cycle low of July, 2018. Once unemployment reverses a downtrend and goes up by 0.4% or more that is a sign of new recession. If one respects the U-6 rate then that confirms a recession has already started.    The payroll-based BLS report uses a Birth-Death model of hypothetical jobs that added 122,000 jobs. But this is hypothetical. (This assumes business are so disorganized and slow that they need a long time to report new employment to the government – this is not correct, as

2019-02-01T17:38:53-07:00February 1st, 2019|mayflowercapital blog|Comments Off on Employment Report Very Misleading

Jobs Increase Not Inflationary

   Today the monthly Employment Situation report was released by the BLS showing a huge 312,000 increase in jobs in the payroll survey. The unemployment rate increased from 3.7% to 3.9% as more people decided to join the work force and seek employment. Fundamentally, because the unemployment rate increased, that is the bottom line: new entrants to the labor force acted to dampen inflation by increasing the supply of workers. The household survey said 419,000 jobs were added with 90% of the total job increase from unincorporated self-employed. That type of “employment” can be a zero income gig experiment rather than a traditional real job. Prime age employment shrank by 11,000, with a 48,000 decline the month before. 146,000 of

2019-01-04T13:20:48-07:00January 4th, 2019|mayflowercapital blog|Comments Off on Jobs Increase Not Inflationary

Inflation Threat: Is It Real?

      Employment growth is the key to inflation. Today the employment report was released by the BLS. A reasonable 213,000 net new jobs were created yet unemployment rose from 3.76% to 4.05%, which was rounded off to a 0.2% increase. This is because when the economy improves the discouraged hidden unemployed come out of hiding and seek employment. Based on the fact that the prime age group aged 25-55 used to have an 83% participation rate and this is now about 1.3% lower, then that may signal that there are at least 1.3% hidden unemployed, although this needs to be calibrated with the total work force and not merely prime age group.     People worry about rising wage inflation but

2018-07-06T10:03:05-07:00July 6th, 2018|mayflowercapital blog|Comments Off on Inflation Threat: Is It Real?

Low Unemployment Rate Very Misleading

   The unemployment rate was released today by the BLS showing a drop in the rate to 3.8%. But two-thirds of the improvement in May was due to labor force dropouts and on third due to actual growth. The crucial “prime” age cohort of age 16-54 had a reduction in their Labor Force Participation Rate (due to dropouts), while the age 55+ group had an increase in participation.   Employment had increased by 1.69% annually since 2012. The average job gains of 207,000 per month this year are far below the gains of 320,000 per month in the 1990’s. Since February, 2015 monthly payroll gains declined from 265k to 223k in a downward trendline. Labor Force Participation Rate was 67%

2018-06-01T18:04:16-07:00June 1st, 2018|mayflowercapital blog|Comments Off on Low Unemployment Rate Very Misleading

Record Low Unemployment: Will Inflation Get Out of Control?

  The Employment Report released by BLS today said unemployment dropped to 3.9% and 164,000 new jobs were created. That seems like it is a full employment economy which threatens to increase inflation and cause rising interest rates. However, very little real wage growth has occurred. Wages have been rising 2.7% but CPI is 2.0%. The token 0.7% real increase in wages is nothing after workers spent the last ten years waiting for the economy to improve. Typically when full employment is reached it becomes a bidding war to hire workers and pay rates beat inflation by at least 2 or 3 percent. The current climate of very low real wage increases implies we are not in an inflationary true

2018-05-04T14:37:21-07:00May 4th, 2018|mayflowercapital blog|Comments Off on Record Low Unemployment: Will Inflation Get Out of Control?

Employment Report: Lower Rate of Employment Gains Results In Stock Crash

The employment report was released today by the BLS with a significant decline in the new jobs at only 102,000 new jobs, only a third of last month’s. The 60 day average, adjusted for excluding volatile retail and construction jobs, was 165,000 which is near the long run average of 170,000. Thus employment continues to grow slowly. The economy needs 125,000 new jobs simply to offset population increase so the net increase adjusted for that was only 40,000 a month using a two month average. That’s a 0.35% annualized rate of improvement in the unemployment rate. Wages have been rising recently at about 1% faster than inflation, although this late in the cycle, with unemployment at 4.1%, real wage gains

2018-04-06T14:50:04-07:00April 6th, 2018|mayflowercapital blog|Comments Off on Employment Report: Lower Rate of Employment Gains Results In Stock Crash

Employment Report’s Huge Gain Very Misunderstood

Today the monthly BLS employment report was released showing 313,000 new jobs, a much higher increase than the typical 170,000. Nominal hourly wages up 3.2% annualized (using 3 mo. average); YoY up 2.6%. David Rosenberg says wage gains are real; and says the report is a “perfect report”; importantly that manufacturers added 100,000 jobs instead of the low wage service jobs.     Economist Mike Bazdarich has an excellent commentary, using his methods, showing only modest, gradual increase in employment and wages occurred when excluding two volatile occupations.     ECRI says unemployment rate actually increasing in recent months if one looks down to the third decimal place. Remarkable: “All of the growth in jobs since 2000 has been among those 55

2018-03-09T14:40:40-07:00March 9th, 2018|mayflowercapital blog|Comments Off on Employment Report’s Huge Gain Very Misunderstood