The legions of the discouraged

 The first Friday of every month the latest Non-Farm payroll figures are announced at 8:30 Eastern Standard Time (so usually 13:30 for us) which informs the world about the state of US employment. A few weeks ago we highlighted an oddity about the key US jobs data set, known as the non-farm payrolls, which throws a shocking light on the latest figures.

On Friday 8^th January the markets had been expecting a figure that was more or less flat, hopefully ending the string of bad news that has seen unemployment grow from around 5% to an unprecedented (for the US at least) 10%. With this in mind is was thought that a strong deviation either way would hurt the markets, with a poor figure bursting the bubble of the V-shaped recovery crowd, while a very positive figure would spook the markets that interest rates may go up sooner than expected.

The actual figure published showed a decline of 85,000 jobs, well below expectations and raised concerns about a negative market reaction; however in the event markets seemed pretty nonplussed by the news and the Dow actually rallied sharply towards the end of trading. The explanation of this was partly the figure diminished the chance of a near term hike in interest rates, while the figures were much better than those from early 09 and  the increase in temporary jobs may herald a real turnaround. Such bullish thoughts are highlighted in the BCA chart below:

The not so hidden awful news

This is all well and good but having trawled the figures in the US Bureau of Labor Statistics (BLS) website (yes, I know, need to get out more often) we need to return to the anomaly we highlighted late last year, which is the removal of discouraged workers from the list of the unemployed. To clarify this is what the BLS has to say:

About 2.5 million persons were marginally attached to the labor force in December, an increase of 578,000 from a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

Among the marginally attached, there were 929,000 (emphasis added) discouraged workers in December, up from 642,000 a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them.

Sorry! That’s nearly a million unemployed removed from the unemployed figures in one month even though they are unemployed. ???? And these are people who want to work, not the long term indolent. If this makes sense to anyone answers on a postcard please.

How this will play out as we move forward is unclear but it seems the data is being cherry picked and what is most worrying is that those doing the most selective picking are those who were most bullish prior to our recent economic train wreck and still they don’t seem to have got the message.

We all want things to get better and get better soon but just as Gordon Brown is discovering you can’t bury your head in the sand indefinitely.

And finally….

The Frog and Golf

A man goes out golfing.
He is on the second hole when he notices a frog sitting next to the green.
He thinks nothing of it and is about to shoot when he hears, "Ribbit 9 Iron."
The man looks around and doesn't see anyone.
Again, he hears, "Ribbit 9 Iron."
He looks at the frog and decides to prove the frog wrong, puts the club away, and grabs a 9 iron and Bang! He hits it 10 inches from the hole.
He is shocked. He says to the frog, "Wow that's amazing, you must be a lucky frog?"

The frog replies, "Ribbit Lucky frog."

The man decides to take the frog with him to the next hole.
"What do you think frog?" the man asks.
"Ribbit 3 wood."
The guy takes out a 3 wood and Bang! Hole in one.
The man is befuddled and doesn't know what to say.
By the end of the day, the man golfed the best game of golf in his life and asks the frog, "OK where to next?" The frog replies, "Ribbit, Las Vegas ."

They go to  Las Vegas and the guy says, "OK frog, now what?"
The frog says, "Ribbit Roulette."
Upon approaching the roulette table the man asks, "What do you think I should bet?"
The frog replies, "Ribbit $3000, black 6."
Now, this is a slim shot to win, but after the golf game the man figures why not.
Bang!  Tons of cash comes sliding back across the table.

The man takes his winnings and buys the best room in the hotel and sits the frog down and says, "Frog, I don't know how to repay you.You've won me all this money and I am forever grateful."
The frog replies, "Ribbit Kiss Me."
He figures why not, since after all, the frog did for him, he deserves it and with a kiss and Bang! The frog turns into a gorgeous girl.

"And that is how the she ended up in my room Elin. So help me or my name is
not Tiger Woods."