U.S. payrolls: Negative 17,000 + Huge Downward Revisions for 2007
BLS data on Nonfarm payrolls is out, and its fugly: NFP fell 17,000 in January -- the first decline since August 2003 (-42,000).
Health care, retail trade and leisure were up, manufacturing, construction, financial services and government were down.
January's Birth/Death adjustment has been traditionally negative, as it reflects the layoffs and closings of holiday seasonal business. In January 2007, it was -175k. In January 2008, it leapt to -378k.
The other news is the Benchmark revisions to the full 2007 year employment data. (There were also changes in industry classifications, seasonal adjustments). Also buried in the benchmark revisions, were refinement estimates of new business creation (aka B/D). It will take me some time to plow through all of these, but the takeaway was a major downward revision of 2007 Establishment surveys (NFP) by 376,000. Additionally, the Household survey showed downward revisions to both employment and the size of the labor force. The source of the revisions is the Quarterly Census of Employment and Wages (QCEW).
The bottom line: Job creation in 2007 was weak; it was especially punk in the latter half of the year.
Here's my favorite line from a Bloomberg column:
"None of the 80 economists surveyed by Bloomberg had predicted the decline in payrolls, which was the first since August 2003. The median forecast in the survey projected payrolls would rise by 70,000, compared with an initially reported gain of 18,000 in December. Forecasts of an increase ranged from 5,000 to 160,000."
None.
Now let's add some color to that. Consider this recent article: U.S. Will Escape Recession, Economists Say in Survey. This group is a reliable fade. Based on that survey alone, I am going to raise my recession forecast from 80 to 90%.
Charts courtesy of Barron's Econoday
>
Sources:
THE EMPLOYMENT SITUATION January 2008
BLS, February 1 2008
http://www.bls.gov/news.release/empsit.nr0.htm
Benchmark Article
Daniel Jackson
BLS, February 1 2008
http://www.bls.gov/web/cesbmart.htm
PDF version
http://www.bls.gov/ces/cesbmart.pdf
Related:
U.S. Payrolls Decline for First Time in Four Years
Bob Willis
Bloomberg, Feb. 1 2008
http://www.bloomberg.com/apps/news?pid=20601087&sid=a6RXEUjetyGE&
U.S. Will Escape Recession, Economists Say in Survey
Shobhana Chandra and Alex Tanzi
Bloomberg, Jan. 9 2008
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aEX73qWiBrb4
Friday, February 01, 2008 | 09:03 AM | Permalink
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Comments
I find it interesting that leisure -- of all things -- is up.
Posted by: OkieLawyer | Feb 1, 2008 9:17:13 AM
The economists are living life in another sort of bubble.
In an economy that has been goosed to the extent it has by MEW and real estate transactions--to the extent of two or three trillion a year (or more), how is it possible that they would't think an economic slowdown (collapse, more likely) when the party comes to an end?
Endanger 10-20% of the economy--what do you think about that? A mere flesh wound?
How stupid, obtuse, or wilfully blind is that?
Posted by: Neal | Feb 1, 2008 9:19:45 AM
y/y employment growth is 0.7% and the 3 month moving average is now under the worst of the 1996 softlanding, in other words the only time employment growth has been this week is during recessions.
only 56.3% of firms returned their surveys, this is pretty cyclical, I've got a chart on it.
Jobs were negative in August of 2007 and Sept of 2005, but later revised away. So I wouldn't make too big a deal about this early negative number, but the overall number of jobs y/y is a disaster. Absolutely zero doubt we are now in recession
Posted by: Michael Donnelly | Feb 1, 2008 9:19:58 AM
I'm reposting this from the prior thread, just to cheer you up and negate the hand wringing and wails...
I don't feel very profound today. But I do want to brag. Hey bears! I'm up YTD, well in the green. I don't talk percentages, except with family. But I'm happy. No, I'm not up a mythically gigantic amount, but it is well above nominal. More than enough to happy dance.
I went to 100% cash in Nov 2007, went long near the bottom, and bought more as the market settled at the bottom, well diversified. Looking forward to a great February. There is still A LOT of up left.
Posted by: cinefoz | Feb 1, 2008 9:24:17 AM
Should we simplify everything by recognizing the fact that all of the numbers are fraudulent, and that they have been intentionally skewed in order to advance political and/or financial schemes?
Who didn't know these numbers were wrong when they were first released?
Who trusts any of the numbers currently being foisted on the public by government and the financial industry?
These two entities have merged into the failed political system we call Fascism - they have become one. We are not being shown statistics, we are being shown propaganda.
Incompetent Fascism, at that.
Posted by: Marcus Aurelius | Feb 1, 2008 9:25:08 AM
What's a "recession?"
In my econ 101 course, a recession required shrinking GDP. Has the definition been recalled?
Is it possible we could have little job growth and STILL not have negative GDP?
And suppose we do have negative GDP...what's "bad?" -2%?
Again, it is amazing to me that some on here veritably root for a "collapse."
Posted by: Karl K | Feb 1, 2008 9:28:16 AM
C'mon, cinefoz - tell us some percentages! We're like family!
Show us your personal financials, for god's sake!
We need to know!
Posted by: Marcus Aurelius | Feb 1, 2008 9:32:06 AM
cin-
I am up too. Doesn't negate the fact that I am looking for a recession here or another drop in the market. I am just trading it. No big deal and nothing to brag about.
Posted by: MarkM | Feb 1, 2008 9:35:06 AM
Tyler Cowen had a blog entry at Marginal Revolution just a little while back ... about how European economists were predicting US recession, but the US economists were not.
The consensus over there at MR seemed to be that week-kneed Europeans had no confidence in the US economy.
I made some comment that we in the US had a tendency to put a good face on things, and make our (public) predictions with an "if all goes well" attitude.
Posted by: odograph | Feb 1, 2008 9:40:07 AM
I'm increasing my depression forecast from 20% to 30%.
Posted by: Dave | Feb 1, 2008 9:41:30 AM
Karl K:
The definition of recession hasn't changed, but the numbers used to measure recession have.
No one here roots for collapse. They root for an end to fraud. They root for the return of honest accounting. They root for stability and responsibility. They root for conservative values in finance (real conservative values, not insane libertarian values dressed as conservative values). They root for the return of the day that obscene greed and wealth were not the be-all, end-all point of people's lives.
If the truth is that the foundation is cracked, and the house is collapsing, we cheer for the day we can start rebuilding - correctly.
Quaint, huh?
Posted by: Marcus Aurelius | Feb 1, 2008 9:43:03 AM
Ah hell, quit reading tea leaves. We have been in a damn recession since last summer.
Does this mean the markets go straight down? Of course not. Big counter trend rallies are the norm. Take advantage of both QID and QLD......
If you got em, trade em.
Another month like January and I'm goin fishin for the rest of the year.
Posted by: Ross | Feb 1, 2008 9:46:08 AM
Ross:
Funny site!
Posted by: Marcus Aurelius | Feb 1, 2008 9:50:52 AM
Marcus, GREAT POST.
Posted by: Ross | Feb 1, 2008 9:51:31 AM
It's not rooting for a recession to want to know the truth. And even if the payroll numbers weren't as unreliable as they are, the money by which we measure recessions has also become a fraud.
Recessions still are defined as two successive quarters of negative economic growth, i.e., contraction, but if one also accounts for population growth (approx. 2%?/yr), anything less than that means on average we are getting poorer.
I went cash mid-year 2007, but now I don't know where to go. Any ideas?
Posted by: Don | Feb 1, 2008 9:56:18 AM
None of the 80 economists surveyed ...
so do these paper pushers get the Ben Stein treatment?
Posted by: Greg0658 | Feb 1, 2008 9:58:21 AM
Precious metals (monetary), energy, agriculture, foreign currencies. DYODD.
Posted by: Marcus Aurelius | Feb 1, 2008 9:59:10 AM
apparently if you are not out waving the red, white and blue you are postulating for a recession. Thanks to people like Kudlow that is how reality is treated.
Sorry that ah...'ain't it.
OT:
Don't ya love how retail got piled into YHOO this morning and then 23 minutes in it gets downgraded.......
Another 100 points on all this "great news"
What happens when something really goes wrong.....LOL
CIao
MS
Posted by: michael schumacher | Feb 1, 2008 10:01:25 AM
Gold just fell off a cliff...why? Let me investigate
Posted by: Steve Barry | Feb 1, 2008 10:17:37 AM
One could find some more details on future revisions of labor force related data in
http://www.bls.gov/cps/eetech_methods.pdf
Posted by: KIO | Feb 1, 2008 10:19:13 AM
Market could crash here...I have a funny feeling...look at gold on no news. This rally is ridiculous. If Dow 12000 breaks, it will hit 9800 very fast.
Posted by: Steve Barry | Feb 1, 2008 10:24:36 AM
Look at Dow chart...right shoulder top right here. Aug and Nov lows are right around here too and are serious overhead resistance. Ominous.
Posted by: Steve Barry | Feb 1, 2008 10:30:30 AM
on Gold:
My guess is that some bank (most likely Spain) is dumping yet again. They actually back up the printed money with a real asset...funny that.....like for like.
Ciao
MS
Posted by: michael schumacher | Feb 1, 2008 11:07:03 AM
cinefoz..
so you are saying that rally is not over yet.
and you are saying you knew about yahoo & msft deal, due to which we are having a rally despite bad job numbers?
and maybe your crystal ball is telling you that we will get more news like Yahoo & msft, or something based on which market will go up, despite bad economic data?
Posted by: techy2468 | Feb 1, 2008 11:18:30 AM
techy2468,
No, I didn't know about any merger. The state of the stock market is as plain as the nose on a person's face.
Assuming away a random event that causes a downturn, this is a normal bottom and a normal upcycle. It is a good time to buy stocks now. At some point, possibly this spring or maybe not until summer or fall, it will be time to sell. And thus goes the great cycle of stocks.
All this crap about larger than life effects that transcend the market are what keep analysts in business. Here's the secret .... it's only an oscillation within a trend.
Fortunately, nobody believes it is really that simple.
It helps to have a strong understanding of monetary theory, macro & micro economics, international economics, psychology, accounting, finance, statistics, a natural aptitude for pattern recognition, and the ability to see an event in abstract terms and transform it into something universal. You also have to know your limits and stay within them.
Hope this helps.
Posted by: cinefoz | Feb 1, 2008 11:40:15 AM
