Posted on 01/06/2023 10:43:39 AM PST by george76
Reading the mainstream media’s reaction to today’s payrolls report, one would be left with the impression that it was generally on the goldilocks side and indicative of a possible soft-landing – consider this from Bloomberg: “the US labor market stayed resilient last month while wage gains cooled, raising hopes that the economy may dodge a recession and the Federal Reserve will further slow its aggressive campaign of interest-rate hikes.”..
Which is accurate: wage growth indeed slowed down following a major revision to the data (remember that 0.6% M/M jump in average hourly earnings that freaked out the market last month? Well, it was quietly revised to 0.4% today), and as a result – as even Fed mouthpiece Nick Timiraos pointed out earlier – “Revisions to average hourly earnings data paint a marginally less worrisome picture for the Fed on wages than the Nov report. The upturn in wage growth in Nov (originally reported as +0.6%) was revised (to +0.4%). The 4.6% annual wage growth in Dec was the lowest since Aug ’21.”
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The drop in wage growth was consistent with the warning from the ADP earlier this week, which found that December ushered in “the largest decline in pay growth for job stayers in the three-year series history” (and even job-changers saw a modest drop in wage growth).
There was more: not only did average hourly earnings drop, but so did average hours worked, which has a major impact on the average wages, and had hours been flat, the decline in average wages would have been even more pronounced.
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What about that massive divergence between the employment number (from the Household Survey) and the monthly payrolls change (from the Establishment survey). Recall that it was just last month that we reported that divergence between these two data sets hit a record 2.7 million, a difference which got added focus just a few days later after the Philadelphia Fed reported that its own calculations found that in Q2 the US added just 10,000 jobs, not the 1.1 million reported by the BLS.
The answer is that today, the BLS decided to finally shrink the record difference between the Household and Establishment surveys, and while 223K payrolls were added (a number which was actually down 244K on an seasonally unadjusted basis), the Household survey outdid itself, and its matching Employment number soared by a whopping 717K.
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There is a reason for that: we have entered the BLS’s annual revisions season, and to start the year the Bureau revises all of its historical series, starting with the Household Survey, as follows:
Seasonally adjusted household survey data have been revised using updated seasonal adjustment factors, a procedure done at the end of each calendar year. Seasonally, adjusted estimates back to January 2018 were subject to revision. The unemployment rates for January 2022 through November 2022 (as originally published and as revised), appear in table A at the end of this news release, along with additional information |about the revisions.
Whatever the specific reason behind the historical adjustment, however, the cumulative record difference between Payrolls and Employment shrank from the all time high 2.7 million hit last month to “only” 2.1 million.
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Luckily, unlike the Establishment survey which gives us shotgun job estimates with little to no granularity, the Household survey provides several layers of detail and we can find just how the BLS managed to trim this gaping difference.
The answer, it will come as little surprise to anyone, is that once again the surge in employment was entirely a function of part-time workers and multiple job-holders.
Here are the facts: in December, the number of full-time workers was 132.299 million, down exactly one 1K workers from the month before; at the same time, the number of part-time workers exploded by 679K, from 26.115 million to 26.794 million (source). Finally, adding insult to injury, the number of multiple jobholders, or those workers who need to hold more than 1 job to make ends meet yet who are double-counted for Payroll (establishment survey) purposes, surged by 370K (which means that the 223K payrolls number is really negative if adjusted for how many people actually got new jobs).
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the total number of full-time jobs has declined by 288K in the past ten months, which however has been more than offset by the 886K increase in part-time jobs.
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And the punchline: multiple jobholders have increased by a massive 684K over this period.
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This means that contrary to conventional wisdom, some 684K jobs added in the past 10 months were not the equivalent of 684K workers finding a job, but 684K workers finding more than one job to afford life during this latest episode of soaring inflation.
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in December, the entire employment increase was thanks to part-time workers, and we don’t have to tell readers that part-time jobs pay far less, have zero benefits and generally are far worse quality than full-time. It also means that the bulk of job growth since March has been in the multiple jobholder category, and that instead of 684K jobs having been given, what really happened is that 684K workers found more than one job to be able to afford living under the Biden administration.
That’s good news.
Which makes it good news for stawks because the hope is that the Federal Reserve will let their foot off the gas some on raising rates and lowering their balance sheet.
Basically the presence of the Fed makes a lot of market news like Bizarro World opposite day -- good news is bad news and bad news is good news.
Wow, that Biden sure knows how to spark the economy.
Part timers get very few benefits. I’m sure Biden will
clarify that problem for us shortly.
I’m sure his press secretary could muddy the waters
considerably.
Hey, man! Part time is the wave of the future. With prices so low, balanced budgets and surpluses, no one needs to work more than 15-20 hrs/week anymore.
One question - how many of the 5 million illegals waltzing in over the past 2 years are filling these part time jobs?
“Which makes it good news for stawks because the hope is that the Federal Reserve will let their foot off the gas some on raising rates and lowering their balance sheet.”
That’s not what I’m hearing from my little circle. They say it’s good news for stocks because they look out 6-12 months. Some look out much further. Day Traders and non-investors look at today. Experienced investors watch labor conditions in order to forecast. You can’t get a past a recession until the labor market slows enough to bite business profit and jobs. It’s going to happen because there is no other way out. The sooner it starts the sooner it will turn around and improve without pushing inflation higher.
Oh, really? The recession train left the station a long time ago. By April of this year, we will look back at 2022 as "the good old days".
Right, and the last thing we need now is to AVOID a recession. That would just mean a worse recession in the near future.
The economic cycle is my old friend after decades of watching it work and working with it. Govt overspending and restriction of our energy lifeblood makes it more volatile than it should be, but that’s water under the bridge, can’t change the wake of the boat and it’s time to pay the bills for the mistakes of the past once again. The sooner and faster the better, as its toughest on those with the least economic weapons (savings in general) to fight it.
Forget learning to code, you’ll be saying ‘want fries with that’.
Our entire work force lives a life of anxiety because of the lack of job security and the knowledge that much work is farmed out to overseas companies where wages are lower than in the US. This anxiety in our work force is reflective in which direction it will vote. Our whole social structure and thinking are shaped by uncertainty and fear. No wonder that politics in the US are taking a leftist, socialist direction. The whole idea of’America First’, as espoused by Trump, was a breath of fresh air heretofore never experienced. Without the idea of MAGA we might as well start turning the lights off.
And this month we are seeing huge growth in part time jobs with no growth in full time jobs.
“the total number of full-time jobs has declined by 288K in the past ten months, which however has been more than offset by the 886K increase in part-time jobs.”
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