Reclaiming Common Sense

Giving President Obama the Benefit of the Doubt and

Giving President Trump No Respect

The Monthly Jobs report for December can be really good. This column produced a forecast article for the ADP jobs report and a forecast article for the Employment Situation Report. It was thought that the ADP report would reveal an addition of 248,000 to 267,000 jobs. There was the outside possibility of 300,000 jobs being added. It was thought that seven out of ten sectors would add seasonally adjusted jobs. The ADP report was released yesterday with nine out of ten sectors adding jobs and 250,000 seasonally adjusted jobs being added to the economy. The Employment Situation Forecast article projected that we would see private sector non-seasonally adjusted (NSA) Current Employment Statistics (CES) growth and that the seasonal factor used to convert the NSA CES data that is recorded to the Seasonally Adjusted (SA) CES data that is reported would yield a range of 224,000 to 310,000 workers being added to the economy, depending upon the seasonal factor used. It was also dependent upon the revisions to the prior months data. If the data from November is revised higher by 25,000 workers then that "borrows" 25,000 from December. If 250,000 workers were added prior to revisions, then the official number would be reported at 225,000. It was thought that we would see at least 250,000 seasonally adjusted workers added to the economy. It was also thought that we would see the unemployment rate tick slightly higher and that workforce participation would continue to rise.

The Non-Seasonally Adjusted CES Private Sector Growth was recorded as being down 62,000 workers. A loss was possible. First, the November data was revised higher by 14,000 workers - and the seasonally adjusted data was revised down 7,000. Let that sink in. Up is down. Too much winning.

The Seasonally Adjusted Growth was reported at 146,000. This number "missed" the mark from what was expected elsewhere (190,000) and missed the mark that was anticipated here. Or did it? The contraction this year was smaller than last year's contraction and yet we "gained 224,000" workers last year and we only gained 146,000 seasonally adjusted workers. Let that sink in. We lost fewer non-seasonally adjusted workers this year and gained fewer seasonally adjusted workers than last year. What is up with the seasonal factors? Or should I say "What is Down" with the seasonal factors? If we used last year's seasonal factor we would have reported an addition of 256,000 workers. If we used this year's seasonal factors and last December's growth rate then we would have only added a  seasonally adjusted 114.000 workers last year.

We Saw Part-time Jobs recorded a drop of 97,000 jobs and Full-time Jobs record a drop of 483,000 jobs. The combined drop was comparable to December 2016. We often see a Scrooge influenced drop in jobs during December

Seasonally adjusted jobs saw a small gain. Did we see a small seasonal gain because this year has been a transition year where full-time jobs are replacing part-time Jobs?

Unemployment Fell in Seasonally Adjusted and Non-Seasonally Adjusted terms. The NSA U-3 unemployment level dropped from 6.286 million to 6.278 million. The SA U-3 value dropped from 6.616 million to 6.576 million workers. The NSA U-3 unemployment rate is below 4%. If we are below 5% we are considered to be at full-employment. The problem is that the participation rate is not as strong as it has been. We need to compare apples to apples and not apples to pomegranates.

Participation is coming back from the abyss. The participation last December was  62.40%. This was the lowest December Participation rate in a generation. The January participation rate would have been even lower than it was originally reported had the people who manage the data had not revised downward the workforce population number last January.

What is the real unemployment rate? This column has written numerous articles on the U-7 unemployment rate. This effective Unemployment rate compares the number of unemployed workers and the number of participants during the same month of the year across multiple years. If we had the same participation rate that we had during December of 2006 then we would have over 9 million more people working in the workforce. We could also have over 9 million more people who could be counted as unemployed. These are the effectively unemployed.

We have the most Full-time Jobs this December than any prior December.  This column has written may articles regarding the "Jobs Iceberg." We lost 14.452 million full-time jobs between July 2007 and January 2010.  President Obama recovered those lost jobs during the Summer of 2016 before losing them by January of 2017, his final jobs report period. We have seen a drop of 612,000 part-time jobs during the past year. We have seen the addition of roughly 2.7 million full-time jobs during the same period of time.  The "Iceberg" is becoming a mountain. 

This column will continue digging into the data. Next week there will be the "Five Presidents" article as well as articles on how the recovery and expansion is impacting men and women, as well as the "Red, Gray, and Blue" series, the Job Sector Series, and the Multiple Job Worker series.

The data was solid - the Seasonal factors were suspect.

It's the economy.