Painful Unemployment Report

Yow.

The BLS employment report is out and it's not good.

Here's the BLS' top-line graph set:

But the internals were markedly nasty. Top-line, U-3, is now reported at 10.2%. But U-6 is 17.5%, rising dramatically from 17.0% previously (both "seasonally adjusted.")

What I really don't like however is the household survey information.

Here, once again, is my personal set of data that I use for employment situations, and again, there is no positive trend change in either. Let's start with the y/o/y trends in the "employed":

Remember, the annualized change turning positive has marked the end of recessions in the past, and turning negative has given a roughly 12 month "lead" on the initiation of a recession. It has not turned positive.

The "not in labor force" graph is even worse:

This graph continues to accelerate in a near-parabolic rise since June. In the history of the data available for this series, unfortunately only back to 1999, this has never before happened.

Our government, by choosing to protect the oligarchs and banksters instead of allowing the market to force the bad debt out into the open where it defaults, has chosen to saddle our nation's citizens with unconscionable and unsustainable debt loads, both at a government and personal level. This was a critical error and, as I expected and predicted, it is now being reflected directly into the employment situation.

There is no reason for cheering in this report; you can argue over "productivity gains" all you want but without jobs the civilian population cannot buy "stuff", whether that be goods or services, and a durable economic recovery is impossible.

Buckle up folks; this ride could get a bit rough, especially with the holidays right around the corner upon which virtually all retailers depend for their continued viability.

Comments

[ryanclarke:]

Employment in this "recession" no longer serves as a lagging indicator .. it is a leading indicator ... because the "bottom of the economic" pile has no savings and has no job ( and thus income ) with which to service the debt the "bottom of the economic" pile has been forced to accumulate.


On Nov 06 10:38 AM Stone Fox Capital wrote:

> lagging indicators... not much else to say about that

Nov 06 10:54 AM

[MarketGuy:]

Not much else to say, because it's a lame duck model. Try "trending indicator" for a more realistic apples to apples look at this particular economic cycle.

Save the "lagging" talk for CNBC and other brainless agenda driven entities.


On Nov 06 10:38 AM Stone Fox Capital wrote:

> lagging indicators... not much else to say about that

Nov 06 11:10 AM

[John Galt:]

On Nov 06 10:38 AM Stone Fox Capital wrote:

> lagging indicators... not much else to say about that>


I'm sure if the number was positive, you'd be singing a different tune.

Nov 06 11:12 AM

[Karl Denninger:]

It is not a lagging indicator for loan defaults - and never has been.

All modern economies are credit-based. That is why the chart I presented on Employment Trends has a near-perfect correlation with the END of recessions when it turns up, and also provides a nice leading indicator that typically warns 6-12 months before a recession is "officially" declared.

For consumers to consume they must have income. Can't get around this - defaults and thus economic slowdown take a few months to start to ripple through the economy once employment starts to slack, but when it turns up the removal of the downward pressure on loan (credit) performance correlates almost exactly with the resumption of positive economic activity.

We have NOT turned the corner.

Nov 06 11:36 AM

[User 353732:]

Compress the Middle class, expand the Lower class to disenfranchise and intimidate the Middle class, especially small and new business owners, glorify the Upper class. This is the political, economic and social model of the People's Republic of America.

So far, it is a brilliant success. The charts you present are a tangible manifestation of the model.

What is even more extraordinary, indeed superhuman in its accomplishment, is satisfactory and accelerating economic growth with collapsing middle class employment and incomes. In the New Economics, growth is now possible via a sheer act of imagination by the US Regime and the unconstrained printing of vapor scrip.
Jobs, income,business formation, financial integrity, innovation net worth are no longer necessary for growth. The Govt. has the statistics to prove it. The middle class is redundant. The Govt has the statistics to prove it. Parasites and predators create economic growth, not middle class producers. The Govt. has the statistics to prove it .

Nov 06 11:45 AM

[ebworthen:]

In this economic and political climate it is DELUSIONAL to call unemployment a "lagging indicator".

They are in denial. Uncle Sam and his pals on Wall Street are DRUNKS, and they keep giving each other fifths of bourbon and raising a glass toasting each other.

Meanwhile, those sober responsible citizens being taxed and robbed and laid off are being scolded as "party poopers" and "gloom and doomers".

What a crock. Enjoy the party boys, the hangover will be hellacious.

Nov 06 11:47 AM

[tripleblack:]

LOL, and government statistics never lie, of course.

The ailing patient is lying on the examination table, flushed with fever and dripping sweat, while the doc smiles broadly, shows them a thermometer showing 98.6, and tells them:

"You are doing just fine".

Who are we going to believe, our own feverish symptoms, or the nice man from the government?


On Nov 06 11:45 AM User 353732 wrote:

> Compress the Middle class, expand the Lower class to disenfranchise
> and intimidate the Middle class, especially small and new business
> owners, glorify the Upper class. This is the political, economic
> and social model of the People's Republic of America.
>
> So far, it is a brilliant success. The charts you present are a tangible
> manifestation of the model.
>
> What is even more extraordinary, indeed superhuman in its accomplishment,
> is satisfactory and accelerating economic growth with collapsing
> middle class employment and incomes. In the New Economics, growth
> is now possible via a sheer act of imagination by the US Regime and
> the unconstrained printing of vapor scrip.
> Jobs, income,business formation, financial integrity, innovation
> net worth are no longer necessary for growth. The Govt. has the statistics
> to prove it. The middle class is redundant. The Govt has the statistics
> to prove it. Parasites and predators create economic growth, not
> middle class producers. The Govt. has the statistics to prove it
> .
>
>

Nov 06 11:51 AM

[American in...:]

Hi Karl,

You really don't get it. Do you really think without the government's deficit spending the economy would be better shape today?

That's a ridiculous idea. We would still be in recession and the unemployment rate would be 15% today, not 10.2%.

All this pseudo-populist talk thrown about the politically disenfranchised Right is cheap, particularly since there is no intelligent alternative to aggregate demand stimulus.

And letting the banks fail would lead to a complete meltdown of the financial system.

If the banks go down, you go down ....


On Nov 06 11:36 AM Karl Denninger wrote:

> It is not a lagging indicator for loan defaults - and never has been.
>
>
> All modern economies are credit-based. That is why the chart I presented
> on Employment Trends has a near-perfect correlation with the END
> of recessions when it turns up, and also provides a nice leading
> indicator that typically warns 6-12 months before a recession is
> "officially" declared.
>
> For consumers to consume they must have income. Can't get around
> this - defaults and thus economic slowdown take a few months to start
> to ripple through the economy once employment starts to slack, but
> when it turns up the removal of the downward pressure on loan (credit)
> performance correlates almost exactly with the resumption of positive
> economic activity.
>
> We have NOT turned the corner.

Nov 06 11:53 AM

[Adonis:]

I am a little curious why everyone is surprised about the employment report. We have known for awhile that it would top 10%. This should not be a surprise.

Whether it is a lagging indicator or not is like asking what came first the chicken or the egg. For the economy to turn around we need to produce and sell things. But to do this we need to haev consumers to sell to. But to have the consumers, they first need money to buy things with. But to have money they need to ahve jobs. But before they can get hired the companies need to start to produce things to make money.

I do think that if you wait for a consistent drop in unemployment before you invest, you will miss a good run. So in that sense it is a lagging indicator, but I also think it can get worse before it gets better.

Nov 06 12:07 PM

[Leftfield:]

It makes perfect sense given our leadership that they concoct phony statistics, monopolize the media and use the last of our reserve-status balance sheet and QE to impose themselves as absolute rulers and absolutely necessary in most American's minds. As User 353732 states, "The middle class is redundant. Parasites and predators provide economic growth. The government has the statistics to prove it."
This has to, of course, collapse, leaving the predatory, parasitic leadership, clients and cronies MORE in charge than ever. Unless Americans who value the truth and principle over pure greed and utilitarianism, wake up in time.

Nov 06 12:19 PM

[Michael Clark:]

It's nice to see household intentions included....deflation is caused by many things but mostly by a change in consumer sentiment and perspective. When consumers hunker-down, try to save money, and believe that a social/financial armageddon is at hand, nothing else really matters very much. There is no more optimism about the future. The future has one injuction: Armor Get On.

No one spends when they are being attacked by the furies of fear of economic dislocation. The financial depression is CAUSED by the spiritual depression that is CAUSED by the Dark Night (the vision of a brighter future contracts into a picture of a Black Hole).

No relief until 2019. No victory for light until 2028.

Nov 06 12:54 PM

[Mad Hedge F...:]

xcv Ouch! Another 190,000 jobs went down the crapper in October, taking unemployment rate to a new 27 year high of 10.2%. Add in discouraged job seekers, and that puts the jobless rate at gut churning 17.5%, and over 20% in California. Along with yesterday’s stunning, gob smacking 9.5% increase in Q3 productivity, the figures point a giant arc spotlight on what is really happening in the economy. Companies are still firing workers en mass to boost profits. After getting blood from a stone they are returning to the same rock for one more drop. I guess if I fire myself, the profitability of my business would go through the roof too, and maybe even my stock would rise. At least then I would then be rid of my oldest, most expensive but least productive employee, who is the worst to get along with, max’s out his sick and vacation days, and wears the same clothes to work every day, even when there lipstick on the collar. But then who would write this daily letter? Maybe Cecelia, my cleaning lady, would do it. She’s cheap. This explains why when you go into Office Depot these days, there is only one minimum waged employee standing at the cash register, the hours on the phone I have to wait to get technical support from Dell, and the endless unmovable lines at Citibank. America’s service economy has become all about denying service to customers. The scary thing is, with companies firing their way to prosperity, what happens when we get another dip? My theory is that the US has entered an era of chronically high employment that is never going away, no matter what the government does. Goodbye USA, hello Germany!

Nov 06 01:26 PM

[awake09:]

So, what the Fed did was buy the bad debt and fraud from the investors and marketplace, and dump it on the tax payer. Yes, what a grand plan. We have turned the corner! Now, pay DC back for all the associated corner-turning costs. NO ONE has won. NOTHING is fixed. We just destroyed our future trying to keep the lid on the volcano. But, it blew anyway.


On Nov 06 11:53 AM American in Paris wrote:

> Hi Karl,
>
> You really don't get it. Do you really think without the government's
> deficit spending the economy would be better shape today?
>
> That's a ridiculous idea. We would still be in recession and the
> unemployment rate would be 15% today, not 10.2%.
>
> All this pseudo-populist talk thrown about the politically disenfranchised
> Right is cheap, particularly since there is no intelligent alternative
> to aggregate demand stimulus.
>
> And letting the banks fail would lead to a complete meltdown of the
> financial system.
>
> If the banks go down, you go down ....

Nov 06 01:55 PM

[ETFdesk.com:]

nice analysis, also see David Rosenberg's write up this morning on the jobs data, Rosenberg on Jobs Mother of All Jobless Recoveries www.etfdesk.com/headli...

Nov 06 02:27 PM

[Archman Inv...:]

Way to funny from the kid who claims:
To manage money for friends and family.
Has a blog masquerading as an investment website.
Then (this is beyond absurd) admits thru the links on his blog to Marketocracy.com that his "pretend" funds essentially match the market (only making money in good markets and getting destroyed in bad markets).
This guy or kid is truly following in the footsteps of all the great asset gathers or analysts:
Lie thru your teeth, rationalize all news as good, collect your fees, even as your clients get screwed.
Maybe Stone Fox (sorry i just laugh when I say that name- its so important sounding) thinks he is related to Michael Darda or one of the other liars that will be on Krudlow tonight to keep telling people everything is ok.


On Nov 06 10:38 AM Stone Fox Capital wrote:

> lagging indicators... not much else to say about that

Nov 06 03:57 PM

[Britishsteel:]

the bottom line, prices on consumables rising, hard assets deflating ,
and along with unemployment skyrocketing, wages are falling and will continue to fall as competition for jobs increase. Was and is that the plan all along?

Nov 07 04:58 PM

[rick12345:]

amazing how headlines managed to skim past news that retail sales were up 1.8% yoy but did not miss an opportunity to publish more rubbish like the above. Selling fear is easy. Selling hope is a lot harder.

Nov 08 07:21 PM

[Mark Anthony:]

On Nov 06 11:36 AM Karl Denninger wrote:
> It is not a lagging indicator for loan defaults - and never has been.
>
> For consumers to consume they must have income. Can't get around
> this - defaults and thus economic slowdown take a few months to start
> to ripple through the economy once employment starts to slack, but
> when it turns up the removal of the downward pressure on loan (credit)
> performance correlates almost exactly with the resumption of positive
> economic activity.
>
> We have NOT turned the corner.

Absolutely FALSE. A consumer is a consumer and is called a consumer because he/she consumes something. You don't need to have income to consume. All the billionaires who have net loss, versus net income in the past years, have they stopped consuming because they have no income?

A consumer only needs to be breathing, to be a consumer. That includes every one from new born babies to people who have retired, and people who are on unemployment benefits. Only when a consumer stops breathing, will he/she stop being a consumer.

The dramatic drop in consumer credit, is actually a good thing. Don't kid yourself, Karl, you think all the people who lost their jobs, and that credit card companies bump up interest to 30%, those people without job and without income are desperately depleting their non-existant savings to pay down their debts, and mean while these people are not eating anything or consuming anything?

No, these people simply stopped paying the credit card company, forcing banks to write down losses. Any dollar that a consumer does not spend paying the banksters, is a dollar the consumer can spend buying things he/she and family needs.

So in a sense that is good. Instead of bailing out banks, the people are bailing themselves out using their own methods.

Nov 09 01:05 AM

[wkoenig:]

Mark, I find you to be very arrogant. I am one of those unemployed and yet I still am paying off my debts while eating less, and I certainly cannot consume other than paying for basic things like food, water, etc.

Stop attacking Karl all the time, it's annoying.


On Nov 09 01:05 AM Mark Anthony wrote:

> On Nov 06 11:36 AM Karl Denninger wrote:

Nov 12 03:54 AM

[wkoenig:]

Mark, you also don't seem to know how things work if you "stop paying" credit cards. The creditors will take you to court and the judge usually gives the creditors permission to even garner some of your unemployment cheque. That is why I am still paying my creditors even though I don't want to -- I want to get out of debt and avoid any problems.


On Nov 09 01:05 AM Mark Anthony wrote:

> On Nov 06 11:36 AM Karl Denninger wrote:

Nov 12 03:56 AM