Another Month, Another Near Miss for Jobs

Includes: AGG, DIA, SPY
by: James Picerno

Always a bridesmaid, never a bride. That about sums up the struggle in nonfarm payrolls to reach the tipping point of growth (or at least zero).

This morning's update for January tells us that the economy is still losing jobs. In the optimistic words of the Labor Department's press release, last month's 20,000 decline in nonfarm payrolls amounts to a labor market that's "essentially unchanged" for January. Yes, we recognize the statistical reasoning for saying so. A decline of 20,000 jobs in a labor force of nearly 130 million is statistically insignificant—a decline of less than two-tenths of one percent. But the scribes at the Labor Department have chosen their words poorly for the press release du jour.

The economy has now lost over 8 million jobs since the recession began in December 2007, and the losses continue. The red ink is relatively slight, to be sure, but continuing nonetheless. Calling another loss of jobs--any loss of jobs--as a status of "essentially unchanged" at this late date is not only unecessary, it appears to trivialize what is clearly the deepest and longest-running dent in the labor market since the Great Depression. (Click to enlarge)

But enough complaining about poor manners and ill-advised rhetoric. As for the numbers dispensed today, there's some good news in the sense that the Labor Department revised upward the November nonfarm payrolls count: the month had a net gain of 64,000 jobs, much better than the rise of 4,000 previously reported. Unfortunately, the revision for the rest of the year is uniformly worse off than originally reported. Bottom line: the Labor Department tells us that the economy was lighter by more than 600,000 nonfarm jobs than originally estimated.

At this point the details don't matter and revisions are of little relevance save for the academics who'll be studying the numbers in the years ahead. For now, the only issue is reaching the point of nirvana, that glorious realm where the trend in nonfarm payrolls is something other than a loss. We're not there yet, the "essentially unchanged" status notwithstanding.

Yes, we're close. Zero and above zero seem to be well within the economy's grasp. But with each near miss, the disappointment builds and so the case for arguing that the "essentially unchanged" status will linger well into 2010 becomes a bit more persuasive. Next month, is all we're left with. Maybe, maybe not.

The longer this drags on, the higher the odds that we're facing an even weaker post-recession job recovery than previously anticipated. And that's saying something. We've been opining for some time now that the labor market's "recovery" is likely to be weak this time (for example, see our posts here and here). Perhaps even weaker than we thought.

In fact, we expect zero to arrive, more or less, in the months ahead. The problem is still that there's some doubt about the capacity for generating numbers of substance above zilch on a sustainable basis.