The reports for June and July were revised down a gut punching 58,000. Employers obviously reacted to the damage the Tea Party was threatening to inflict on the global economy with a Treasury bond default by instituting an immediate hiring freeze.
The figures were further muddled by conflicting cross currents. The Verizon strike cut 45,000 from the reported total. At the same time, a return of state employees to work in Minnesota, which had been shut down over a budget impasse, boosted the figures by 22,000.
Health care lost 30,000 workers, government 17,000, and construction 5000. Professional and business services gained 28,000 jobs. What is really frightening here is that only 4,700 temps were hired, which normally lead the recovery stage in the economic cycle.
Risk assets everywhere fled in terror, while a monster rally launched in the bond markets. Yields for the ten year Treasury bond reached a new intraday low in the mid 1.90%’s, while the 30 year was seen well below $3.50%.
For me, the real stunner in the report was the revision to July government job losses up to an amazing 71,000. Clearly what is happening here is that as short term government stimulus programs run out, public workers are being let go in record numbers.
Congress deadlocked and the House is ideologically handcuffed, so there is no chance that any of these job creating programs will be renewed. This is going to get a lot worse before it gets better.
Will this cause me to lower my 2% GDP forecast for 2011? I don’t think so. But it will force some permabulls, paid cheerleaders, and Kool-Aide drinkers to revise down their own overoptimistic targets from 4% and 3% down to my own more realistic and greatly subdued figure. Hint: This is not good for stock prices.
What organizations are currently advertising the greatest number of job openings? The US Air Force, at 134,000, followed by Taco Bell, the National Guard, and Staples. Looks like you better sharpen up your target practice or your Spanish if you want that paycheck bad enough.