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Another employment stats hoax or funny job market trends?

While I still work hard to earn position of a Seekingalpha's contributor, I still count on some wild bypassers who occasionnaly pay a visit to my modest log cabin.

We all contemplated sudden market nosedive last Friday, when dismal job data were released. True, markets are extremely volatile these days (IV is nearing all-time highs reached at the peak of 2008/2009 financial crisis), but as always my primary goal is to know what's true, and what's just go bananas.

The center focus of the Friday's US employment report was that out of 431,000 added nonfarm payrolls 411,000 appeared to be temp jobs. That news put markets, which played down decline in unemployment from 9.8% to 9.7% m-o-m, in the tailspin. No questions, temporary jobs cannot be relied upon as a sought evidence of growing economy, however let's look around. The phenomenon of declining unemployment rate coupled with ostensibly falling job creation was explained by some 322,000 unemployed having left the work force. This means they no longer claim unemployment benefits, therefore they are no longer subjects to the work force census. Poor third of a million of Americans sounds like a new trend, which is worth a bit more scrutiny. We are talking about rather noticeable layer of people whose source of living is under question, let alone irreversibly lost skills and expertises.

This mess is all happening amid The Conference Board reporting robust job creation dynamics (read www.conference-board.org/economics/employment.cfm and note they are particularly impressed that 6 out of 8 index components are continuously on the rise) as of May and vitally raising personal incomes and spending (read www.bea.gov/newsreleases/national/pi/pinewsrelease.htm and note that personal spending rose by $4 bn in April followed by almost $60 bn in March). So please give me a break: do these statisticians pretend that America has invented some innovative society model, where people don't look for jobs for the simple reason of being able to boost their incomes and spending without performing any work at all? This is apparently a Dream Society, but it's too good to be true.

Another data array is concerning initial and continuous jobless claims. Last week report revealed increase of the latter by 66,000 ongoing claims. Wait a minute, are these statistitians saying that people, while leaving the US workforce, still claim unemployment benefits (see above)? As we all know, in the US frustrated jobseekers who dropped looking for jobs automatically lose their unemployment benefits (whoever at least once in their lives used to visit a job center know what I mean)!

Now the summary. It's because either all US stat number is a big hoax, or (more likely) because people more aggressively enter illegal job market. In any case, none of these two options have anything to do with US economy, rather it's a headache for the US Administration.






Disclosure: none