Establishment Survey +155,000 Jobs; Household Survey +28,000 Jobs; Unemployment Rate Revised Up, Flat Since September

Initial Reaction

The establishment survey report of +155,000 jobs was about what most expected.

However, beneath the surface, this report looks weak.

The household survey shows a gain of a mere 28,000 jobs. The unemployment rate stayed the same although the number of people unemployed rose by 164,000.

December BLS Jobs Report at a Glance

• Payrolls +155,000 - Establishment Survey
• US Employment +28,000 - Household Survey
• Involuntary Part-Time Work -220,000 - Household Survey
• Baseline Unemployment Rate +.00 at 7.8% - Household Survey
• U-6 unemployment +.00 to 14.4% - Household Survey
• The Civilian Labor Force +192,000 - Household Survey
• Not in Labor Force  -16,000 - Household Survey
• Participation Rate +.00 to 63.6 - Household Survey

Recall that the unemployment rate varies in accordance with the Household Survey not the reported headline jobs number, and not in accordance with the weekly claims data.

Quick Notes About the Unemployment Rate

• Last month it was reported the US unemployment rate fell -.2 to 7.7%
• This month the unemployment rate was reported flat at 7.8% (so last month was revised up)
• In the last year, those "not" in the labor force rose by 2,199,000
• Over the course of the last year, the number of people employed rose by 2,436,000
• Long-Term unemployment (27 weeks and over) was 4,766,000 a decline of 16,000
• Ratio of long-term unemployment to overall unemployment is 39.1%. Once someone loses a job it is still very difficult to find another.

December 2012 Jobs Report

Please consider the Bureau of Labor Statistics (BLS) December 2012 Employment Report.

Nonfarm payroll employment rose by 155,000 in December, and the unemployment rate was unchanged at 7.8 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in health care, food services and drinking places, construction, and manufacturing.

Click on Any Chart in this Report to See a Sharper Image

Unemployment Rate - Seasonally Adjusted



Nonfarm Employment - Payroll Survey - Annual Look - Seasonally Adjusted



Employment is above the total just prior to the 2001 recession, and about where it was in mid-2005.

Nonfarm Employment - Payroll Survey Monthly Changes - Seasonally Adjusted



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Between January 2008 and February 2010, the U.S. economy lost 8.8 million jobs.

Since the employment low in February 2010, nonfarm payrolls have expanded by about 5.3 million jobs. Of the 8.8 million jobs lost between January 2008 and February 2010, approximately 60.22% have been recovered (not accounting for normal demographic-related job growth).

In 2012, employment grew by an average of 153,000 per month, the same as the average monthly gain for 2011.

Statistically, 125,000+- jobs a month is enough to keep the unemployment rate flat. For a discussion, please see Question on Jobs: How Many Does It Take to Keep Up With Demographics?

Once again, recall unemployment is based on the household survey.


Current Report Jobs



Average Weekly Hours



Average weekly hours have improved substantially but are still below where they were at the start of the recession.

Index of Aggregate Weekly Hours



The index of aggregate hours paints a good picture of the stall in the recovery. Employment is up, but hours are not up proportionally.

Average Hourly Earnings vs. CPI



Average hourly earnings has been falling for years and lagging CPI inflation since September 2009. Simply put real wages have been declining. Add in increases in state taxes and the average Joe has been hammered pretty badly.

For further discussion, please see What's "Really" Behind Gross Inequalities In Income Distribution?

BLS Birth-Death Model Black Box

The BLS Birth/Death Model is an estimation by the BLS as to how many jobs the economy created that were not picked up in the payroll survey.

The Birth-Death numbers are not seasonally adjusted, while the reported headline number is. In the black box the BLS combines the two, coming up with a total.

The Birth Death number influences the overall totals, but the math is not as simple as it appears. Moreover, the effect is nowhere near as big as it might logically appear at first glance.

Do not add or subtract the Birth-Death numbers from the reported headline totals. It does not work that way.

Birth/Death assumptions are supposedly made according to estimates of where the BLS thinks we are in the economic cycle. Theory is one thing. Practice is clearly another as noted by numerous recent revisions.

Birth Death Model Adjustments For 2011



Birth Death Model Adjustments For 2012



Birth-Death Notes

Once again: Do NOT subtract the Birth-Death number from the reported headline number. That approach is statistically invalid.

In general, analysts attribute much more to birth-death numbers than they should. Except at economic turns, BLS Birth/Death errors are reasonably small.

For a discussion of how little birth-death numbers affect actual monthly reporting, please see BLS Birth/Death Model Yet Again.

Household Survey Data



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In the last year, the civilian noninstitutional population rose by 3,766,000. Yet the labor force only rose by 1,566,000.

Those "not" in the labor force rose by 2,199,000 to 88,839,000.

The massive rise of those "not" in the labor force is primarily economic weakness, not demographics. Actually, older workers are returning to the work force because they cannot afford retirement. One look at the average age of Walmart greeters and those working in fast food restaurants tells a story itself.

Decline in Labor Force Factors

1. Discouraged workers stop looking for jobs
2. People retire because they cannot find jobs
3. People go back to school hoping it will improve their chances of getting a job
4. People stay in school longer because they cannot find a job

Were it not for people dropping out of the labor force, the unemployment rate would be well over 10%.

Part Time Status (in Thousands)



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There are 7,918,000 workers who are working part-time but want full-time work. This is a volatile series.

BLS Alternate Measures of Unemployment



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Table A-15 is where one can find a better approximation of what the unemployment rate really is.

Notice I said "better" approximation not to be confused with "good" approximation.

The official unemployment rate is 7.8%. However, if you start counting all the people who want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.

U-6 is much higher at 14.4%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.

Duration of Unemployment



Long-term unemployment remains in a disaster zone with 39% of the unemployed in the 27 weeks or longer category.

Grossly Distorted Statistics

Given the complete distortions of reality with respect to not counting people who allegedly dropped out of the work force, it is easy to misrepresent the headline numbers.

Digging under the surface, the drop in the unemployment rate over the past two years is nothing but a statistical mirage. Things are much worse than the reported numbers indicate.

Last month shows pronounced weakness in the underlying numbers, this month was weak again.

For a look ahead to 2013, please see Small Business Owners' Hiring Intent Plunges to 2008 Lows; Don't Blame Sandy or Fiscal Cliff.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

"Wine Country" Economic Conference Hosted By Mish
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Fire Rescues

While everyone sleeps, cops prevent a possible tragedy:

• Grand Crossing District officers kicked in two doors of a burning apartment building and ushered to safety a resident who had trouble walking and seeing through a thick haze of smoke that enveloped the second floor.
  
  “On our end its another family above me, she’s an older lady. They went upstairs, knocked on her door, helped her down the stairs," said Ashley Wilson, who was inside the building when the fire broke out.
  
  Two plainclothes officers were on patrol on the 400 block of East 66th Street in the West Woodlawn neighborhood when they noticed smoke from a first floor window.

Some of the quotes from the families and coppers might make you grin. Nice job Officers.

Nikkei Soars as Yen Sinks to 30-Month Low

Inquiring minds note the Nikkei is up 293 points (2.8%) to 10,688 as the Japanese 30-Year Yield is Highest Since 2011.

Thirty-year yields climbed to levels unseen since December 2011, tilting the so-called yield curve to the steepest level in 17 months. Japan’s newly installed Prime Minister Shinzo Abe said in a New Year’s statement that “bold” monetary policy is one of the three prongs of his economic measures.

The yield on the 30-year bond touched 1.995 percent, the most since Dec. 2, before trading at 1.99 percent as of 3:21 p.m. in Tokyo from 1.975 percent on Dec. 28, according to Japan Bond Trading Co., the nation’s largest interdealer debt broker.

Japan’s Nikkei 225 (NKY) Stock Average jumped 2.8 percent after the Standard & Poor’s 500 Index in the U.S. on Jan. 2 reached its highest close since September. The yen touched 87.83 per dollar, the weakest since July 28, 2010, extending its longest series of weekly declines since 1989.

Yen Weekly



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I happen to think Prime Minister Shinzo Abe is serious about causing inflation in Japan. The currency market seems to agree as well.

However, the yield on the 30-year bond is only 2%, which is nothing to get that excited over. For now, the bond market is not treating Abe's inflation threat that seriously. If and when the bond market does react, Abe will not like the state of affairs one bit.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Nice Job Anita!

Before we even quote the article, let's just lay this out there - Police CANNOT charge felonies in Cook County.  Almost every single felony charge must go through Felony Review, a construct unique to Cook County and Rockford if we aren't mistaken.

It is a method that appears to let the Cook County State's Attorney "try" a case before a judge is even involved, thereby leading to a supposedly higher conviction rate and greasing the skids for reelection chances. It also provides countless well paying patronage jobs for the connected bottom-of-the-barrel law school grads who can't find actual employment or don't want to spend years researching legal briefs.

It also leads to a dismal prosecution rate of felonies, everything being bargained down to misdemeanors or labeled "continuing investigation" while clearance rates hover around 25%.

Once again, Anita's minions cost people their lives:

• An alleged arsonist accused of setting a fire that killed his girlfriend and daughter on the West Side last week threatened almost exactly the same deed just three months ago.
  
  Nathaniel Beller filled his bathtub with gasoline and threatened to torch his 4-year-old daughter Neriyah and 9-year-old son Naciere during a tense standoff with Cicero Police on Sept. 9, but neither police nor the Cook County State’s Attorney charged him.
  
  Quickly freed after a psychiatric evaluation, the career criminal allegedly made good on his chilling threat at his mom’s house Saturday. Chicago Police say the mentally ill 29-year-old poured an accelerant on both children and their mother, Taniya Johnson, then started a fire that claimed the lives of Neriyah and Johnson as well as his own.

And the excuse given?

• Andy Conklin, a spokesman for the Cook County State’s Attorney office, confirmed that prosecutors declined to file felony charges, in part because Johnson refused to sign a criminal complaint. He declined further explanation of why Beller wasn’t charged.

Here's a funny little quirk of the law. If a police officer responding to a domestic situation sees cuts, bruising or obvious trauma on a victim, and the victim refuses to sign complaints against his/her abuser because they are afraid of further abuse, the officer is obligated under the law to sign complaints on behalf of the victim. Failure to do so subjects the officer to possible criminal and internal charges, termination and jail time.

But Anita's office can accept a victim's refusal to sign complaints to charge an asshole who has a 9-year-old standing in a tub filled with gasoline and the fallout is........what exactly? Oh yeah, a dead woman, a dead 4-year-old and a 9-year-old whose chances of survival are currently less than 50%.

Banned from Denny's

Ignorant citizen complains to an ignorant Denny's manager and stupidity ensues:

• Are you a cop? Do you carry a gun? Don't go to the Denny's in Belleville, Ill.
  
  You are not allowed, the police chief says. Not after what happened Tuesday.
  
  The flapjacks -- sorry, the flap -- began when several on-duty detectives with the Belleville Police Department dropped in to Denny's for some on-duty noshing, according to local media.
  
  They had their badges and their guns, but as detectives, not their uniforms, according to the St. Louis Post-Dispatch. This bothered a patron who then complained to a manager, David Rice, who then complained to one of the detectives: Please take your gun to your car or leave. No guns allowed.

Denny's attempted a walk-back and offered a half-hearted apology after finding out these were on-duty detectives, but Belleville Chief William Clay was having none of it:

• "This was an insult, a slap in the face, to those detectives and to all of the men and women who proudly wear the uniform or badge and serve in law enforcement," Police Chief William Clay said, according to the News-Democrat.
  
  "This individual [Rice] was the manager of Denny's. He therefore speaks for Denny's, in my mind. This policy effectively prohibits on-duty sworn police officers from dining in a Denny's Restaurant, but allows 'registered sex offenders,' 'felons' and or 'pedophiles' to enjoy a dining experience in Denny's."

Looks like Golden Nugget from here on out.

NY TImes Discovers Crime

Shocking discovery - murders happen in primarily minority neighborhoods!

• CHICAGO — This city’s 471st homicide of 2012 happened in the middle of the day, in the middle of a crowd, on the steps of the church where the victim of homicide 463 was being eulogized. Sherman Miller, who was 21, collapsed amid gunfire not far from the idling hearse that was there to carry away James Holman, 32, shot to death a week earlier.
  
  A funeral shooting at St. Columbanus Catholic Church on the South Side left neighbors fretting that no place, not even a church, felt safe any longer. “It’s become the Wild Wild West,” said Charles Childs Jr., who had watched from across the street as mourners screamed and scattered.
  
  
• More than 80 percent of the city’s homicides took place last year in only about half of Chicago’s 23 police districts, largely on the city’s South and West Sides. The police district that includes parts of the business district downtown reported no killings at all. And while at least one police district on the city’s northern edge saw a significant increase in the rate of killings, the total number there still was dwarfed by deaths in districts on the other sides of town, and particularly in certain neighborhoods.

The Times even provides a handy map of neighborhoods to avoid.

And of course, what's an earth-shattering discovery like this without the requisite blame being laid? The Times lists income, education, and racial percentages in its attempt to seek answers.

Nothing about broken homes, though. Missing family structure. And certainly no stats listing access to guns, seeing as how Chicago, Cook County and Illinois currently ban most ownership of handguns. That wouldn't fit the narrative of all guns being evil and needing to be banned - they already are (pending implementation of a court ordered Concealed Carry law that is.)

We certainly hope the local media picks up on this story. Maybe they can start listing the descriptions of offenders.

Ban Hammers, Clubs, Fists and Feet

Perusing the FBI crime stats reveals this info:

• According to the FBI annual crime statistics, the number of murders committed annually with hammers and clubs far outnumbers the number of murders committed with a rifle.
  
  This is an interesting fact, particularly amid the Democrats' feverish push to ban many different rifles, ostensibly to keep us safe of course.
  
  However, it appears the zeal of Sens. like Dianne Feinstein (D-CA) and Joe Manchin (D-WV) is misdirected. For in looking at the FBI numbers from 2005 to 2011, the number of murders by hammers and clubs consistently exceeds the number of murders committed with a rifle.
  
  Think about it: In 2005, the number of murders committed with a rifle was 445, while the number of murders committed with hammers and clubs was 605. In 2006, the number of murders committed with a rifle was 438, while the number of murders committed with hammers and clubs was 618.
  
  And so the list goes, with the actual numbers changing somewhat from year to year, yet the fact that more people are killed with blunt objects each year remains constant.

But don't let the facts get in the way of a good old panic-pushing agenda that has no basis in reality.