As you know, the first Friday of every month has the release of the Federal Bureau of Labor Statistics (BLS) report on the previous month’s employment information. 

Expectations were running very high. Stock markets have priced-in 3.5% GDP growth and a future of non-stop 300,000 new jobs per month as far as the eye can see. Recall that the US economy generates 125K new jobs per month just for “showing up”  i.e., from population growth.  We need to generate jobs at the 300K / month rate for years in order to regain the jobs that have been lost as well as grow with our growing country.

Wall St offically expected 520K new jobs including 300K in US Census workers. So on net 220K new private industry jobs were expected. But we know Wall St is an old master at setting low hurdles. Case in point: we know that during the week of the BLS snapshot, 417,444 new census workers were added. This brings the total number of census workers to 573,779. (wow!)  All these jobs will evaporate gradually in July and August since they are 3 month term jobs.

417K new census workers + 125K new jobs just because of population growth + 50K BLS playing with the data = 592K. Call it 600K. And this is the number just to maintain the worst employment environment in decades, not improve it. In reality -and with the point above made - we should see a 700K number posted in order to show real jobs growth that will begin to make a difference to our economy.  So, really, expectations should be for roughly 640K new jobs, not 520K. 

What was posted was:

  • 431K new jobs in total 
  • 411K new census / fed jobs (but we know it was really 417K) 
  • 41K new private payroll jobs. This is a joke.  
  • initial unemployment claim rate 9.7%. But well over 10% with the fed’s temp jobs removed. 
  • other factors: 13K state jobs lost + some other minor points.

On the previous day, similar data was released from a private company called ADP (they do payrolls). ADP’s data showed an increase in private jobs of 55K.  

Wall St. will throw up on this data. It is terrible. A $14T economy with 300M people that needs 125K new jobs per month just to maintain near record high unemployment — that only generates 41K new jobs. Boom!

Did you notice that state governments let 13K jobs go? State budgets are detonating. They’re 15% of the nation’s jobs and are going to see their biggest headcount reduction ever — apparently starting now.

It is obvious that we’re going to see 10.5% initial claims data in about 2-3 months time when those 600K census workers end up claiming UI again this fall. The U6 (total unemployemnet) is going to 18% or more.