Friday, February 03, 2006

Enjoying your seasonally-adjusted job?

The media is all in a lather this morning over the January US jobs numbers.
Employers stepped up hiring in January, boosting payrolls by 193,000 and lowering the nation's unemployment rate to 4.7 percent, the lowest since July 2001.

The fresh snapshot of the jobs climate, released by the Labor Department on Friday, suggested that the economy started the new year on fairly good footing.

Although the 193,000 gain in payroll jobs in January fell short of the 250,000 new jobs that economists said to anticipate before the release of the report, it still marked a sturdy showing and was the biggest increase in jobs since November.

"There's no question we're getting back to better days for job creation," said Ken Mayland, economist at ClearView Economics. "There's been a sense of unease in the American workplace and this should help relieve that. The economy is getting on off to excellent start in 2006."
Well, gee whiz, Ken, it's all comin' up roses!

Of course, we should all remember that the US economy did not produce 193,000 actual jobs in January 2006. It produced 193,000 seasonally-adjusted jobs. The kind no one actually works. In the real world, the US economy eliminated 2.625 million jobs, the seasonally unadjusted kind that actually generate paychecks.

Of course, January is always the bleakest month for jobs, with all the Christmas help being sloughed off. On a cheery note, this was the best January for jobs since 1998, although only marginally better than the last three Januaries (+82,000 jobs over 2005; +36,000 over 2004; +60,000 over 2003). Since Katrina the country is -1.175 million actual jobs (August 2005-January 2006 total nonfarm payrolls), a little worse than the same period in 2004-05.

Total real wages and salaries (deflated by the more moderate PCE index rather than the CPI) have been stagnant for a year as have real average hourly earnings of production workers (again using the more moderate PCE index). At best we can say that the US economy is treading water as far as jobs go.


At 12:29 PM, Blogger Epimethee said...

and economists fear increased wages !!!
No one seems wise enough to understand that a revenue based spending, a higher saving rate, all need higher wages ...

At 5:44 PM, Blogger PaulThom said...

I just heard Elaine Chow on Kudlow saying that increased productivity means increasing wages (without inflation). Am I on drugs but isn't part of the economic "miracle" of the past few years (corporate profits up) due to the fact that productivity has been going up without an increase in wages? Is Elaine Chow on drugs or am I?

At 8:20 PM, Blogger john c. halasz said...

What's the Personal Comsumption Expenditures index? I know what the CPI is, a chained index of a selected market -basket of goods deemed necessary to amintain an average standard of living, but how is the PCE number calculated, from a statistical estimate of aggregate PCE, divided by per capita or households, and then adjusted to the GDP deflator?

At 8:52 AM, Blogger michael said...


Before I discuss the January employment report, let me say it has been compiled after
many revisions. More importantly, it is in stark contrast with the January ISM
Services Employment Index, which declined to 51.1% from 56.9% in December. In other
words, we have an economy that is heavily reliant on the services industry. How could
a January non-manufacturing employment index drop so much and yet the non-farm
payrolls rise by 193,000? In my view, it cannot and did not.

At 12:43 PM, Blogger Richard said...

didn't you all get the memo to read this week's business week where the cover story says 'Unmasking the Economy. Why it's so much stronger than you think'. I've just about had it with this clearly biased bull market approach. While i'm at it, i've had it with the wall street journal as well. can someone anywhere provide financial news without being biased one way or another?

At 2:16 PM, Anonymous Anonymous said...

It's funny the gonzo capitalists are all about the "wisdom or crowds" as opposed to experts, and yet here they are, bleating about "Why [the economy's] so much stronger than you think'"....

Irony didn't die, it was reborn as Mega-Irony.

-- a different chris

At 4:43 PM, Blogger Gen. Glut said...


Everything you ever wanted to know about CPI v. PCE:

Gen'l Glut

At 2:05 PM, Blogger Epimethee said...

if employement picks up as usual, the distinction you, general, make, will have been useless...

The question is, can this seasonal shock truly hurt an already fragile economy ...

Dunno ...

I hope so, since I short the markets...

Paulthome : elaine must have meant that a rising productivity allows higher wages.

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