Friday, January 7, 2011

Employment Situation Summary for Friday, January 07, 2011

Employment Situation Summary
Release Date: Usually the first Friday of each month
Release Site:
Market Relevance: VERY HIGH
Management Value: VERY HIGH

To learn about the official release please follow:

Friday, January 07, 2011

Blue World Employment Situation Analysis

The Bureau of Labor Statistics released a jobs report today that was, per usual of late, not surprising. I've seen the word "disappointing" used a lot this morning. The "confusion" most experts are suffering is due to the conflicting indicators week by week with new jobless claims and the monthly ADP report. Since the beginning of time investors, managers and experts have tried to discover a way to accurately and consistently predict the unemployment report. The problem is that no other indicator, government or private, samples as large a pool or evaluates from the two key perspectives simultaneously, meaning household and establishment data. (follow link for explanation

We are in uncharted waters, here. This recession is not like prior recessions caused by a normal business cycle downturn, international conflict or some other type of business or confidence disruption that, while significant, had a probable game clock. This recession started with a perceived slow down. It was exacerbated when it appeared a solid anti-business candidate would win the Presidency and have the full support of an anti-business congress. An acceleration occurred when he did win and it continued to deepen as his policies were implemented. At this time our future is still rife with uncertainty regarding healthcare legislation, tax policy and the business climate, in general. Remember, the government CANNOT create jobs no matter how hard they focus on them. All they can do is create a business friendly climate that encourages the private sector to expand or, as is the case now, create a climate of fear and uncertainty, the guaranteed killers of growth . A payroll tax break for...the employees?!? Window dressing. Extending the Bush era tax cuts for only 24 months, healthcare costs to employers already shooting through the roof, the continued threat of crippling regulation of construction, energy and manufacturing by legislation or fiat does nothing to encourage those who invest real money, hire real people and make real contributions to GDP. It really is that simple.

Based on all that you would not be surprised to learn that Blue World expects to see inconsistent and very muted growth in employment, GDP and demand for at least and, hopefully only, the next two years UNLESS we see a very high profile and significant shift in political attitude and policy.

Now, to our analysis of the numbers. The overall rate dropped to 9.4 percent which continues to be a staggering and unacceptable number. The details reveal that no meaningful changes, good or bad, have occurred and the markets are reacting accordingly today as the detail is digested. The unemployed rate for professionals is still flirting with 5 percent (4.8%). Historically 3.5% for this group was considered devastating. There were increases in each of the following negative categories: unemployed for more than 27 weeks, could only find part-time work, marginally attached and discouraged workers and construction job losses. Predictably there were continued gains in healthcare and social assistance. The diffusion index continues its erratic movement. As the inventory component of GDP would predict manufacturing hours worked and overtime per week was flat.

There is no magic here, folks. People who operate on theory can afford to see things in a light substantially different than those who invest real money, hire real people and make real contributions to GDP.

Please look for some upcoming posts with more detail on some of the commentary above.

We remain in a very defensive posture with our investment strategies and will for the foreseeable future.

We always thank you for reading and...stay tuned!

Release Site:

Every effort is made to ensure accuracy of data transcription but accuracy cannot be guaranteed. The official release site should be cross referenced for accuracy and footnoting. The analysis represents the opinion of Blue World Asset Managers, Ltd. who are not giving advice and does not warrant or guarantee predictions based on its analysis.

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