The NBER declared the start of the recession today in February. One of the reasons was a downturn in employment.
The Economy Peaked, Entered Recession, in February 2020
Please note the Economy Peaked, Entered Recession, in February 2020
Month of the Peak
In determining the date of the monthly peak, the committee considers a number of indicators of employment and production. The committee normally views the payroll employment measure, which is based on a large survey of employers, as the most reliable comprehensive estimate of employment. This series reached a clear peak in February. The committee recognized that this survey was affected by special circumstances associated with the pandemic of early 2020. In the survey, individuals who are paid but not at work are counted as employed, even though they are not in fact working or producing. Workers on paid furlough, who became more numerous during the pandemic, thus resulted in an overcount of people working in recent months.
Accordingly, the committee also considered the employment measure from the Bureau of Labor Statistics household survey, which excludes individuals who are paid but on furlough. This series plateaued from December 2019 through February 2020, and then fell steeply from February to March. Because both series measure employment during the week or pay period containing the 12th of the month, they understate the collapse of employment during the second half of March, as indicated by unprecedented levels of new claims for unemployment insurance. The committee concluded that both employment series were thus consistent with a business cycle peak in February.
Surprise: The BLS Admits Another Phony Jobs Report
The NBER confirms what I said last Friday in Surprise: The BLS Admits Another Phony Jobs Report
BLS and the Census Bureau are investigating why this misclassification error continues to occur and are taking additional steps to address the issue.
If the workers who were recorded as employed but absent from work due to “other reasons” (over and above the number absent for other reasons in a typical May) had been classified as unemployed on temporary layoff, the overall unemployment rate would have been about 3 percentage points higher than reported (on a not seasonally adjusted basis).
Unlike others, I do not claim the BLS did this on purpose.
Regardless, the result is the same: For the second consecutive month the BLS significantly understated the unemployment rate.
Nonfarm Jobs vs Employment
The lead chart is from the BLS.
They used the word “employment” although they are really referring to nonfarm jobs. Employment is worse.
Employment Level
Despite the “way better than expected” bounce in employment in which the unemployment rate is admittedly several percentage points to high, the actual employment level is less than it was in January of 2003.
That makes it 17 years of employment wiped out, with “only” 15 for nonfarm jobs, a subset of employment.
Consumer Credit Declines an Amazing $68.7 Billion
In April Consumer Credit Declined an Amazing $68.7 Billion.
Revolving credit fell an annualized 64.9%.
Clearly, consumers have a lot more rebalancing to do. Equally clearly, the Fed wants to prevent just that.$68.7 billion is an unprecedented decline, but what’s coming (or doesn’t) is more important.
Decline in Mortgage Forbearance Plans But Payments Drop Too
The good news is a Decline in Mortgage Forbearance Plans. The Bad News is Payments Drop Too.
Rebound
A rebound is underway, but realistically, where is it going?
Percentagewise, the rebound may look good, but it will take years just to get back to where the economy was before Covid-19 hit.
Mish
Who cares. Commonsense tells us unemployment is high. These kids obviously don’t care. They would rather be protesting than looking for a job.
Top chart at The Daily Shot Editor (a really good source people) today, speaks for itself and damns those BLS liars at the same time:
Happy to be back from northern Europe as these two last months the comments windows where not working for myself at least.
Over here also the jobs situation is not clear. People also fear a new flare up of the infections numbers now that we are at 90 per cent out of confinement.
The Labor Department’s JOLTS report showed that separations fell sharply month over month to 9.9 million, about 5 million less than March.
V shaped? Riiiggghhhttt.
why do the loot ?(what a stupid ass question) https://www.youtube.com/watch?time_continue=310&v=sb9_qGOa9Go&feature=emb_logo
“Despite the “way better than expected” bounce in employment”
…
Going forward?
May was a cocktail of states opening back up + plenty of stimulus $$s + forbearance.
As stimulus wanes? As business faces months of < 80% pre covid revenues? As once forbearance over, payback is lump sum or extra payments spread over relatively short period? As State and local government face budget cuts? As defaults / delinquencies rise and credit tightens? As households / business / governments cut back to repair balance sheets?
(even assuming no big Second Wave) put me down for weak bounce and then flattish / downish grind for at least another year.
If you want to see the future, I suggest you look at the attached graph. There was essentially a half-century growth trend The downturn in 2009 resulted in an immediate drop and then a “recovery” at a significantly slower growth rate. There was no difference in the growth rate between the Obama administration and the Trump administration. It was a decade-long trend.
Take a sharpie in your hand. Draw in a bigger immediate drop than in 2009, and the most probable growth rate. What justification can you see for resuming the Obama/Trump growth rate? The future is not as bright as that.
over 13 years hardcore following politics and finance and I am sure of one thing, everything is agenda driven and a lie.
In normal cases I would definitely agree with you the wonks and worker bees at the BLS and Census just do their job and any fudging of the numbers would be impossible. But in this case an entire classification is wrong, that sounds like it is coming from leadership as a policy.
Agree on honesty, but the models come form the same rabbit hole that brought the economy to its knees. Jumped up economic quacks with know-it-all egos.
Main street is expecting a full recovery by November. It will not happen. It took 5 years to recover from 2003 levels to great financial crisis peak. And another 5 years to get back to that level. This one will take at least 3. But if a person can work from home that is a job that can be done overseas for cheaper. That’s the rub for CEOs who now see work from home productivity skyrocketing.
Some jobs just can’t be outsourced because of the sensitive technical nature. And I’m not talking about secret or top secret military work. Even commercial technology has to abide by ITAR rules/regs.
Office jobs that could be outsourced were already outsourced. Even high hanging fruit. Now, they are reduced to import foreign labor in the name of profits.
All we can be sure of is that the market will double by the time we recover.
If you want more relevant numbers, look only at male employment. It’s a much more apples-to-apples comparison from year to year, decade to decade.
It’s not as if women work anymore today than they did before. Rather, they have just changed jobs: From ones which were not counted in official statistics, to ones which are.
Economy it’s usual complete chit,deficits soaring out the ass,govt as hapless and incompetent as ever,Fed printing like it’s no tommorow, it’s like Obama never left! Trump is basically a 3rd Obama term!
That intervention started under Bush during the financial crisis. So it’s more like a 4th Bush term.
You seem to think facts matter. Doncha know that the recession is over and Trump rallies are resuming. Good times on the way. At least that’s what the MAGA twitter feed is full of.
If the stock market stays high, Trump stands a good chance of getting reelected. Anyone hoping Trump loses had better hope for massive market crash that stays low until after Nov.
The number of votes of successful investors and the number of votes of unhappy people is significantly different.
Dont persons fly from other countries to the USA? World reports highest number of COVID-19 cases in a single day, WHO says
Yes and yet we don’t mandate a quarantine period or pretend to check them for anything but their temp
As a cop said in this article: “Covid is over”. [lol]