High Expectations for Jobs Numbers
This morning we got the release of the October jobs report, and it followed the hurricane-related very weak report that we got in September. This time, the reason actually was weather-related. Remember, they originally reported a decline of 33,000 in September. No one cared, though, because it was all about the hurricane. This month everybody was very optimistic; the consensus for October was 325,000 jobs.
Numbers Fell Flat
I was watching CNBC this morning and they were all trying to guess the jobs number. Everybody ended up being over. Rick Santelli’s estimate actually was 401,000, but most guys were somewhere between 350 – 400,00, so everyone on CNBC was more optimistic than the consensus. And then the number came out at 261,000. Everybody went over, so they all lost by the Price is Right rules.
Lowest Unemployment Since Dot Com Bubble
But beneath the surface, this is a weak report – even weaker than the 261,000 jobs that were reported. The unemployment fell to 4.1. That’s a new low for this cycle. You have to go all the way back to the dot com bubble to get an unemployment rate this low. I don’t know if Trump tweeted about it yet, but I’m sure he’s going to talk about it: “Oh this is great!” He’s going to take credit for the drop in the unemployment rate. But the problem is, the reason that the unemployment dropped was because so many people left the labor force
Largest Labor Force Exodus
We had 968,000 people leaving the labor force in October. This was the third largest monthly exodus ever, causing the number of Americans currently exiled from the labor force to hit a new record high – 95,385,000. The labor force participation rate plunged back down to 62.7% from 63%.
This is the exact same type of jobs numbers we were getting under Obama, where you’d have a falling unemployment rate because so many people were leaving the labor force and so many people were working part time. Candidate Trump was extremely critical of this:”The unemployment rate is the biggest con, the biggest fraud in history – unemployment is really 30-40-50% – the jobs are lousy, they are low paying, people are leaving the labor force!” Exactly what is going on today. Yet now, “Everything is great, the unemployment rate is low, it’s all thanks to me, and I’m doing a great job!”
This is a weak number. In fact, look at average hourly earnings. They were supposed to rise by .2% and they were flat. The only reason they were flat is because they rounded it up. Actually, average hourly earnings went down during the month of October. And this is not adjusted for inflation. These are just the earnings. So we know prices are going up and so earnings actually went down in October. Now year over year, we have an increase of earnings of 2.4%. I am sure the cost of living is up by more than 2.4%, regardless of what the CPI claims. So this is a weak report.