Monday, June 29, 2009


Greetings good citizen,

The mind is a funny thing as it is often only truly ‘aware’ of what’s going on in its immediate vicinity. Reports of other events elsewhere are usually accepted at ‘face value’. If the media reports things are going gangbusters, who are you to disagree?

And for a very long time now, the ‘news’ such as it is has seemed like it was being beamed in from another planet. I was consistently unable to independently verify the ‘robust’ economy boasted of by either Bush or Clinton.

The ‘Dot.gone’ era was particularly spooky because the markets were (like today) loaded with sky high share prices that had no basis in reality.

This was followed by the equally ‘funky’ real estate markets, where the words on everyone’s lips were, ‘Who the hell is buying this stuff at these prices?’. Like the dot.gone era, it was obvious there weren’t enough ‘qualified’ buyers for these prices to be realistic. (The 'housing boom' was also a 'symptom' of too much money seeking too little investment opportunity.)

A rather ‘simplistic’ but perfectly logical explanation for the ‘dot.gone’ era was the lack of investment vehicles juxtaposed against a glut of earnings among importers seeking ROI.

This explanation is eerily similar to why the Housing bust occurred. Although the housing bust had a decidedly ‘sinister’ backdrop to go with it and that was the raping of the world’s pension trusts, who were the largest buyers of ‘collateralized debt instruments’…

Well good citizen, if you too have been wondering whether all of the babbling about how ‘strong and vigorous’ our economy was unvarnished BS, then welcome to tonight’s offering . Where ‘job growth’, as measured over the past decade turns out to have been positively abysmal.

The Lost Decade... Part II

[Missed part one so this will have to stand alone…]

Earlier this week we took a look at the Lost Decade for the S&P 500. Business Week provides another lost decade... jobs (EconomPic detailed this trend at a higher level earlier this month):

Between May 1999 and May 2009, employment in the private sector only rose by 1.1%, by far the lowest 10-year increase in the post-depression period.

It’s impossible to overstate how bad this is. Basically speaking, the private sector job machine has almost completely stalled over the past ten years. [But you knew that. It’s not what the media was telling you but it jives with what your brain absorbed as what was going on around you…even if you didn’t consciously recognize it.]

The chart below shows the number of jobs added / subtracted by sector.

[Since we don’t have a ‘photo bucket’ to work with, I’m gonna have to do this the hard way.

Rising ‘sectors’ were : Private Health care, Food & Drink ‘places’, gov’t Edu, Professional & business ‘services’, Gov’t itself (except health care and Ed), Social Assistance (assumedly non-profits like shelters and food pantries…), ‘Private Education’ (albeit modestly), Arts & Entertainment, Gov’t health…(which is a bit puzzling as Gov’t health is ‘excluded’ elsewhere) he last two sectors to ‘grow’ over the past decade are mining and financial services.

Shrinking sectors (otherwise known as ‘losers’) are as follows: Transportation & Warehousing (bigger vehicles and less inventory ‘on hand’ have cut into both sectors), Retail (which is a bit worrying given our ‘shopping mall’ economic model.), Accommodations (as teleconferencing ‘replaces’ face to face meetings.), Wholesale, another disturbing sign that illustrates the collapse of distributor networks.) Construction (largely due to ‘overbuilding.) Information and last but not least Manufacturing both of which have sustained heavy losses due to ‘off-shoring’.

The graph shows roughly how much each sector gained or lost respectively.]

Health care, education, and government sectors added a total of ~7mm jobs over the past 10 years. Everything else? A drop of almost ~4mm.

Do you agree with the above conclusion or does it look like the author ‘mis-read’ the graph?

If you click on the link and look at the graph, Manufacturing has lost more than 5 million jobs by itself!

While the ‘gain’ looks pretty close it behooves us to pay attention to where most of the gains have been made.

The leader is ‘private health care’ with what I’d ‘eyeball’ to be a gain of roughly 3 and a half million jobs ‘in the past decade’. Think about that, we aren’t talking the last quarter or even all of last year, we’re talking 3.5 million jobs over the past ten years combined!

If we ‘eyeball’ the next two, the ‘hospitality’ industry edged out the Education market by what looks like a hundred thousand or two jobs as both are on either side of the two million jobs mark. And this indeed gives us roughly 7 million in the ‘plus’ column.

The other six ‘up’ sectors don’t look like they’d add up to a whole million jobs combined.

Let’s return to our ‘minus’ side of the puzzle and ‘eyeball’ what the losing side looks like again.

The biggest single loser is manufacturing, hands down, at roughly 5 and a half million…but it looks like losses in IT are up there a little bit too. Maybe another half a million…on the other hand, ‘in-sourcing’ has been the big trend in IT via the H1B Visa program. So this quarter of a million may be larger than it appears.

Then we arrive at the ‘construction’ numbers. You know and I know that construction is ‘flat’ and has been for over two years…yet they have shed only…what’s it look like to you, a hundred thousand or maybe a hundred and fifty…over the last decade!

Well, if we use the BLS ‘Birth/Death’ model then there’s a new construction company opening every other week and it hires at least 20,000 men (to work on who knows what…)

Sorry good citizen but even this data from Business Week shows signs of being heavily ‘massaged’.

And in the meantime the news reports continue to be far removed from reality as you actually encounter it.

Perhaps most perplexing is how every week the labor markets shed over 600,000 jobs yet when we get to the monthly figures it magically shrinks to six hundred thousand or less.

There aren’t any jobs in the papers…so where are these two million laid-off workers finding work?

What industry is prospering when so many of us are hurting for income?

Are all of these ‘displaced’ workers finding jobs with the ‘aid’ organizations they appeal to? Which is pretty incredible because we’re talking about roughly two million people that definitely got the axe during the month but somehow miraculously ‘disappear’ when the ‘first Friday’ of the following month rolls around.

Understand what I’m saying good citizen, since the beginning of the year the ‘weekly average’ of job losses has been in the six hundred thousand range…while the monthly average has been reported to be around the six hundred thousand mark total.

Unless the people at the BLS can’t add, there is something very wrong here, beginning with the ‘assumption’ that the missing two million workers found jobs between the time they were laid off and the next reporting period.

I’m here and willing to listen to any potential explanation, theory or speculation regarding the unemployment number conundrum, which is shrouded in enigma and wrapped in mystery…

Thanks for letting me inside your head,


No comments:

Post a Comment