Recession Numbers Second Consecutive Month



Yesterday I was asked if the services ISM changed my view about the US being in recession. I responded that I wanted to see today's job report first.



Well I have seen it and the report is nothing short of a certified disaster.



Yes, Virginia, based on the household survey, and manufacturing reports, the regional Fed surveys the US is in recession.



The one survey that is different is the ISM services report. The question is why? This is speculation, but I believe ISM has too few companies in the survey, and perhaps large companies are still growing while medium and small-sized firms are not. The other possibility is the ISM report is an outlier for another reason.



Regardless, last month the the household survey had a decline of 195,000 jobs and this month the decline is 119,000. Thus, in the last two months, there are 314,000 fewer employed.



At turns, the household survey leads. I strongly suggest the economy has turned.



Jobs Report at a Glance



Here is an overview of today's release.





US Payrolls +96,000 - Establishment Survey

June revised lower from +64,000 to +45,000.

July revised lower from +163,000 to +145,000.

Three-month average is a weak +95,000 - Establishment Survey

US Employment -119,000 - Household Survey

US Unemployment Rate -.02 at 8.1% - Household Survey

The Civilian Labor Force fell by 368,000. Otherwise the unemployment rate would have risen.

Average workweek for all employees on private nonfarm payrolls steady at 34.4 hours

The average workweek for production and nonsupervisory employees on private nonfarm payrolls steady at 33.7 hours.

Average hourly earnings for all employees in the private nonfarm workers sector fell by 1 cent.

US Unemployment Rate -.2 to 8.1%

This month the number of people employed fell by 119,000.

In the last two months, the number of people employed fell by 314,000!

In the last year, the civilian population rose by 3,695,000. Yet the labor force only rose by 971,000.

This month the Civilian Labor Force fell by 368,000.

Last month, those "not" in the labor force increased by 348,000 to 88,340,000, another record high.

This month we set another record high with a whopping 581,000 dropping out of the labor force. If you are not in the labor force, you are not counted as unemployed.

In the last year, those "not" in the labor force rose by 2,723,000

Over the course of the last year, the number of people employed rose by 2,347,000.

Participation Rate fell .02 to 63.5%;

There are 8,031,000 workers who are working part-time but want full-time work, a decrease of 215,00. This one the only bright spot in the report.

Long-Term unemployment (27 weeks and over) was 5.033 million a decline of 152,000 (likely an artifact of the decline in the labor force).

Were it not for people dropping out of the labor force, the unemployment rate would be well over 11%.

Over the past several years people have dropped out of the labor force at an astounding, almost unbelievable rate, holding the unemployment rate artificially low. Some of this was due to major revisions last month on account of the 2010 census finally factored in. However, most of it is simply economic weakness.

August 2012

Jobs Report

Total nonfarm payroll employment rose by 96,000 in August, and the unemployment rate edged down to 8.1 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in food services and drinking places, in professional and technical services, and in health care.

Click on Any Chart in this Report to See a Sharper Image

Unemployment Rate - Seasonally Adjusted

Nonfarm Employment - Payroll Survey - Annual Look - Seasonally Adjusted

Nonfarm Employment - Payroll Survey January 2008 through July 2012 - Seasonally Adjusted

click on any chart for sharper image

Average Hourly Earnings vs. CPI

BLS Birth-Death Model Black Box

Do not add or subtract the Birth-Death numbers from the reported headline totals. It does not work that way.





Birth Death Model Adjustments For 2011

Birth Death Model Adjustments For 2012

Birth-Death Note

Household Survey Data

click on chart for sharper image

Those not in the labor force rose by 2,723,000

Discouraged workers stop looking for jobs People retire because they cannot find jobs People go back to school hoping it will improve their chances of getting a job People stay in school longer because they cannot find a job

Part Time Status

click on chart for sharper image

BLS Alternate Measures of Unemployment

click on chart for sharper image

Grossly Distorted Statistics