Employment: The Happy Dance

Friday and over the weekend the Obama administration and much of the news media were doing the happy dance over the monthly employment numbers.

The release was on Friday, when the stock markets were closed for a Christian holiday. The S&P 500 e-mini futures reacted as though the numbers were good news.

They weren't.


First, I discount the unemployment percentage (9.7%). It's based on a reading of the psychological state of workers -- are they seeking work or not. Researchers can't know that, really.

I focus on the number of non-farm payroll jobs created, and that's where the happy dancers trip up.

The non-farm payroll part means the jobs aren't in agriculture, government, private households or non-profit organizations. Think of it as jobs in the private sector.

There were 162,000 private sector jobs added, and that's less than the 200,000 job consensus forecast. Normally, a 19% shortfall is punished by the markets.

Federal government employment also rose, mainly because census workers were hired. This is the most temporary of temporary jobs. You work for a few months, and then you're laid off for 10 years. It doesn't count.

Moreover, the economy needs to add 150,000 jobs a month just to stay even, to provide work for new entrants into the workforce.

That gives a net gain in the private sector of maybe 12,000 jobs. Is that worth a happy dance?

I think not. New jobs are a welcome thing, but 12,000 jobs net does not a recovery make.

The Obama team certainly has motivation to do the happy dance -- the better people think things are, the better the Democrats political fortunes.

Reporters writing about the jobs numbers also can point to self-interest. The "things are getting better" narrative has been dominant for weeks, and you generally can't go wrong as a reporter if you write within the dominant narrative. Contrarians have problems with their bosses.

Does the happy dance serve the public interest? I think not. I believe in fact-based trading, and fact-based living for that matter. The happy dance may be an aesthetic expression of joy, but it's not a matter of facts.

Friday's Bureau of Labor Statistics employment situation report.

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