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That Was One Weird Jobs Report

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That was one weird jobs report.

The labor department released the November employment data on Friday. The numbers simply don’t make any sense. As one chief investment officer put it, “One of the weirdest reports I have ever seen.”

One thing seems pretty certain. The labor market has not recovered, no matter how the powers that be spin the numbers.

The headline number was extremely disappointing. The US economy added just 210,000 non-farm payroll jobs. It was the lowest level of job growth since last December. The consensus expectation was for an increase of 550,000 jobs.

But the unemployment level plunged to a 21-month low of 4.2%. That was down from 4.6% in October.

Of course, President Biden chose to focus on the low unemployment rate, not tepid job growth. He took to Facebook and bragged, “Today, we received incredible news that our unemployment rate has fallen to 4.2%. At this point in the year, we’re looking at the sharpest one-year decline in unemployment ever.”

The Biden administration has been bragging about this incredible economic recovery. But a look at this chart reveals that the labor market is far from “recovered.”

The number of people in the labor force rose from 161,458 million to 162,052 million, boosting the labor force participation rate from 61.6% to 61.8%. But that is nowhere near prepandemic levels.

Simply put – a lot of people have dropped out of the workforce. Employment remains 3.9 million jobs below the peak in February 2020.

Meanwhile, companies can’t find enough people to fill open positions.

Why aren’t people going back to work? That’s a good question. It could be because there is still plenty of government stimulus money sloshing around out there in the economy. It could also be because of the fake wealth effect created by the booming stock market thanks to the Fed’s manipulation of interest rates.

When you parse out the numbers, they don’t make a whole lot of sense. Unemployment is falling and labor force participation is rising, but the economy isn’t adding very many jobs. Companies can’t find people to fill open positions, and yet 5.9 million Americans who aren’t in the labor force claim they want jobs. That’s up 849,000 since February 2020. These people are not counted as unemployed because they were not actively looking for work during the four weeks preceding the survey or they said they were unavailable to take a job.

No wonder analysts call this weird.

The news wasn’t terribly good on the wage front. Inflation continues to squeeze consumers’ pocketbooks, but wages aren’t keeping up. Average hourly earnings were up 4.8% on an annual basis, missing expectations of 5.0%. Keep in mind, inflation is running over 6% annually. This pours cold water on the narrative that inflation is really good for the working person.

So, how are Americans keeping up with rising prices? It appears they are turning to credit. Credit card debt is surging and a survey showed that nearly half of American consumers plan to pay for holiday expenditures using “buy now, pay later” options.

It’s not easy to make sense of this Labor Department report, but one thing is clear: the job market hasn’t “recovered.” There may well be some structural changes going on that we can’t even put our fingers on yet. And the idea that the economy is now boomings is a complete myth. No matter how Biden and his minions spin the numbers, you’ll find cracks in the foundation if you just look hard enough.

One thing seems clear to me: the current trajectory isn’t sustainable.

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About The Author

Michael Maharrey is the managing editor of the SchiffGold blog, and the host of the Friday Gold Wrap Podcast and It's Your Dime interview series.
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