Friday, April 2, 2010

400,000 new jobs and counting

The jobs news this morning can be summarized like this: in a welcome sign that the economy may finally be on the mend, jobs rose in March by 162K, but that was less than the 184K expected, and 48K of those jobs were new census workers; meanwhile the unemployment rate was unchanged at a very high 9.7%.

Or it could read like this: abstracting from census and other government workers, jobs rose in March for the third month in a row, as the private sector has now created a total of over 800K new jobs so far this year.

The difference between these two measures of jobs is the survey you look at. The first summary above came from the traditional survey of establishments, the second from the household survey. The latter has a good record over the years of picking up turning points in the economy ahead of the former. That's because it uses a telephone survey to get its data, whereas the establishment survey gathers data from existing businesses, and adds a guesstimate of how many new ones there might be. And as the chart shows, that makes a big difference. If the economy is turning up, the government is likely under-guesstimating the number of new businesses and new workers. (Both of the lines in the chart represent private sector workers only.)

But let's assume that even the household survey can have random blips, such as the 500K drop in private sector jobs in December, and the 550K jump in January. A conservative reading of the numbers would therefore conclude that new private sector jobs have increased by 400K so far this year, with 300K of those new jobs created in March alone. Any way you look at it, though, the number of jobs is clearly on the rise, so the outlook is likely to improve in the months to come.

The economy is now growing, and it's for real.


septizoniom said...

shall we say v shaped and be done with it?

Benjamin Cole said...

Well, better so-so good news than unrelenting bad news.
No recession last forever, even this one. I hope the recovery picks up speed rapidly.

I suppose in some regards, this so-so jobs report is good news for the stock market--the Fed can keeping pouring money on the economy full blast, and I hope they do (although the mysterious MZM, from the St. Louis Fed, seems to be contracting).

Interest rates near zero is where they belong.

As the global economy recovers, we will again see gluts of capital. This means interest rates will stay low. Inflation is dead.

This does set up for a boom in real estate and equities---though investors are wary of another financial system collapse.

Investors may also have fresh in their minds that real estate recently collapsed, and that equities have been a dog investment since 1999.

But where else to put your money?

John said...

Benj, In my book that's a pretty good assesment.

The lone exception, there were some decent markets during the period between 2003 and 2008. I had a couple of decent years in there. But it was like walking through a mine field. Something always seemed to be blowing up somewhere. Fortunately for me it always seemed to be 'over there'.....until 2008!

Cabodog said...

Didn't take long for "O" to take credit for it...

Benjamin Cole said...


For me, actual operating non-passive business seem to be the place to be.

Equities may have a run ahead--and ETFs make index investing easy. I have become disenchanted with being a public shareholder due to incredibly weak corporate governance. Sheesh, shareholders cannot even put up their own slates for board elections. Still, the sector as a whole may rally.

Land--I think now is a safe time to buy property--you sure are not buying at the top. Interest rates low for many years ahead.

II find operating land in Thailand a good investment. Make money while waiting for appreciation.

I like BP a few months back when it was yielding 9 percent.

It may be that passive investors have to settle for crummy returns for a long time. Too much capital chasing too few deals--that means low returns over time.

You can try to get in front of the herds.

John said...


I assume by non-passive you mean active as in small businesses. I would think there are many great opportunities there. I don't know of a good way to do that though unless you consider something ike an American Capital Strategies (acas-nyse) that does mezzanine financing to small businesses. I have a VERY small leftover position in it from the crash. It did great from 2002 until the Lehman fiasco.

I think you are absolutely right about land. If there is a special spot you've always wanted you may not get a better opportunity in your lifetime if you are anywhere near my age. Buyer's market for sure. And cheap money to boot. I got my spot too early. I overpaid but I really don't think the thing would have been on the market if the seller had not seen the tsunami coming. I saw it too but it got worse than I thought it would get. But I'm very happy with my special spot. The kids will dispose of it someday although they swear they won't now.

Speaking of the kids, we're leaving this afternoon to spend Easter with one of them. Happy Easter to you and your family - you too Scott.

DaleW said...

Nonfarm private payrolls rose by 123K for the month and are up 147K for the year, which annualized to 0.5% and 1.4%, respectively. Federal government payrolls were up 48K (Census) and state & local were down 9K. Average hourly earnings for private nonfarm workers fell 0.1% MoM, the first MoM decline since April, 2003. This was only the ninth time since 1964 (554 months) this measure declined on a MoM basis. Sure, the data can be read as positive, but the recovery is weak and deflationary last month, by my read.

brodero said...

Reagan's approval rating finally got above 50% when the unemployment
rate fell to 8.8%.....

Benjamin Cole said...


If you are still reading, Happy Easter to you as well, and anyone else reading.

This is a great blog, full of real info.

As for operating businesses, I mean you buy and run the business--not as a public shareholder.

In my view, passive investments will tend to become overinvested in the years ahead, due to gluts of capital. Too much capital chasing too few deals. This will lead to booms and busts, and generally lower returns.

Supply and demand--there is capital (supply) aplenty. That will lower returns--but should make for a good economy. I hope anyway.

juandos said...

Hmmm, so the following won't impact on future job growth, eh?

Courtesy of the WSJ: On top of AT&T's $1 billion, the writedown wave so far includes Deere & Co., $150 million; Caterpillar, $100 million; AK Steel, $31 million; 3M, $90 million; and Valero Energy, up to $20 million. Verizon has also warned its employees about its new higher health-care costs, and there will be many more in the coming days and weeks...

The idea that these clowns on the Hill and in the Oval Office don't have a clue about the real world won't impact on future employment possibilities, eh?

I mean just consider the babbling, moronic rantings of one Barry Sotero...

Personally I hope you're right about the numbers of new jobs...

Nadeem1414 said... it is a nice and splended view of beach, so the new about jobs it is a cream for unemployment.