Mish's Global Economic Trend Analysis |
- Spain's Bad Bank "FROB" Admits More Taxpayer Bailouts Likely
- Enormous Discrepancy Between Jobs and Employment Continues
- Beneath the Headline Numbers, Not a Good Jobs Report
- Japan's Prime Minister Wants New Secrecy Laws; What's a Secret? Anything He Wants To Be Secret
| Spain's Bad Bank "FROB" Admits More Taxpayer Bailouts Likely Posted: 06 Dec 2013 04:44 PM PST Via translation from Huky Guru's Blog in Spain please consider statements by the president of the "FROB" regarding taxpayer support of the "bad bank". The president of the Fund for Orderly Bank Restructuring (FROB), Fernando Restoy, said "resolution does not guarantee recovery of all public support". Restoy advocates "steps to minimize costs to the taxpayer". Restoy calculates pubic aid (so far) at 6% of GDP while Guru calculates Spanish Bank Bailout Funding at 22% of GDP. Guru states the FROB croaked 26 billion euros in 2012 and 10 billion euros in 2011. Guru complains, and rightfully so "Until recently they even sold us the idea that we were going to make money. Now the question we ask is whether we will recover anything." Indeed. Spanish taxpayers are again on the hook for more "support". But why the announcement now? I can offer three possible reasons.
My bet is on door number 3, or possibly a combination of door number 2 and door number 3. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Enormous Discrepancy Between Jobs and Employment Continues Posted: 06 Dec 2013 11:56 AM PST Now that employment distortions related to the government shutdown in October are behind us, let's take a detailed look at the recent and growing discrepancy between jobs as reported on the establishment survey and employment as reported on the household survey. Jobs vs. Employment Discussion Before diving into the details, it is important to understand limits on data, and how the BLS measures jobs in the establishment survey vs. employment in the household survey. Establishment Survey: If you work one hour that counts as a job. There is no difference between one hour and 50 hours. Establishment Survey: If you work multiple jobs you are counted twice. The BLS does not weed out duplicate social security numbers. Household Survey: If you work one hour or 80 you are employed. Household Survey: If you work a total of 35 hours you are considered a full time employee. If you work 25 hours at one job and 10 hours at another, you are a fulltime employee. Household Survey vs. Establishment Survey  Over time, and with revisions, the two data series move in sync (as they should in normal conditions):
However, there has been a serious discrepancy between the two data series in the last year that is not apparent in the above chart. A few tables will show what I mean. Household vs. Establishment Year-Over-Year Comparisons
Household vs. Establishment Year-Over-Year Averages
Household vs. Establishment Month-Over-Month Changes
The third table shows the volatile nature of the data, especially the household survey. It's the second table that is the important one. Take special note of the bottom two lines in the second table. Until this past year, the establishment survey and household survey moved tightly. In the last 12 months, the payroll survey averaged a gain of 191,000 jobs a month while the household survey averaged less than half of that at 92,000 jobs per month. Blame Obamacare Obamacare is the most likely explanation for the discrepancy. Recall that the definition of fulltime under Obamacare is 30 hours, but fulltime to the BLS is 35 hours. Next, consider what happens under Obamacare if someone working 34 hours is cut back to 25 hours, then picks up another parttime job. Obamacare Effect Prior to Obamacare 34 hours worked = 1 parttime job household survey 34 hours worked = 1 job establishment survey Enter obamacare Person cut back to 25 hours and takes a second job for 10 hours Here is the new math 25 + 10 = 1 fulltime job on the household survey. 25 + 10 = 2 jobs on the establishment survey. In my example, the household survey totals up all the hours and says, voilla! (35 hours = full time). So a few extra hours that people pick up working 2 part time jobs now throws someone into full time status – thus no surge in part-time employment, but there is a surge in jobs. I commented on this discrepancy last month and repeat my claim again today. Request to ADP To prove my thesis, we need to weed out duplicate social security numbers. The BLS can't, but ADP can. I contacted them twice but to no avail. I would like ADP to crunch the data and determine how many duplicate social security numbers show up vs. the same months in prior years. If I am wrong it won't be the first time. But let's have a look at the numbers and see what they say. For further discussion and a synopsis of what really happened in today's job report, please see Beneath the Headline Numbers, Not a Good Jobs Report Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Beneath the Headline Numbers, Not a Good Jobs Report Posted: 06 Dec 2013 08:48 AM PST Initial Reaction Some of the skew in last month's job report related to the government shutdown was taken back today, as expected. The labor force stats and participation rate were exceptions, and details reveal much weakness.
Ignoring the decline and the rise in employment over the past two months, the huge discrepancy between the household survey and the establishment survey persists. In essence, this was a bad report, with people dropping out of the labor force like mad. Revisions This was the fifth straight month of revisions to the establishment survey but the revisions were relatively minor. The change in total nonfarm payroll employment for September was revised from +163,000 to +175,000, and the change for October was revised from +204,000 to +200,000. With these revisions, employment gains in September and October combined were 8,000 higher than previously reported. Explaining the Unemployment Rate
Employment rose more than the labor force, so the unemployment rate fell as further explained in my "initial reaction" above. October BLS Jobs Statistics at a Glance
Additional Notes About the Unemployment Rate
November 2013 Jobs Report Please consider the Bureau of Labor Statistics (BLS) November 2013 Employment Report. The unemployment rate declined from 7.3 percent to 7.0 percent in November, and total nonfarm payroll employment rose by 203,000, the U.S. Bureau of Labor Statistics reported today. Employment increased in transportation and warehousing, health care, and manufacturing. Click on Any Chart in this Report to See a Sharper Image Unemployment Rate - Seasonally Adjusted  Employment History Since January 2009  click on chart for sharper image Change from Previous Month by Job Type  Hours and Wages Average weekly hours of all private employees rose 0.1 to 34.5 hours. Average weekly hours of all private service-providing employees rose 0.1 to 33.3 hours. Average hourly earnings of production and non-supervisory private workers rose $0.03 to $20.28. Average hourly earnings of private service-providing employees rose $0.03 to $20.09. Real wages have been declining. Add in increases in state taxes and the average Joe has been hammered pretty badly. For 2013, one needs to factor in the increase in payroll taxes for Social Security. For further discussion of income distribution, please see What's "Really" Behind Gross Inequalities In Income Distribution? BLS Birth-Death Model Black Box The BLS Birth/Death Model is an estimation by the BLS as to how many jobs the economy created that were not picked up in the payroll survey. The Birth-Death numbers are not seasonally adjusted, while the reported headline number is. In the black box the BLS combines the two, coming up with a total. The Birth Death number influences the overall totals, but the math is not as simple as it appears. Moreover, the effect is nowhere near as big as it might logically appear at first glance. Do not add or subtract the Birth-Death numbers from the reported headline totals. It does not work that way. Birth/Death assumptions are supposedly made according to estimates of where the BLS thinks we are in the economic cycle. Theory is one thing. Practice is clearly another as noted by numerous recent revisions. Birth Death Model Adjustments For 2012  Birth Death Model Adjustments For 2013  Birth-Death Notes Once again: Do NOT subtract the Birth-Death number from the reported headline number. That approach is statistically invalid. In general, analysts attribute much more to birth-death numbers than they should. Except at economic turns, BLS Birth/Death errors are reasonably small. For a discussion of how little birth-death numbers affect actual monthly reporting, please see BLS Birth/Death Model Yet Again. Table 15 BLS Alternate Measures of Unemployment  click on chart for sharper image Table A-15 is where one can find a better approximation of what the unemployment rate really is. Notice I said "better" approximation not to be confused with "good" approximation. The official unemployment rate is 7.0%. However, if you start counting all the people who want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6. U-6 is much higher at 13.2%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years. Labor Force Factors
Were it not for people dropping out of the labor force, the unemployment rate would be well over 9%. Grossly Distorted Statistics Digging under the surface, much of the drop in the unemployment rate over the past two years is nothing but a statistical mirage coupled with a massive increase in part-time jobs starting in October 2012 as a result of Obamacare legislation. Digging beneath the surface, the snap-back from the government shutdown was nowhere near as strong as it should have been in the household survey. More on the the discrepancy between the two reports shortly. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Japan's Prime Minister Wants New Secrecy Laws; What's a Secret? Anything He Wants To Be Secret Posted: 06 Dec 2013 07:24 AM PST I would like to use the word shocking, but hardly anything any government does anymore is shocking. The best I can hope for is Japanese citizens are disgusted enough to boot their fascist, economically illiterate prime minister before its too late. Unfortunately, I highly doubt that happens. Please consider Japan's Abe Seeks to Pass Secrecy Bill That Sapped Support Japan's government will move today to pass a bill granting it sweeping powers to declare state secrets, a measure pushed by Prime Minister Shinzo Abe to boost ties with the U.S. even as it sapped his public support at home.US War-Mongers Support Abe Also disgusting (and also not surprising) is support for secrecy laws from US warmongers and NSA defenders. Please notice that the secretary general of the LDP, wrote a blog post Nov. 29 likening those who demonstrate against the bill to terrorists. Does that remind you of anything? Goering at the Nuremberg Trials Please recall what Reichsmarschall Hermann Wilhelm Göring (in English his name is also spelled as Hermann Goering) Nazi founder of the Gestapo, Head of the Luftwaffe, said at the Nuremberg Trials. Here is a clip of the interview in Goering's cell in prison, after the war. Göring: Why, of course, the people don't want war. Why would some poor slob on a farm want to risk his life in a war when the best that he can get out of it is to come back to his farm in one piece? Naturally, the common people don't want war; neither in Russia nor in England nor in America, nor for that matter in Germany. That is understood. But, after all, it is the leaders of the country who determine the policy and it is always a simple matter to drag the people along, whether it is a democracy or a fascist dictatorship or a Parliament or a Communist dictatorship.And now we are told by charismatic politicians that we are under attack. We must give up our constitutional rights to prevent further attacks. [And we need more secrecy too.] Adding an additional note about secrecy, the above is a portion of my November 1, post What's the Greatest Threat to Our Constitutional Rights? Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
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