- First official jobs report of Q2
- Wednesday’s ADP private payrolls were below expectations
- March was revised down, indicating a softer labor market
- Challenger job cuts numbers well above previous month, biggest year over year increase in 10 years
- The jobs number came in at 222,000 jobs with unemployment down to 5.4%
- The media is spinning the headline number
- The picture underneath the jobs report is not as nice
- The March downward revision by 41,000 jobs causes one to question whether today’s job number will be revised downward given all the negative underlying data
- The stock market recognized this; sensing the Fed will remain on pause
- Average Hourly Earnings increased only .1%, half expectations
- Numbers of Americans who have left the labor force is now at a record high
- When employers are changing the nature of the workforce replacing full time workers with part time workers it distorts the net number of jobs
- The Household Survey indicates the breakdown of full time vs. part time
- The government makes no such distinction
- In April we created 437,000 part time jobs – biggest gain in part time employment since last June
- The number of full time jobs declined by 252,000 – the biggest drop of the year
- The bad news of full time job loss is buried beneath the superficial layer of part time jobs
- The demographic breakdown indicates workers 55 and older gained 266,000 jobs in April
- Workers 25 – 54 lost 19,000 jobs
- This blows a hole in the notion that labor force participation is going down because of retiring baby boomers
- Other bad news to hit this quarter’s GDP:
- Wholesale Trade numbers: inventories expected to rise by .3% but rose by .1% – smallest gain since March of 2013
- Wholesale Sales expected to break 3-month losing streak; instead increasing streak to biggest year over year decline since November of 2008
- Earlier in the week, Q1 Productivity down 1.9% following 2.1% decline last quarter
- Unit Labor Costs rose more than expected +5%
- Challenger numbers show a big explosion in layoffs
- The reality is that the economy is weakening rapidly
- The Fed and the media don’t want to acknowledge this because they are afraid of how the market will react
- Recent encounter with Former Fed Chairman Ben Bernanke
- Ben Bernanke was a speaker at the SALT conference
- I introduced myself to him after his presentation, told him “I am probably your biggest critic.”
- He responded, “You have a lot of competition.”
- Later that evening at a cocktail party I approached him and he offered to pose for a photo.
- Photo got more views and likes that most other photos on Facebook
- I tried to give him a cliff’s notes version of my take on the Fed’s part in the housing bubble
- Bernanke blamed regulations, Fannie & Freddie and the sub-prime mortgages
- I said the Fed created the conditions for Sub-Prime mortgages because low interest rates made them affordable
- I asked why he did not warn us in advance of the regulations, Fannie & Freddie and the Sub-Prime Mortgage business?
- Bernanke originally denied the housing bubble existed
- Ben Bernanke had no clue that the Fed’s policies created the bubble even after it burst
- In hindsight, he lays blame on aspects of the market that he should have identified in advance
- I asked him, “how can can you be sure you were right, when interest rates are still at zero and the Fed’s balance sheet still hasn’t shrunk?
- Is there anything that might change your opinion that your decisions were right?
- He evaded the answer, but I believe he was sincere about his opinions
- Later that evening, people came up to me and commented that they appreciated the views, but that Ben Bernanke was strongly disagreeing with me
- Bernanke will not hold the title of worst Fed Chairman because the worst is yet to come when Janet Yellen takes us into QE4
