The April Jobs Report and My Encounter With Ben Bernanke – Ep 81

  • 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

Peter Schiff is an economist, financial broker/dealer, author, frequent guest on national news, and host of the Peter Schiff Show Podcast.

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