“If you tell a lie big enough and keep repeating it, people will eventually come to believe it.” Joseph Goebbels
I dislike giving the employment report any acknowledgment because the report is constructed for the purposes of political expedience. But I can’t help posting a few comments because, once again, the non-farm payroll report for June showed significant growth in sectors of the economy for which real world business economic reports showed economic contraction. The headline number purports that the 222k new jobs were created in June. This wailed on the consensus estimate of 170k.
The Government attributes 16k in new jobs to the construction industry. How can this possibly have been the case when construction spending declined 4.4% on a quarterly basis for April and May? Moreover, housing starts have been declining for the past few months, including June. Unless there’s a new model for running a business, contracting economic activity is accompanied by payroll cost-cutting. The number is just not credible. Same with retail, for which the Government wants us to believe that 8100 jobs miraculously were created despite the fact that retail stores are being closed at one of the fast rates in history.
Then there’s the nefarious “birth/death” model, which guesstimates the number of jobs created by new companies started in June net of jobs lost from new businesses closed in June. I have news for the Bureau of Labor Statistics: new business formation, according to Gallop, is at a 40-yr low. Furthermore, potential business owners are less likely to risk borrowing money for a new business when the cost of borrowing is increasing. This may be due to the fact that more people are interested in creating a new modern bookkeeping business that could help aid those new businesses. Nevertheless, some new businesses are looking to start their adventure in the market. While some new business owners may forgo borrowing money; others may venture into the borrowing world to start their business. These owners may find that using a cheap accountant service could help to keep them on top of their expenses and ensure that their business stays afloat. As for the guesstimation on the number of jobs created by new companies? Maybe the BLS statisticians forgot about the Fed interest rate hikes and forgot to plug the higher cost of capital in to their new business formations blender. The B/D model attributes 102k new jobs from new businesses net of business deaths. To convolute their reporting Hmmm…23k of those came from construction…need I say more?
The above commentary is a preview of this week’s Short Seller’s Journal.
The ultimate contrarian indicator opened his mouth
Monday. Dennis Gartman said that gold will start to move
quietly higher. I knew the moment I read that it was going
to take a hit. I love the accuracy that Gartman provides.
Dave, a big reason for these fake stats is to give them ammunition for force PM’s lower.
I agree with all your comments Dave, however I do not think you can deny that the labor markets are tight. Very tight I’ve heard in your home state. I suppose it’s about the participation rate declining? How do people get by without working? Seems like we would see a flood of beggars, since unemployment benefits only last so long. Bottom line, something does seem positive regarding employment in this low-growth environment.
No the labor market is not tight. That’s pure propaganda. You can get a job if you can program software for video games and apps. General white collar jobs are very hard to get even in Denver. The waiter/bartender job mkt might be tight but that is changing now that retailers are dumping employees every day – here in Denver. My fiance’s kid is home from college and it was struggle to find a job delivering pizza.
Here’s how you can live w/out a job: find a lawyer who specializes in social security disability. He’ll come up with a reason you can’t work, probably has a doctor on the dole who will write the report and then there’s a 90% chance you can get it. Or apply to an online school that qualifies for student loan funding and you can borrow your entire education + expenses. There’s other ways to do it as well via Govt entitlement programs. Why do you think there’s a record number of Americans who get food stamps? Obamacare medicaid is available to anyone who has AGI below the poverty level.
And there’s more. Just got this color from a subscriber in the real estate business in Denver: “I also am hearing of lost jobs here in Denver where federal job openings are not being filled. My federal working friends say they are laying off already with the fed budget expected to go through. If it goes as projected, lots of fed jobs are going away here in Denver.” I’m saving her housing market color – which will raise eyebrows among housing mkt bulls – for my SSJ subscribers.
Whoever fed you the “tight job market in Denver” narrative was feeding you fake news CNN-style.
Also, I happened to hear a millennial in my building at the pool today explain to his babe that the only way he could get a real job is to start his own business…The population demographic of my building is primarily the absolute stereotypical millennial.
Tight job market in Denver…ROFLMAO
I heard the news about a tight labor market in CO from NPR I think, related to the fact that “because the labor market was so tight” they were removing drug tests that identified mariuana use, because it was eliminating their labor choices…..beggars cant be choosy type thing. Maybe just BS like you said, but the verdict is still out for me. Maybe pure propaganda sometimes, if they are pointing to the BLS numbers, but in other cases, when refering to local situations, like when I see helped wanted signs all over the place (granted low end jobs), it does lend some credence to the tightness stance.
NPR? Ya no propaganda there (note: intense sarcasm). I guess you would have a better perspective than me since I live IN Denver and you live out of State and I have at least 3 real world examples. Good call. Psst…I heard TSLA was cheap after last week….
No “help wanted” signs point to jobs that pay less than not working and signing for Govt assistance.