January employment stats: Middle class, markets down and out

New jobs creation way down in January, but unemployment rate down to 4.9%! Difference between DOL’s U-3 (fake) vs. U-6 (real) stats rears its ugly head again. Fun with oil and other rumors hit stocks Friday.

U.S. Bureau of Labor Statistics (BLS) chart illustrating January 2016 U-3 (reported) vs. U-6 (more accurate but not reported to the general public) unemployment rates.

WASHINGTON, February 5, 2016 – Confused U.S. stock markets are down again Friday as investors and supercomputers alike try to figure out just what the heck is going on with the economy. U.S. Bureau of Labor Statistics (BOL) payroll numbers for January show the economy added only 151,000 jobs last month—a huge miss in the already pathetic 190,000 job increase expected.

Meanwhile (late at night and out of sight), Q4 2015 job creation numbers were revised downward, something that’s rarely reported and never reflected in media reports lest they damage the routine lies of Obamanation. The net result of all this, of course—not to mention that oil’s recent rally shows signs of fizzling again—has sent markets down again.

Selling is accelerating as we near the noon hour. At 11:20 a.m. EST, the Dow is off 201 and sinking, the broader-based S&P 500 is off a nasty 29 points and change and the tech-heavy, small company-heavy NASDAQ is getting vaporized, off roughly 120 and fluctuating wildly even as we write this piece.

The key rottenness in the unemployment numbers is shown in the BLS chart we’ve reproduced below, which shows the difference between the fake BLS unemployment numbers the BLS, the Fed and the Administration tout publicly (U-3) and the arguably real unemployment rate (U-6) which includes people who’ve lost their unemployment benefits and are no longer counted as unemployed (!), the underemployed, the unwillingly part-time unemployed and those who’ve just given up (like West Virginia coal miners).

Full BLS chart, illustrating U-3 (official and fake) vs. U-6 unemployment rates. (Via dol.gov)
Full BLS chart for January 2016, illustrating U-3 (official and fake) vs. U-6 unemployment rates. (Via dol.gov)

U-6 is the real unemployment rate on this chart, not the bogus U-3 numbers. But for a variety of reasons, the White House (no matter which party controls it) always prefers those better-looking, fake U-3 stats. Making things worse, the government bases its massive social safety net, aka “entitlements,” on these numbers, too. Conveniently, the fake numbers they prefer are always lower (ditto with inflation measures), which enables the Feds to spend less on promised social programs while claiming they’re helping the beneficiaries.

But here’s what Obama’s current Secretary of Labor Tom Perez has to say about it all:

“The latest jobs report shows that our economy continued to recover in January, adding 151,000 jobs and extending the longest streak of private-sector job growth on record to 71 months. All told, 14 million private-sector jobs have been created since early 2010. The unemployment rate ticked down to 4.9 percent, and initial unemployment insurance claims remain near historic lows, with 285,000 initial claims during the week ending Jan. 30. Claims have been at or under 300,000 for 48 consecutive weeks, the first time that’s happened since December of 1973.”

Love that statement? Try this one out, think about it for a second, and then try not to laugh too cynically:

“Labor unions, meanwhile, remain a powerful force for shared prosperity, a fact confirmed once again by the release last week of the annual Bureau of Labor Statistics report on union membership. Median weekly earnings of full-time union workers ($975) were more than 25 percent higher than those of non-union workers ($776) in 2015. That amounts to more than $10,000 a year for hardworking Americans, and it puts upward pressure on wages and standards throughout the economy.”

As the Maven’s nephew used to text his uncle, ROFLMAO!* What Perez’ statement (likely written by unnamed minions) claims is beyond laughable. Union membership is at its lowest ebb ever. According to the most recent figures the Maven has seen, unions now represent only about 14 percent of the U.S. workforce. And—wait for it—a significant number of these unionized workers are employed by Federal, state and local governments. Which means that the bulk of the wage increases enjoyed by this “powerful force” are being paid for by U.S. taxpayers who are steadily losing ground to this bureaucratic monolith.

You’ve got to admit, this is an Administration that lies with boldness and style.

ZeroHedge breaks out numbers further, noting, among other things, the following facts:

“Employment in food services and drinking places rose in January (+47,000). Over the year, the industry has added 384,000 jobs.

“Health care continued to add jobs in January (+37,000), with most of the increase occurring in hospitals (+24,000). Health care has added 470,000 jobs over the past 12 months, with about two-fifths of the growth occurring in hospitals.”

In case it’s not intuitively obvious to even the most casual readers, what this pair of stats reveals is unpleasant indeed. First of all, the bulk of current employment increases are in the restaurant (food services) industry—low to minimum wage jobs by and large, save for a few swanky dining establishments here and there.

Second of all, and equally important, massive job increases continue to occur in the healthcare industry—jobs that are now, courtesy of Obamacare, paid for by you and me both via subsidies carved out of our income tax “contributions” as well as those ever-increasing health insurance premiums we’re forced to pay. Plus, lest we forget, periodic sneak attacks from those ever increasing deductibles embedded into those health insurance policies.

These, combined with never-mentioned hacks to the benefits paid out to Medicare beneficiaries, mean that most of these healthcare jobs are being massively and entirely subsidized by the average American citizen, drastically diminishing take home pay.

All these unpleasantries are hiding between the lines each and every month in these DOL and BLS reports, hidden by artful verbiage that’s convinced the average citizen that this misery and thievery is a feature not a bug. But collectively, it’s clear these latest numbers are bugging Wall Street which is now smelling recession even as the Feds seem set to increase interest rates anyway. Even Kafka likely couldn’t handle scenarios such as the ones we’re seeing in real life today. It’s as if the entirety of the Washington bureaucracy has turned into one of that author’s giant cockroaches.

Today’s minimal trading tips

Pile on to this off-again, on-again rumors that Turkey is set to invade Syria—which is pulling gold and oil prices one way or the other, depending on which rumor the machines believe—the market really remains too dangerous for investors, amateur and professional alike.

We still advise reducing positions where feasible, remaining in reasonably good quality preferred stocks and highly-rated, short term (less than 10 years to maturity) bonds, and even nipping into a bit of gold, which lately seems to be trying to respond in a normal way (trading up) to uncertain monetary and international situations.

Otherwise, nearly every brilliant maneuver tends to end up in the same place: utter failure. And that’s not what we need in our portfolios.

So, relax and have a good weekend, and get an early start on it.

*I.e., “Rolling on (the) floor, laughing my (derrière) off!”

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Terry Ponick
Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17