Here's What Wall Street Is Saying About Today's Terrible Jobs Report

[bsteadman]

Here's What Wall Street Is Saying About Today's Terrible Jobs Report

Business Insider
Matthew Boesler
1/10/2014

Excerpt:

The commentary is pouring in from Wall Street strategists and economists about today's release of the December jobs report, which estimated that only 74,000 workers were added to nonfarm payrolls last month — well below the consensus prediction of 197,000.

Here is what they are saying:

Alan Ruskin, global head of G-10 FX strategy at Deutsche Bank: "One of the most confusing employment reports in quite a while. Most of the report is very weak, with the notable exception of the most important single variable, the unemployment rate. It does seem like weather influence in the report, most obvious in the fall in construction, that is likely representative of negative weather effects elsewhere. Most sector payrolls were weak, with the exception of retail trade — that bodes well for the strength of the consumer. The data will make both policymakers and the market take a pause for thought. Since bond bears were obviously dominant, it is no surprise to see a large positive Treasury bond response. However, in most markets I would expect limited follow-through from here, since it is extremely doubtful that the 87,000 private payrolls number is anywhere close to representing the underlying growth picture, while the 6.7% has again been achieved in the main by a slide in the participation rate and probably overstates strength. Nonetheless, in coming months, it is the faster unemployment rate downward trend that is likely to be sustained, much more than weak payroll growth."

Jan Hatzius, chief economist at Goldman Sachs: Even taking into account the effects of weather, Hatzius calls the report "still a fairly sizable disappointment," and the report is "definitely weaker beyond that factor," according to Bloomberg. Hatzius also says that because the decline in labor force participation rate accounts for the entire decline in the unemployment rate, it shows how "relatively poor" an indicator of labor market conditions the headline unemployment rate actually is.

David Ader, head of government bond strategy at CRT Capital: "A weak gain of course, with the oddity of the drop in the unemployment rate a function of a drop in labor participation, so people leaving labor force, and so not a strong sign. The Fed recognizes this, and while 6.5% might be the threshold idea, we can offer that as the drop is due to participation, the Fed will offer a lower threshold de facto. Weather clearly had an impact, with 273,000 out due to weather, really twice the norm, and so seasonals are a function here. Still, drop in work week and soft wage gains are there. Bottom line — taper is a bit up in air, but we think they will taper at a soft level (no more than $10 billion) as weather is such a factor. Our odds have shaved down from near 100% to more like 70%, however. They won't accelerate, of course. Note market bid but inhibited by the last FOMC day's closing levels (our target you may recall)."

Ted Wieseman, economist at Morgan Stanley: "Weather was an important contributor to the softness in December payroll job growth, but not enough to explain all of the softness. Construction payrolls fell 16,000, which we estimate is consistent with about a 30,000 weather drag (note that ADP, which has trouble with short-term disruptions, badly missed this, forecasting a 48,000 construction job gain). Leisure and hospitality, which includes some weather-sensitive outdoor areas, rose a sluggish 9,000, reflecting perhaps a 10,000 weather drag. Other weather impacts in less directly impacted areas may have brought the overall weather drag to 50,000 to 75,000. There was major confusion in the market after the report in interpreting the BLS' count of people not at work because of bad weather. This is a measure in the household survey that is indicative — and only indicative — of weather impacts on the report. 273,000 people with jobs didn't work in the December survey week because of the weather. Note that THESE PEOPLE HAD JOBS. So obviously this household survey gauge can't just be subtracted from the establishment payroll count. Also, that number is always high in December: 273,000 compared with a 20-year average of 135,000. Our past work has indicated that amount of elevation versus average in this HOUSEHOLD SURVEY gauge of PEOPLE WHO HAD JOBS is consistent with roughly a 50,000 to 75,000 weather drag on ESTABLISHMENT SURVEY growth in NET NEW JOBS."
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View the complete article at:

http://www.businessinsider.com/wall-...-report-2014-1

[bsteadman]

Economy Adds Only 74,000 Jobs in December

Breitbart / Big-Government
Peter Morici
1/10/2014

Excerpt:

The economy created only 74,000 jobs in December, well below the 2013 average of 188,000. The Labor Department report indicates stronger growth for the coming year predicted by many economists may not materialize.

Growth slipped to 1.9 percent last year, thanks to the $200 billion January tax increase and sequestration spending cuts; this is simply not enough to bring unemployment down to an acceptable level, support strong wage gains, and reduce income inequality.

This report indicates that neither the economy nor the job market have shifted into high gear as the White House preaches and private economists who flack for the Administration have claimed.

Unemployment dropped to 6.7 percent because 525,000 additional unemployed adults were discouraged and did not seek a job. Also, many prime working-age adults remain stuck in low-wage, part-time jobs with few or no benefits.

Factoring in those frustrated adults, the jobless rate rises to 13.1 percent. The economy needs to add about 365,000 jobs each month to push unemployment down to about 6 percent and provide those folks with decent paying, full-time employment. That would require GDP growth in the range of 4 to 5 percent.

Over the last four years, the pace has been a paltry 2.3 percent, but much stronger growth is possible. During the Reagan recession of the early 1980s, unemployment peaked at a much higher level than during the recession Obama inherited, and GDP advanced at 4.9 percent over the comparable period of recovery.

Slow growth and weak demand for labor are among the primary causes of wage stagnation, inequality, and worsening conditions for families at the lower end of the income ladder. Retailers catering to those families, such as Family Dollar Stores, Sears, and K-Mart, had weak holiday sales. In the year ahead, price cuts and even thinner margins will be necessary to sustain their sales as the outlook for their customers remains poor.

The defining difference between the recent recovery and the strong record of the 1980s has been the Obama Administration’s reliance on policies that simply address the symptoms of economic stagnation, such as the expansion of Medicare, longer unemployment benefits, and support for a higher minimum wage.

Washington has failed to confront structural issues that cause subpar growth, chronic unemployment, income inequality, and poverty. Important among those are inefficient and dysfunctional government regulation of business; prohibitions on domestic petroleum development off the Atlantic, Pacific, and Eastern Gulf Coasts; and protectionist policies in China and elsewhere in Asia that limit market opportunities for competitive U.S. products.

U.S. automakers are essentially blocked from selling American-made vehicles in China’s huge market, even though Chinese manufacturers are terribly uncompetitive. U.S. carmakers are compelled to form joint ventures and share know-how with Chinese partners to produce and sell in the world’s second largest economy. These and similar restrictions steal millions of American jobs in the auto and supporting industries like electronics, metals and plastics, and computer software.
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View the complete article at:

http://www.breitbart.com/Big-Governm...bs-in-December