An article on the real employment figures for the US from The Share Centre, Bears and Bulls column. The US is the real problem, economically, though the US has kept people focused on Europe’s problems. The US, like the UK has continued printing more debt (Quantitative Easing), which is only delaying the inevitable crash.
The myth behind US job figure
Friday 3 February, or Golden Friday as it was described here, saw the best collection of economic data released in a very long time, but perhaps the pick of the tops was the US job figures. Employment rose 243,000 in just one month, and the US unemployment rate fell to 8.3 per cent – the lowest level in three years.
But drill into the data, and suddenly the story does not look so good. In fact, it is tempting to say we were sold a lie.
Bear: The figures really are quite simple. In 2011, the civilian population of the US rose by 3,565,000, and yet the labour force only rose by 1,145,000.
In other words, last year 2,420,000 people dropped out of the US labour market.
According to Mike ‘Mish’ Shedloc and his MISH’S Global Economic Trend Analysis web site, when you take into account: US civilians who want a job, but have given up looking; people who dropped out of the unemployment list because their unemployment benefits ran out; those doing part-time work, but want permanent work, then the true US unemployment rate is 15.1 per cent.
And the US, just like the UK, is seeing real wages fall. Last year, US average hourly earnings rose by 1.9 per cent, but during the same period US inflation was 3.0 per cent.
Actually Mish is not alone in expressing fears about the misleading nature of US job data. He is joined in his lament by a certain B Bernanke.
Yesterday, the Chairman of the Fed told the US Senate that: “It is very important to look not just at the unemployment rate, which reflects only people who are actively seeking work.” He added: “There are also a lot of people who are either out of the labour force because they don’t think they can find work, or they are in part-time jobs.”