Behind the Dismal Employment Numbers, Rogue Wave Coming

[marmar]

from Minyanville:



Behind the Dismal Employment Numbers, Rogue Wave Coming
By Lee Adler Jul 11, 2011 11:00 am


Ready to get more depressed? In historical context, Friday's jobs data are even worse than you think.


I warned on Thursday that regardless of what the government numbers would show, the jobs situation was deteriorating badly. Based on real-time federal withholding tax data, there have been virtually no job gains since last year.

Here’s an excerpt from that report:

Month to date withholding taxes as of the end of June were down 4.6% from last year. Some of that was due to a calendar anomaly of a payment date for a biweekly and semimonthly pay period last year coming on June 1. That resulted in June receipts last year being inflated, making this June look worse than it was. A 4.6% drop would imply an economic collapse. In actuality it’s more of a stall, although I expect it to spiral down from here.

As shown on the chart below, tax receipts over 2 week rolling periods have again opened a lead versus last year, although the monthly averages are about even. In view of the fact that tax receipts were consistently running well ahead of the same point last year from February through May, the sharp drop in June suggested that the US economy may already be in recession. That becomes a little clearer when looking at the comparison in real terms, adjusted for wage increases (though small) as shown on the next chart. Given the ending of POMO and government spending cuts ahead, I expect this comparison to soon go negative.



Chart data through July 5

(6/24/11) Normal seasonality shows a flat period through Q3, with a final low in September/October. If this graph drops below last year’s level from here, then the economy probably is in free fall. That would be very bad news for the levels of debt the Treasury must float in the months ahead.

I have not been able to isolate a strong correlation between this data and the government’s headline employment numbers. Regardless of what the Labor Department releases say on Friday, a zero gain in withholding over the past month is clear evidence that there are no more people working today than there were a year ago, at least in terms of paying jobs. If the numbers come in positive I would only guess that there are plenty of “self-employed” people out there, not subject to withholding, who aren’t earning any money at all, let alone a decent living.

I was a little surprised that the propaganda machine at the Bureau of Labor Statistics was willing to admit this fact, but I must have had brain-lock, because it should have been obvious that it would want to trumpet bad news. The government has $66 billion in new long-term paper to sell next week, and the name of the game is to get those yields down by whatever means necessary. I have observed repeatedly through the years that the government would sacrifice the stock market on the altar of the Treasury market whenever necessary, and it proved that again on Friday. ............(more)

The complete piece is at: http://www.minyanville.com/businessmarkets/articles/employment-employment-report-employment-number-jobs/7/11/2011/id/35649?camp=featuredslidealso&medium=home&from=minyanville

[Fumesucker]

1. K&R, thanks for posting.. n/t

[Cali_Democrat]

2. But the Bush tax cuts were supposed to create jobs

What gives? :shrug:

[amborin]

3. k&r read something to that effect on zero hedge, too; rather scary