Pathetic Job Numbers Expose “Fake” Economic Recovery

economic recoveryIt was only a matter of time…

In March, U.S. employers added only 120,000 jobs—the fewest number of new jobs in five months—and well below analyst estimates of 205,000 (source: U.S. Bureau of Labor Statistics).

Loyal readers are well aware of my negativity on the economy…my feeling that the “rosy” job numbers of the past few months would not be sustainable.

Of the 120,000 jobs growth in March, 31% were in the low-paying “food services and drinking places” category. This is one of the reasons why hourly weekly earnings fell in March from February’s level by just $0.60; nonetheless, income in the pockets of the average American, which is 70% of GDP, is not growing.


Let’s keep this in mind, dear reader: while jobs growth was supposedly very strong over the last few months, registering over 200,000 monthly, wages stubbornly refused to improve. The jobs growth is not putting pressure on wages, which confirms that people are taking any job they can, not necessarily good ones.

Even though the jobs growth was moderate at best in March, the unemployment rate actually fell from 8.3% in February to 8.2% in March; the lowest level since January of 2009.

How is this possible? More people fell out of the labor force and were not counted by the Bureau of Labor Statistics—more discouraged workers. The “labor participation rate” measures all people in the working age population (from ages 16-64) who are actually employed. In January, the rate hit a 30-year low of 63.7%; that is, only 63.7% of the people who can work and want to work are actually working. In February, it improved somewhat to 63.9%, but in March, it fell again.

Let’s express this in other terms. The number of people that are no longer considered part of the labor force by the Bureau of Labor Statistics has reached a record in March of over 88.288 million people!

The Bureau of Labor Statistics

 (The Bureau of Labor Statistics defines “persons not in the labor force” as those who haven’t searched for work in the last four weeks because they are discouraged—unable to find work—or feel they don’t have the skills required to enter the job market. There are also the very few in this number who didn’t work because of child-care reasons, family responsibilities, or ill health, or because they are currently in training or are unable to find transportation.)

If more people are falling out of the labor force, it is because jobs are becoming harder to find, putting into question the current jobs growth. Certainly, this is a reflection of this recession—and supposed jobs growth recovery—that is five years running now!

One can see from the chart above how the rate with which people are falling out of the labor force has increased dramatically since 2007—a slowdown in jobs growth.

U6, as reported by the Bureau of Labor Statistics, is a broader measure of the unemployment rate, because it takes into account discouraged people as well as those working part-time who want full-time work. The U6 unemployment rate dropped to 14.5% in March, an improvement from February’s 14.9%.

Once again, the improvement in this unemployment rate doesn’t come from jobs growth, but from those workers who are no longer counted, as detailed in the graph above.

Even though many are surprised by the weakness of this jobs growth, I’m not, dear reader, because it is a reflection of the other weaker economic data that I’ve been highlighting in these pages so far in 2012.

With little jobs growth (while the unemployment rate improves?), no increase in wages and low-paying jobs still counting for too large a number of the jobs growth, one wonders where the “recovery” is in this supposed economic recovery. The answer is that there is no real recovery…just rising government debt, artificially low interest rates, and an unprecedented increase in the money supply—a fake recovery if you will. (Also see: The Land Debt Built.)

Michael’s Personal Notes:









Where the Market Stands; Where it’s Headed:



What He Said:
