A Long Winter for the Unemployed

It was snowing when we left Baltimore. Bad weather…

The weather has been odd this year. Florida had its coldest spell ever this year.

Freeways in Southern California were closed because of the snow.

Forecasters are predicting the coldest January in many years.

And Cancun, Mexico hit record lows just when the experts were there debating how to cure global warming.

Here in Paris it is raining…temperature about 45 degrees. Very typical for this time of year.

The first business week of the year was calm. Traders and investors were getting back to their desks, reading the papers, and trying to get a grip on what was going on. No one wanted to panic until he had chance to figure out what to panic about. Except for a big drop in gold early in the week, nothing much happened…

Investors seemed mostly optimistic. Most believed that a slow recovery really was on the way. But the actual reports were mixed and perplexing.

For example, last Thursday, the employment figures were reported as both a triumph and a setback.

This from AP:

WASHINGTON (AP) – The nation’s economy added 103,000 jobs in December and the unemployment rate dropped to 9.4 percent last month, its lowest level in 19 months.

That sure sounds like good news. But Bloomberg gave the story a different spin:

US Economy Adds 103,000 Jobs, Fewer Than Forecast

Jan. 7 (Bloomberg) – Employers in the US added fewer jobs than forecast in December and the unemployment rate dropped, partly reflecting a shrinking workforce, a sign the labor-market recovery will take time to develop.

Hmmm… Not so good after all. It turned out that private employers added 103,000 jobs last month, while the government cut 10,000. But that wasn’t why the unemployment rate fell. The fine print in the AP story gives the real reason.

…the job growth fell short of expectations based on a strengthening economy. And the drop in unemployment was partly because people stopped looking for work.

What’s the real story? What’s really going on? The employment numbers are fishy. Last year, for example, a total of about 1.1 million new jobs were created. That sounds nice, until you realize that the economy needs to add about 120,000 jobs per month – or 1.4 million – just to stay even with population growth.

Right now, there are 130 million people with jobs. According to the feds, there are 15 million more who would like to have jobs but can’t find work. That puts the total workforce at 145 million.

But wait; ten years ago the portion of the population that wanted to be employed was just over 50%. That would be about 160 million today. What happened? Do fewer people want to work today? Or are there actually fewer jobs, and more people unemployed, than the official figures tell us?

Based on these numbers, the real tally of the jobless is probably about 30 million, or about 18.7%.

The Great Correction continues…

Bill Bonner
for The Daily Reckoning