Thursday, February 9, 2012

The Weekly Update 2-10-2012

As I have written for several months, JOBS are the key to the economic turnaround.

Like many others I want to believe in Santa Claus but reality prevents that belief.  Instead, we believers settle for "the spirit" of the season.  So, when I saw last Friday's (2-3-2012) unemployment report I wanted to believe, but just like believing in Santa reality prevents that belief!

The jobs report headline was the unemployment rate fell to 8.3%.  This is now a trend as it is the fifth monthly reduction in this key stat.  The number of jobs created grew to 243,000!  The number of people unemployed dropped from 13.1 million to 12.8 million.  Impressive, if only you could believe.

The reality:  the headlines are guilty of lying by omission.  In fact The Bureau of Labor Statistics (BLS) reduced the size of the workforce by 1.2 million people.  In their report the BLS sites the adjustment as a result of the 2010 census which over calculated the number of people in the workforce for the last ten years.  However, the fact that tells "the truth" remains that the labor force participation rate has dropped from 65.7% to 63.7% in the last 2.5 years since the recession "officially" ended.  The difference in the two numbers represents the 4.8 million people who have given up on finding a job.

Conclusion:  without the adjustment from questionable census detail, meaning using December 2011 numbers, the unemployment rate would have increased .2% to 8.7% versus the headlines yelling about how great a .2% drop to 8.3% is.

Like the reality that forces each of us to confront the fact that there is no Santa Claus, we must understand the reality of what massaging the jobs data can do to distort the truth.  Just like Santa, for now we will just have to believe in "the spirit" of a jobs based turn around because the data does not support the headlines.

I am interested in your comments!  Feel welcome to contact me via e-mail or directly at 1.800.800.6364.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.  To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.  All performance referenced is historical and is no guarantee of future results.  All indices are unmanaged and may not be invested into directly.

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