It’s the first Friday of December, so the job numbers for November are out from the Bureau of Labor Statistics, and the latest economic report came out from the Bureau of Economic Analysis on November 29th. The latest helping of government data on jobs and the economy are remarkably rosy, but there are more than a few dark clouds surrounding the silver linings. Let’s dig in to the numbers.

Official Unemployment Rate: 4.6%

The U-3 unemployment number is the biggest news from the latest jobs report, dropping to the lowest level since 2007. While a welcome sign of recovery, this is a number we could have seen four years ago without the burden of ObamaCare and massive taxing and spending programs that have slowed the economy. While the U-6 number also improved to a seasonally adjusted 9.3%, the Labor Force Participation Rate and Employment-Population Ratio numbers remained at their historically low 62.7% and 59.7% rates, respectively.

This indicates that the improvement in the unemployment rate is largely due to new workers entering the work force and finding jobs, while older members of the work force continue to drop out of the work force entirely. Only when we see a significant increase in both the LFPR and EPR numbers, along with a low unemployment rate, could we confidently say sidelined workers (ie, not presently in the work force) by the recession are reentering the work force. We aren’t seeing that, so put away the Champagne for now.

Jobs Created: 178,000

The economy created a solid number of jobs in November, though 65,800 fewer jobs than the Q4 2013-2015 average of 243,800 and 102,000 fewer jobs than same period last year. This isn’t something we can just gloss over, because that indicates that 26.9% fewer jobs were created from the prior three year average. That’s not insignificant, especially when considering the sheer number of temporary retail jobs that are generally created in late November leading into the Christmas shopping season.

The number of workers marginally attached to the work force jumped to 1.9 million, “up by 215,000 from a year earlier” (from the Labor Report), and, according to table B-1 from the report, year to year retail jobs were down 8.3%, with department stores reporting 5.1% fewer jobs from just 2015. While some of this may be due to increased competition from online retail, it’s too early to write it entirely off to that. It also represents quite a bit of dark cloud around the silver lining.

Q3 Annualized GDP Growth: 3.2%

The second estimate of the Q3 number came out at the end of last month, showing the first GDP growth rate above 3.0% since 3rd Quarter of 2014, only the eighth time the GDP growth rate has broken 3.0% during the Obama administration. Tempering this good news is that the stimulus programs of Quantitative Easing and historically low federal funds rates remain in place.

If the economy were really in good shape, the GDP growth rate should be over 10% given current stimulus conditions, yet both growth and inflation remain at very modest levels. If we think of stimulus programs as hospital care, until the patient isn’t receiving any more treatment, we can’t say definitively that the patient, being the US economy, is no longer very sick.

That’s the Economic Speed Round for December 2016. Catch you in a month.

 

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