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Truth vs. Propaganda. The media is trumpeting another fall in unemployment today as the number of jobs created was only 60% of the expected 203,000. If the expectations had been met, unemployment would have stayed level at 8.3%. The media ignores this reality and glorifies this as good news since unemployment fell to 8.2%. Really? Removing people from the workforce denominator to counteract the numerator will produce a lower unemployment rate that will actually be believed by educated Americans? The answer is yes: if it worked in the past, it will continue to work in the future.
An analysis from Zerohedge.com puts this into perspective:
March NFP [non-farm payroll] big miss at just 120K. Unemployment rate declines from 8.3% to 8.2%. Futures slide, for at least a few minutes before the NEW QE TM rumor starts spreading. The household survey actually posted a decline in March from 142,065 to 142,034. And as always, as we predicted when Goldman hiked its NFP forecast yesterday from 175K to 200K saying “if Goldman’s recent predictive track record is any indication, tomorrow’s NFP will be a disaster”, Goldie once again skewers everyone. Finally, Joe LaVorgna’s +250,000 forecast was just 100% off… as usual.
But this is only part of the story. The government has “seasonally adjusted” the jobs report due to winter. The bombshell is about to hit:
Yet things finally change in April, when seasonal adjustments hardly have an impact on the NSA number, and then in May things get from bad to worse, when the Seasonal Adjustment will for the first time every year, subtract 670,100 jobs from the NSA number. Appropriately enough, this will come just before the June FOMC meeting. Finally, should the NFP number be a major beat, it merely makes US-based QE that much more unlikely until and unless we get a major disappointment in payrolls.
At this rate, our unemployment rate will be zero if there is a second Obama administration: the workforce will be zero. But if you have trouble comprehending what the administration is doing to solve our economic crisis, just listen to Joe:
U.S. payrolls rose far less than expected in March, keeping the door open for further monetary policy support from the Federal Reserve, even as the unemployment rate fell to a three-year low of 8.2 percent.
Employers added 120,000 jobs last month, the Labor Department said on Friday, the smallest increase since October.
Economists polled by Reuters had expected nonfarm employment to increase 203,000 and the unemployment rate to hold at 8.3 percent.
The weak employment growth last month likely reflected the fading boost from unseasonably warm winter weather. The payrolls count for January and February was revised to show just 4,000 more jobs created than previously reported.
The drop in the unemployment rate, to the lowest level since January 2009, reflected a drop in the labor force. The separate household survey, from which the jobless rate is derieved also showed a drop in employment.
The weak employment gains could hurt President Barack Obama’s chances for re-election in November. The unemployment rate has fallen from 9.1 percent in August.
The painfully slow recovery in the labor market is a concern for Fed Chairman Ben Bernanke, who is keeping open the option of further monetary policy support for the economy if the unemploymnt rate remains stubbornly high.