Mc Rescue as Ronald McDonald Throws the Middle Class a Lifeline (Michael Pento)

The middle class has been thrown a lifeline

from Ronald McDonald

Wednesday, May 4, 2011
Euro Pacific Capital
By: Michael Pento


The non-manufacturing portion of the U.S. economy dropped precipitously in the month of April. According to the ISM Index, the service sector of the economy—which unfortunately accounts for 90% of GDP—plunged to 52.8 last month from 57.3 in March. The measurement of new orders dropped by the most since records began in 1997. New orders at service providers decreased to 52.7, which was the lowest reading since December 2009, from 64.1 in the prior month. Meanwhile, the employment index dropped to 51.9, from 53.7 a month earlier.

More data confirming the slowing economy came from the release this morning of the ADP employment report. The private payroll survey indicated that 179,000 jobs were created in April, down from the revised 207,000 reported in March. The BLS reported that 216,000 net jobs were added in March.

The rapidly rising cost of food and energy is starting to vastly curtail consumer spending on non-discretionary purchases. Therefore, inflation is well on the way to eroding employment and GDP growth just as it always has throughout economic history.

But not to worry all of you who are out of work or significantly under-employed. The middle class has been thrown a lifeline from Ronald McDonald. The restaurant chain announced on April 19th that it is looking to add 50,000 U.S. workers. Thus is the sad future for U.S. employment.

Michael Pento, Senior Economist at Euro Pacific Capital is a well-established specialist in the “Austrian School” of economics. He is a regular guest on CNBC, Bloomberg, Fox Business, and other national media outlets and his market analysis can be read in most major financial publications, including the Wall Street Journal. Prior to joining Euro Pacific, Michael worked for a boutique investment advisory firm to create ETFs and UITs that were sold throughout Wall Street. Earlier in his career, he worked on the floor of the NYSE.


Read about McDonald's Hiring

5 job seekers for each available job: 4 out of 5 unemployed workers, there are no jobs

Economic Policy Institute
by Heidi Shierholz
March 11, 2011

This morning the Bureau of Labor Statistics released an extremely disappointing January report from the Job Openings and Labor Turnover Survey (JOLTS), showing that job openings decreased by 161,000 in January and that revisions to earlier data reveal that there were 142,000 fewer job openings in December than previously reported. Today’s JOLTS report can be better understood in relation to two benchmarks: (1) the number of unemployed workers; and (2) the number of job openings in the recovery following the recession of 2001.

The number of job openings compared to the number

of unemployed workers

The total number of job openings in January was 2.8 million. The total number of unemployed workers was 13.9 million (unemployment data are from the Current Population Survey). The ratio of unemployed workers to job openings was thus 5.0-to-1 in January, unchanged from the revised December ratio. January marks 23 months that the “job seeker’s ratio” has been at or above 5-to-1. By comparison, the highest it got in the early 2000s downturn was 2.8-to-1. A job seeker’s ratio of 5-to-1 means that for 4 out of 5 unemployed workers, there simply are no jobs.

The number of job openings now compared to the last recovery

The JOLTS survey began in December 2000, so the only other recession captured by these data is that of the early 2000s. After the early 2000s recession, job growth was very slow. The economy shed jobs—1.1 million of them—for 21 months after the recession officially ended. Yet the current recovery has generated far fewer job openings than even the extremely weak recovery of the early 2000s. In the first 19 months of that recovery (December 2001 to June 2003), the cumulative number of job openings in the economy was 65.9 million. In the first 19 months of the current recovery (July 2009 to January 2011), the cumulative number of job openings in the economy was 49.5 million, 25% lower. In other words, our labor market has a significant shortfall of new job openings even when measured against the exceptionally weak recovery of the early 2000s. (For more information on the shortfall of job openings in the current recovery, see Reasons for Skepticism About Structural Unemployment.)

These numbers underscore the fact that cuts in federal spending are extremely premature. With the job seekers ratio at or above 5-to-1 for nearly two straight years, we should instead be having discussions of substantial additional stimulus spending.

Other articles by Heidi Shierholz

CNBC Hosted "Guess the Payroll Number" Gong Show and All Panelists were gonged.

2/4/2011
CNBC delivers today's BS BLS Non-Farm Payroll Data and their esteemed panel blows off the number. Mark Zandi, almost pulled a John Boehner weep when he stated the numbers are meaningless. Mark later states the numbers make no sense. Mr. Zandi does not handle seasonal adjustments well when they embarrass Mr. permabull given his 140,000 new jobs projection. Of course at no time during the panel of experts diatribe did anyone mention the Department of Labor seasonally adjusting out over 1 million initial jobless claims during the prior 9 weeks. Economists are giddy when seasonal adjustments maintain the fictitious pace of recovery.

The Gong Show Winner is David Malpass who projected 220,000 new jobs and then states, "I really think there is an improvement in the economy though you can't see it." SAY WHAT!

The highlight is Rick Santelli opening a can of whoop a@* when Steve Liesman deemed the U-6 figure dropped to 16.1%. NOTE: once again, the seasonally adjusted number dropped from 16.7% to 16.1%. The Non-Seasonally Adjusted figure (a.k.a. real) increased to 17.1% from 16.6%. Non of the esteemed panelists opted to bring up that data nugget.



The Experts New Jobs Projections Episode

U-6

Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force.. .

Seasonally Adjusted Rally Continues: Philly Fed Revises Dec. Business Conditions Down To 20.8 From 24.3 (Zero Hedge)

Zero Hedge

January 13, 2011

Unfortunately, the Ministry of Disinformation and Data Revision will not be able to blame the latest major economic data point revision on dyslexia. After as we previously noted, the Chicago PMI was revised lower from 68.6 to 66.8 just three short days ago, today that other standout number, the Philly Fed, which had originally printed at the better than expected level of 24.3, has just been revised much lower to 20.8. Since this number means the Philly Fed actually declined from the November print of 22.5, one can see why even the Chinese are seeing their jaws drop at the ceaseless "adjustment" of what has now become an unrepentantly upwardly economic data stream.

Specifically, the December Employment Index has been lowered to 4.3 from 5.1, the December New Orders Index has swooned to 10.6 from 14.6, the December Current Inventories was lowered from -2 to -5.9, the Current Number of Employees dropped from 5.1 to 4.3, and the Current Average Employee Workweek contracted from 19.3 to 16.8. The silver lining: the December Prices Paid Index to 47.9 from 51.2.

Also, virtually all the future indices improved. Then again, as today's PPI indicated, and as surging commodity costs validate, nobody doubts the margin collapse any longer. We can't wait to find out just how many more of the melt up inducing December economic indicators will continue to be revised lower (even as the BLS continues to backward revise jobless numbers higher).

ADP May Stand For A Dubious Prediction (Michael Pento)

Thursday, January 6, 2011
By: Michael Pento

This morning’s ADP report showed that employers increased payrolls by 297,000, which was the biggest gain in the history of the report. Although this is a very strong number it is important to point out that of the total 297k jobs created 270,000 were in the service sector. This means that over 90% of all jobs created were of the borrowing to consume variety, while less than 10% were of the saving and producing genre. The obvious conclusion from this data is that the trade deficit will surge in coming months.

Contradicting the ADP report was data released from the ISM non-manufacturing report. The employment component during December shrank to a 3 month low and registered 50.5, down from 52.7 in the prior month.

How can we reconcile the fact that the employment component ticked down to a 3 month low, yet at the same time, ADP says 270k service sector jobs were created? We’ll hopefully get some clarity on this when the BLS released the employment report for December on Friday. My guess is that if you accrue over a trillion dollars of debt per year, you will eventually hire some people to help consumers spend their borrowed money. But the bill is quickly coming due and there will be no bailout forthcoming. One can only bask in the eye of a hurricane for so long.

Michael Pento, Senior Economist at Euro Pacific Capital is a well-established specialist in the “Austrian School” of economics. He is a regular guest on CNBC, Bloomberg, Fox Business, and other national media outlets and his market analysis can be read in most major financial publications, including the Wall Street Journal. Prior to joining Euro Pacific, Michael worked for a boutique investment advisory firm to create ETFs and UITs that were sold throughout Wall Street. Earlier in his career, he worked on the floor of the NYSE.

49% of metropolitan areas' reported higher unemployment rates in Nov. 2010 vs Nov. 2009

Department of Laughter Labor

1/4/2011

METROPOLITAN AREA EMPLOYMENT AND UNEMPLOYMENT

NOVEMBER 2010

Unemployment rates were higher in November than a year earlier in 182 of the 372 metropolitan areas, lower in 166 areas, and unchanged in 24 areas, the U.S. Bureau of Labor Statistics reported today. Thirteen areas recorded jobless rates of at least 15.0 percent, while 11 areas registered rates of less than 5.0 percent. One hundred eighty metropolitan areas reported over-the-year increases in nonfarm pay-roll employment, 176 reported decreases, and 16 had no change. The national unem-ployment rate in November was 9.3 percent, not seasonally adjusted, compared with 9.4 percent a year earlier.

Metropolitan Area Unemployment (Not Seasonally Adjusted)

In November 114 metropolitan areas reported jobless rates of at least 10.0 percent, down from 127 areas a year earlier, while 63 areas posted rates below 7.0 percent, down from 74 areas in November 2009. El Centro, Calif., again recorded the highest unemployment rate, 29.1 percent, followed by Yuma, Ariz., 24.8 percent. Among the 13 areas with jobless rates of at least 15.0 percent, 11 were located in California. Bismarck, N.D., again registered the lowest unemployment rate, 3.3 percent in November. The areas with the next lowest rates were Fargo, N.D.-Minn., and Lincoln, Neb., 3.5 percent each, and Grand Forks, N.D.-Minn., 3.7 percent. Of the 11 areas with jobless rates under 5.0 percent, 9 were located in the West North Central census division. Two hundred thirty areas recorded unemployment rates below the U.S. figure of 9.3 percent, 137 areas reported rates above it, and 5 areas had rates equal to that of the nation.  Complete Report

Dept.of Laughter/Labor reports unemployment increased in 21 states and D.C. and stock market celebrates unemployed

Bureau of Labor Statistics
U.S. Department of Labor
12/17/10

Regional and state unemployment rates were generally little changed in November.

• Twenty-one states and the District of Columbia recorded unemployment rate increases,
• 15 states registered rate decreases,
• and 14 states had no rate change, the U.S. Bureau of Labor Statistics reported today.
• Twenty-eight states and the District of Columbia posted unemployment rate decreases from a year earlier,
• 17 states reported increases,
• and 5 states had no change.
• The national jobless rate edged up by 0.2 percentage point between October and November to 9.8 percent, but was little different from a year earlier.

In November nonfarm payroll employment:

• decreased in 28 states,
• increased in 20 states and the District of Columbia,
• and was unchanged in 2 states.

The largest over-the-month employment decreases were in North Carolina (-12,500), Massachusetts (-8,600), and Ohio (-7,800). The largest over-the-month percentage decreases in employment occurred in New Mexico (-0.5 percent) and Nevada, Utah, and Wyoming (-0.4 percent each). The largest over-the-month increases in employment occurred in Texas (+19,100) and New Jersey (+10,000). The largest over-the-month percentage increases in employment were in Alaska (+1.6 percent), Oregon (+0.4 percent), and Mississippi and New Jersey (+0.3 percent each).

Complete DOL Report

Consumer Price Index recap by Michael Pento (all about owner’s equivalent rent)

Wednesday, November 17, 2010
By: Michael Pento

The facts are that 25% of the Consumer Price Index is derived from owner’s equivalent rent and the BLS substitutes out everything that is increasing in price and then claims that most price increases came from quality enhancements, which are then summarily discounted. Despite those manipulations of the data, the government still reported that consumers paid 1.2% more for goods and services than the previous year. Where is this deflation that the Fed and administration is so concerned about? If one quarter of the CPI measures the rental equivalent derived from a humongous asset bubble that has just popped, it’s simply amazing that the reading on inflation is positive at all.

On the housing front we were treated with some sobering news on just how addicted the U.S. has become to artificially induced growth. I’ve often written about the utter economic devastation that will occur once either the Fed or the market forces interest rates much higher. We had a little taste of this from this week’s mortgage application data.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes loans for home purchases and refinancing, fell 14.4 percent to 713.6 in the week ended November 12, the lowest in four months. Borrowing costs on 30-year fixed-rate mortgages jumped to a two-month high of 4.46 percent in the week, up from 4.28 percent in the previous period.

Therefore, an 18 basis point increase in rates sent mortgage applications tumbling. Just think what will occur to the housing market and the economy in general if I’m correct and the U.S. faces an inexorable rise in interest rates? Those rates may rise well into the double digits due to inflation and a surging supply of debt issuance. Think about that the next time Bush, Geithner or Bernanke takes a victory lap over the “successful” TARP program. I wonder if Mr. Buffett will then write a thank you letter to the NY Times about how government caused America to become an insolvent nation.

Michael Pento, Senior Economist at Euro Pacific Capital is a well-established specialist in the “Austrian School” of economics. He is a regular guest on CNBC, Bloomberg, Fox Business, and other national media outlets and his market analysis can be read in most major financial publications, including the Wall Street Journal. Prior to joining Euro Pacific, Michael worked for a boutique investment advisory firm to create ETFs and UITs that were sold throughout Wall Street. Earlier in his career, he worked on the floor of the NYSE.

October Jobs Report: Just another Government Fabrication

Government changed the "seasonal adjustment"

it made to the payroll numbers--and,

in so doing, boosted the number of "jobs"

created in October by 100,000.

(Rome continues to burn)

By Henry Blodget
Business Insider
11/13/10
Remember last Friday's payrolls numbers--the ones that blew away expectations about the number of jobs created and got everyone talking about recovery again?

Well, even at the time those payroll numbers were confusing, because the other part of the jobs report--the "household survey"--showed yet another crappy number.

But by pointing to the crappy household number and ignoring the payroll number, the bears seemed to be trying to make lemons out of lemonade.

But it turns out that there was a simple reason why the payroll numbers looked so good--a reason that had nothing to do with underlying strength of the jobs market.

What was that reason?

The government changed the "seasonal adjustment" it made to the payroll numbers--and, in so doing, boosted the number of "jobs" created in October by 100,000.

Stephanie Pomboy of MacroMavens (via John Mauldin) explains:

• " 'The seasonal bar which the payroll data must jump was (inexplicably and dramatically) lowered from prior Octobers.
• " 'Thus, in October 2009, the BLS set the bar at 870,000 jobs, similar to the 840,000 it anticipated in October 2008. This year, by contrast, it lowered the bar to 768,000. Mumbo, jumbo, payrolls presented "an upside surprise" of 100,000.'

Alan Abelson of Barrons (again via John Mauldin) adds the following:

"According to John Williams at Shadow Government Statistics, the BLS' fiddling with the figures via what he calls 'seasonal-factor games' actually created 200,000 phantom jobs last month. John cites such finagling as the reason his prediction of an October decline and a rise in the jobless rate was wrong. It also explains why seasonally adjusted payrolls were revised upward by 110,000 in September, including 56,000 in August."

In other words, it wasn't that there were a surprising number of jobs created in October. It was that the government changed its "seasonal adjustment" assumption in a way that made it look as though there were a surprising number of jobs created in October.

Now, seasonal adjustment is an art not a science. And maybe the new seasonal adjustment is more defensible than the old one. But if our government is going to publish a number like this that represents such a major "surprise," we would expect it to at least be upfront about the reasons for the surprise.

And in this case those reasons had NOTHING to do with the jobs market, and EVERYTHING to do with the seasonal adustment assumption.

Ben Bernanke Sentenced The Poorest 20% Of The Population To A Cold, Hungry Winter (Zero Hedge)

Lowest 20% of Americans, as per the BLS,

food and energy purchases represent

over 50% of their after-tax income

What is your level of empathy Ben?

Zero Hedge
11/5/10

The following chart prepared recently by JPMorgan demonstrates something rather scary, and makes it all too clear how the Chairman's plan to "assist" the US population via some imaginary "wealth effect" due to QE2, is about to backfire.

As is now becoming very evident, the prices of energy and food products are about to surge, and in many cases have already done so, but courtesy of some clever gimmicks (Wal Mart selling what was formerly 39 oz of coffee as a 33.9 oz product for example) the end consumers haven't quite felt it yet. They will soon.

There is a limit to how much every commodity can open limit up before it appears on the SKU price at one's local grocer. And while a marginally declining "core CPI" is irrelevant for this exercise as it measures only items that are completely outside of the scope of everyday life, what will be far more important to end consumers will be the push higher in food and energy costs.

The problem, however, is that for the lowest 20% of Americans, as per the BLS, food and energy purchases represent over 50% of their after-tax income (a number which drops to 10% for the wealthiest twenty percentile). In other words should rampant liquidity end up pushing food and energy prices to double (something that is a distinct possibility currently), Ben Bernanke may have very well sentenced about 60 million Americans to a hungry and very cold winter, let alone having any resources to buy trinkets with the imaginary wealth effect which for over 80% of the US population will never come.

Here is how JPM explains the phenomenon:

When the Fed considers the possible consequences of a falling dollar resulting from QE2, it should perhaps focus on food and energy prices as much as on traditionally computed core inflation. First, the food/energy exposures of the lower 2 income quintiles are quite high (see chart). Second, the core CPI has a massive weight to “owner’s equivalent rent”, which suggests that the imputed cost of home occupancy has gone down.

Unfortunately, this is not true for families living in homes that are underwater, and cannot move to take advantage of it (unless they choose to default and bear the consequences of doing so). Due to the housing mess, there has perhaps never been a time when traditionally computed core inflation as a way of measuring changes in the cost of things means less than it does right now.

Since nothing else appears to have jarred America from its prime time TV/iPad hypnosis yet, perhaps this is for the best, and a few hungry months in subzero temperatures is precisely what several tens of millions of Americans need to finally march on Constitution avenue.

Initial Jobless Claims Fall to 452,000 and of course last week's figure was revised UP (Zero Hedge)

The U.S. Stock Market Celebrates

452,000 citizens filing for unemployment

Zero Hedge

Jobless claims "fell" to 452k with the story as usual being in the revision. Last week's 462K number which was originally expected to be 445K is now revised to 475K! But of course it is so much more palatable to get the BLS lie piecemeal instead of in one place.

We are now on 25 out of 26 sequential upward revisions, and up to just under 250k Year to Date on initial claims. With this week's number beating expectations of 455k, only means the revised miss will be announced next week, when this week's number is revised to north of the expectation.

The same identical story in continuing claims: the print was 4,441K, a deterioration from last week's 4,399K which again was revised to 4,450K (revision 36 out of 37). Lastly, those falling of regular rolls once again jumped, and for the week ended October 2, those on Extended Benefits and EUCs rose by 280K.

Since the news confirms the US economy continues to lose workers, this will do nothing for the market's expectations of trillions in free liquidity to be announced in two weeks by the Fed. Then again, none of this matters - as Jim Iurio said earlier: "We are all currency traders."

And here is the latest upward revision chart that looks behind the headlines of the Department of Truth:

ADP Payroll Report dives....DOWN 39,000! Will CNBC be able to save the day?

ADP Report

Private-sector employment decreased by 39,000 from August to September on a seasonally adjusted basis, according to the latest ADP National Employment Report® released today. The estimated change of employment from July to August was revised up from the previously reported decline of 10,000 to an increase of 10,000.

The decline in private employment in September confirms a pause in the economic recovery already evident in other data. A deceleration of employment occurred in all the major sectors shown in The ADP Report and for all sizes of payroll. The September decline in employment followed seven monthly increases from February through August. However, over those seven months, the average monthly gain in employment was 34,000. There simply is no momentum in employment.

Unlike the estimate of total establishment employment to be released on Friday by the Bureau of Labor Statistics (BLS), today’s ADP National Employment Report does not include the effects of federal hiring — and now firing — for the 2010 Census. Hiring for the census peaked in May and is still tapering down slightly. September’s ADP Report estimates employment in the service-providing sector rose by 6,000 in September, the eighth consecutive monthly gain. This increase was not enough to offset an employment decline in the goods-producing sector of 45,000. Construction employment dropped by 28,000 during September and manufacturing employment declined 17,000, the third consecutive monthly decline.

All sizes not hiring

Large businesses, defined as those with 500 or more workers, saw employment decline 11,000 while employment among medium-size businesses, defined as those with between 50 and 499 workers, decreased by 14,000. Employment among small-size businesses, defined as those with fewer than 50 workers, decreased by 14,000. Complete ADP Report