Daniel Alpert
Westwood Capital
Business Insider
11/6/2010
With a really fantastic headline number coming from the Establishment Survey, we thought we’d take a closer look at the other side of the coin. The Household Survey showed the following today:
• a decline of 330,000 in the number of people employed;
• a decline of 254,000 in the labor force;
• a decline in the employment-population ratio to 58.3% from 58.5% in September;
• an increase of 462,000 in those not in the labor force; and
• an increase of 76,000 in the number of people unemployed.
The drop in the number of employed is concerning – and brings into question the disparity between the labor force and unemployment statistics in the Household Survey, and job creation indicated by the establishment surveys. These were not small differences
The take-away is that final demand in the U.S. can only be generated through an increase in the number of people with jobs and/or the wages earned by those employed. A material decline in the number of people employed (especially with only meager changes in hour’s worked and hourly wages) is not consistent with an improvement in final demand.
Furthermore, one questions why – with the Establishment Survey showing such a robust number – people are exiting the labor force, rather than entering it in response to employment opportunities?
The disparity between what the Household Survey and the Establishment Survey are telling us is of some concern…
Read the rest, with graphics, at Business Insider
