Job Growth in October Was Stronger Than Expected
Does That Mean the Economy Is Stronger Than I’ve Been Saying?
The Biden administration is telling us that the US is not in a recession. In fact, they say, the economy is “very healthy.”
Those are the very words Biden’s script doctors have put down in the binder that White House Press Secretary Karine Jean-Pierre reads from several times a week. When I see her at the podium, reciting these phrases, I have nothing but sympathy. Who thought it was a good idea to put this young woman in that job?
She knows nothing about finance or economics. And that was fine during her first few months, when the mainstream press threw her only the softest of softballs. But now that inflation is over 8% and America’s middle class, including those that watch the mainstream media, are worried, the questions she’s getting are a bit tougher.
She seems like a nice, bright, good-natured person. The kind of person you’d want as a neighbor or a book-club friend. But she’s not up to what she’s being asked to do – i.e., defending the economic policies of the Biden administration by denying that the economy is in serious trouble.
One thing they could have done, when the negative data began to emerge, was craft a message similar to the one Clinton used. Recognize past failures and chart a new direction. But they didn’t do that. Either because they didn’t believe it was necessary or because Biden was committed to his FDR delusion.
Instead, they argued that inflation was temporary, and then that it wasn’t all that big or important, and then that the economy wasn’t really in a recession, even though we had two consecutive quarters of negative GDP growth.
Every time Jean-Pierre is asked a tough question about the economy, she must flip through her binder, hoping to find some new, believable talking point. Alas, there is only one: job growth.
As she keeps pointing out, the supply of jobs in the US is growing. In fact, non-farm payrolls grew by 261,000 in October, which was significantly stronger than the Dow Jones estimate of 205,000.
So… What?
I’ve been saying that I think we are headed into a massive, long-term recession that will include, among other tribulations, the failure of tens of thousands of businesses and the unemployment of millions of Americans that are currently working.
So, how do I explain the growth in jobs?
It’s simple. For one thing, most of the job growth we’ve seen in the past year has nothing to do with the growth of our economy. It is, instead, a reflection of the millions of job openings that popped up after the government abandoned its hysterical COVID protocols and businesses were allowed to reopen. It is also a reflection of the millions of Americans that “retired” when they received government bailouts, and have now gone through most of that money and need to return to work. And though the October number was better than expected, it was still the slowest pace of job gains since December 2020.
Tom Porcelli, Chief US Economist at RBC Capital Markets, seems to agree with me. He points out that job growth is a backward-looking data point. The broader picture is “of a slowly deteriorating labor market.”
“This thing doesn’t fall of a cliff,” he says. “It’s a grind into a slower backdrop. It works this way every time. So the fact that people want to hang their hat on this lagging indicator to determine where we are going is sort of laughable.”
Some negative indicators:
* Apple recently announced it will be freezing new hires except for research and development.
* Amazon said it is “pausing” hiring for retail jobs and its corporate workforce.
* Lyft announced it will be laying off 14% of its employees.
* And, of course, Elon just laid off half of the twits at Twitter.
