Friday, January 10, 2014

Poor Holiday sales in 2013 Followed by Poor Jobs Numbers in 2014

Despite last years huge gains in stocks, holiday sales were poor, raising the question of whether the economy really is as strong as some believe. Financial Times reports:

Limited spending by US consumers produced a lacklustre holiday shopping season for many retailers, which are likely to face pressure on profits and questions over whether they should have fewer stores.

Sales at stores open for at least a year rose on average 2.3 per cent in December among the 19 retailers that reported figures on Thursday, according to Thomson Reuters. That compares with a 3.5 per cent rise in the same month last year and headline inflation currently running at 1.8 per cent.

A sampling of recent headlines:

Sears' sales tumble during disappointing holiday season
Pier 1 Imports holiday sales disappoint
Bed Bath & Beyond shares plunge after Union-based retailer reports ...
Retailers of all stripes sing holiday blues - USA Today

And it goes on, but you get the idea. In addition, today we got the jobs report reporting a lousy 74,000 jobs. As a reminder, we need about 200-250k jobs per month to keep up with population growth. The previous four months had averaged about 200k per month. The unemployment rate declined even with the poor jobs number from 7.0% to 6.7%. Sadly the reason is that 535,000 gave up and left the labor force as the labor participation rate dropped to its lowest level since 1978. This leave 91.8 million not in the labor force.

Worse, 55% were temp jobs:

The real unemployment rate, if we had a normalized participation rate would be unchanged at 11.5

Notice the red line in the graph below that represents the implied unemployment rate if the labor participation rate were unchanged:

So since 2008, the real rate of unemployment, which is all that matters to people seeking work, has not changed at all since the financial crisis of 2008!

Are we still supposed to believe this is a recovery?

And as ZeroHedge shows, even with the printing of $1 TRILLION by the Fed, we actually created LESS jobs than the year before! Wasn't QE supposed to create jobs?

The Fed spent over $1 trillion in 2013 (to push the stock market to all time highs) and all we got was... less jobs created than in 2012?
Establishment survey 2012 vs 2013 job change:

And Household survey 2012 vs 2013 job change:

Source: BLS