A Gallup survey says the unemployment rate in the US is 10.3% and rising. Meanwhile, the BLS says it’s 8.9%. The comparison is not precise because Gallup does not seasonally adjust but the BLS does.
However, on an equal comparison basis, Gallup has the unemployment rate where it was a year ago but the BLS shows a drop of .5%.
For BLS details please see BLS Jobs Report: Nonfarm Payroll +192,000, Unemployment Rate 8.9%; Reflections on the Jobs Report .
Now let’s take a look at the most recent Gallup survey.
Gallup Finds U.S. Unemployment Hitting 10.3% in February
Inquiring minds note Gallup Finds U.S. Unemployment Hitting 10.3% in February
Unemployment, as measured by Gallup without seasonal adjustment, hit 10.3% in February — up from 9.8% at the end of January. The U.S. unemployment rate is now essentially the same as the 10.4% at the end of February 2010.
Unemployment Rate Not Seasonally Adjusted
The percentage of part-time workers who want full-time work worsened considerably in February, increasing to 9.6% of the workforce from 9.1% at the end of January. A larger percentage of the U.S. workforce is working part time and wanting full-time work now than was the case a year ago (9.3%).
Part-Time Workers Wanting Full-Time Jobs
Underemployment Surges in February
Underemployment, a measure that combines part-time workers wanting full-time work with those who are unemployed, surged in February to 19.9%. This resulted from the combination of a sharp 0.5-point increase since the end of January in the percentage unemployed and a 0.5-point increase in the percentage working part time but wanting full-time work. Underemployment is now higher than it was at this point a year ago (19.7%).
This deterioration in the jobs situation combined with surging gas prices, budget battles at the federal and state level, and declines on Wall Street tend to explain the recent plunge Gallup recorded in consumer confidence. They also align with the continued “new normal” spending patterns of early 2011. Although Gallup’s Job Creation Index has improved over the past year and showed modest improvement in February, the improvement has not been significant enough to positively affect underemployment and unemployment.
Warren Buffet said Wednesday on CNBC that the U.S. unemployment rate should be in the low 7% range by late 2012. If that is going to be the case, the job creation environment must change dramatically from what it is today.
Explaining the Differences
I was asked to shed some light on the differences between these surveys. Except to reiterate an opinion from last year I cannot.
Last year I stated that normal seasonal firing patterns may not play out. My rationale was a belief that we would not see the traditional release of employees in the post-Christmas slump because staffs were cut to the bone and there was a marginal pickup in consumer demand.
That presumption now appears to be the case. However, the question is not one of a few good months of non-firing but rather where to from here.
I still see no driver for job growth, and that is just what Gallup says. Moreover, I discussed this setup not as an afterthought, but in advance.
Adding to that discussion, just yesterday I noted Big-Box Retailers Reconsider Size; Saturation, Online Sales Affect Store Expansion Plans and Hiring Needs
Big-Box Decisions Affect Store Hiring Plans
I am wondering, do we really need “Walmart Express” at all? At best it is a sign of total saturation of big boxes and a turf battle for smaller cities and neighborhoods.
As such, think about store hiring plans now vs. store hiring plans in the midst of the big-box commercial real estate boom.
With the new “smaller is better” model, another commercial real estate boom remotely close to the build-out that occurred in 2005-2007 is not in the cards.
Moreover, residential housing is still dead.
Together, the picture just does not add up to the 200,000+ jobs a month many economists and market cheerleaders expect.
Risks Skewed to the Downside
The Gallup survey reflects what I suggested would happen. Improvements last month have given way to a relapse this month (it just has not shown up in the BLS reports).
Moreover, critical budget issues affect states, and Congress is poised to cut spending. Together with rising oil prices on a supply shock, possible European interest rate hikes, a cutoff in Quantitative Easing, forced cutbacks in China due to overheating, and a stock market that is priced well beyond perfection, the best one can say is that risks are hugely skewed to the downside, both for the stock market and the unemployment picture.
Mike “Mish” Shedlock
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