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Wednesday, May 8, 2013

Jobs and the economy

The last jobs report sparked quite a rally in stocks as their were significant revisions to prior months.  My question is did anything really change?  Despite there being supposedly a bunch more jobs, the current data is clearly getting soft again.  Here is the jobs data for the last few years.


Does the recent data strike you as being significant.  Lets review what happened the last two years.  Between Jan. and April in 2011 there were 774,000 jobs created.  In the same period in 2012 there were 899,000 jobs.  So far this year we have 783,000 jobs.  So that means we are only slightly better then 2011 and significantly lower then last year.  Nothing special there to indicate the recovery is gaining strength.  There was an article in the USA Today yesterday titled "Job gains bring a harrumph".  They did a poll of 37 economists and only 4 of the 37 said the jobs report reduced their fears that growth would suffer a sharp slow down in the second and third quarters.  Despite the increase in the numbers of jobs the hours worked dropped so there was no real increase in actual wages paid.

This year is really starting out very similar to the last two with respect to jobs.  However, there is a lot of underlying manufacturing data that is significantly weaker.  Both of the last two years suffered mid year economic slow downs.  Will this year be any different?  It looks like it is already happening to me.  The question then becomes does the stock market eventually reflect the slow down with a sizable correction or not?


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