What do the Numbers Tell Us

This bullish stock market is exciting as heck. Since late November 2012 the DOW continues to rise … going from 12,500 to over 15,000 … and hovering at 15,500 as I write this blog. According to the official numbers, the Great Recession was officially over in the summer of 2009. However, it doesn’t seem so robust for the average American. When one looks at the statistical facts that are public information, you understand why we still feel things aren’t as robust as they seem from the stock market numbers. This month the U. S. Department of Labor reported employers added 195,000 jobs to their payrolls … which beat the estimate of 165,000. Payrolls for April and May were revised higher, to reflect an additional 70,000 jobs. While these numbers look good, the employment situation in America continues to have several perturbations. Let’s look at some key statistical areas and see if we can gain some insights from this public information. (NOTE: All statistics come from the U. S. Department of Labor Statistics)

1. Unemployment  in the general overview, the unemployment rate remained unchanged at 7.6% even with exceeding the estimated job increases in June (165,000). Granted that is below the peak rate of 10% in 2009, but the unemployment rate has now remained over 7% for 55 consecutive months.
2. Manufacturing – in the U S continues to take its hits. While manufacturing use to be the foundation for the U S economy, that is no longer the case. Over the past ten years, more than 2.6 million manufacturing jobs have been eliminated in the U S, with most going overseas. And the June statistics show that manufacturing lost 6,000 jobs, which represent the fourth consecutive month for reduction this year. It may surprise many to learn that the number of employees in manufacturing is near its lowest point since 1946. Will it continue to go down?
3. Part Time Workers – the number of people employed part time due to the economy and not being able to find full time employment increased by another 322,000 in June to 8.2 million … the most ever in this segment in history. Many of these are individuals who have had their hours cut back and were unable to find a full time job. They are also the reason for the large reduction in the unemployment rate the past several months.  And these are generally not good paying jobs.
4. Percentage of Working Age Americans with a Job – is under 59%, its lowest since 1983. (Think about that statistic) This ratio most likely will not improve for many years. The adult population grows at about 200,000 people per month, which is about the same as the jobs being created each month to date in 2013. (Remember – last month’s numbers show increase jobs of 195,000 on an estimated 165,000)
5. Quality of Jobs versus Quantity Jobs – there seems to be a realization of more analysts and economists (and we assume our government leaders) that there is a quality issue with the jobs being created. Leisure and hospitality employment increased by 75,000 jobs in June, 60,000 in May. Retail jobs added 37,000 jobs in June. These are not normally quality well paying jobs … the vast majority are basically minimum wage and part time jobs.

What insights do you glean from these public statistics?

Are you happy with your outlook the next six months … two years?

Will things be better or worse by January 2014?

As a business leader what actions will you take based on these statistics?

What other statistics can you think of that might improve or offset these?

© Phil Hoffman 2013. All rights reserved

Seems Mighty Quiet Regarding the Stock Market

Normally my intention is not to blog on the stock market … and probably shouldn’t now. But this week is showing seriously concerning signs and – maybe it’s just me, but – it seems to me that the media is keeping things fairly low key concerning the possible implications. Guess they are focused on the Facebook IPO. This is somewhat baffling to me.

Hasn’t the media been reporting we’re into recovery …

It’s been my personal contention that we are not – will not – be in a “recovery” until the Dow Jones is over $14K. In the $13K range, we are “working toward a recovery” … and under $13K we’re in a recession. Today the market again closes under $12,500 … yikes! And the media seems to be having a rather lackluster attitude / response so far.

While I readily admit that I am not a stock market guru or forecaster, it is my personal opinion that there are three very basic issues impacting the economy that are not being addressed openly and honestly by the parties that can make the decisions to change things. Those three things are:

1. The current and short-term demographics of our economy clearly reflect that the age group for consuming in our economy is not big enough to lift our economy. Since we are a consuming economy and our GDP is based on production and consumption … and the government is 30% of the GDP and does not produce anything, our economy can only stay sluggish at best … or go down. With the primary consuming demographic of our economy – the age group 34 to 64 – being projected to increase at 2% – 3% over the next 15 years (and that is NOT per year) … and the age group over 64 is projected to increase at over 50% over the next 15 years … it is hard to imagine how our economy can grow.
2. As long as the financial sectors continue to not realistically value real estate … but continue to keep it overvalued on their books (and hoard cash) the economy cannot bottom out and rebound. IF this is the right way to handle this segment of our economy, then we are all in for at least 5 – 7 years or longer before all the industries affected by real estate can expect true growth. (And remember, inflation is just waiting to raise its head … and will)
3. The crisis that is going on in Europe is the crystal ball to see what is going to happen – sooner than most of us think – if our leaders continue to do nothing or make only band-aid type adjustments. The PIGS are sending us a message and we don’t seem to be listening.

This is so simple it seems complex.

What are your thoughts on the economy … the stock market?

Do you think everything is in place for things to work out well?

What are you willing to do about it?