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Executive Summary

Financial media proclaims the job market is strong, citing 372,000 jobs created in June according to the Establishment Survey. However, digging into the details reveals some ignored discrepancies. Since March 2022, the Establishment Survey shows 1.124 million jobs created where the Household Survey shows 347,000 jobs lost during the same period (second graph). Furthermore, the number of unemployed is 159,000 higher than reported pre-pandemic, and the labor force participation rate is below pre-pandemic and pre-Great Recession (first graph). Also, full-time and part-time jobs are being lost and employees are becoming multiple jobholders (third graph) to make ends meet. The contradictory survey results combined with very weak economic data reported lately should give one pause as to the state of the economy and the job market.

Please proceed to The Details.

“Two truths cannot contradict one another.”
–Galileo Galilei

The Details

For the past couple of years, the media has continuously proclaimed that the job market is strong. The reason for this is the fact that more job openings existed than people looking for work. However, what do the numbers bear out? How strong is the employment situation? Let’s dig into the details to see what the numbers say.

Overall, since December 2019 – just prior to the pandemic – the number of people employed today remains 692,000 lower. The number of unemployed is 159,000 higher than recorded pre-pandemic. In other words, all of the jobs created over the past couple of years merely filled the job vacancies resulting from the pandemic. And there remains a deficit of 692,000 jobs to fill just to get back to the previous status quo. Also, the number of working age individuals not in the labor force, and not looking for work, has increased by 4.2 million since December 2019. And for long-term reference, since the start of the Great Recession in December 2007, 20.5 million potential workers have dropped out of the labor force.

The labor force participation rate, seen in the graph below, remains below the pre-pandemic level as well as below the pre-Great Recession level.

Taking a closer look at last month’s jobs report reveals some eye-opening discrepancies. The Establishment Survey reported a gain of 372,000 jobs. This is the number bandied about by the media. The number “beat” expectations and was celebrated as a win for the economy. However, the Household Survey – which is used to calculate the unemployment rate, labor participation rate, and other data – reported a huge loss of 315,000 jobs in June. In fact, as reported by Zero Hedge, since March the Establishment Survey has indicated jobs have increased by 1.124 million, while the Household Survey shows job losses of 347,000 for the same period.

Additionally, according to the June report, the composition of job holders has changed. The June Household Survey reported a loss of 152,000 full-time jobs, a loss of 326,000 part-time jobs, and a gain of 239,000 multiple job holders.

Many pundits are pointing to the Establishment Survey job gains (while ignoring the Household Survey results) as proof the economy has not slipped into a recession. However, the graph below shows that job gains continued at the start of recessions in 1970, 1974 & 1980. The June jobs report does not prevent a recession from already existing in June of this year.

There are many inputs and caveats to be considered when examining the employment situation. To merely look at one quoted number, which has been seasonally adjusted, adjusted for small business birth/death data and contradicts a complementary datapoint, will not reveal the true picture. When examining a more comprehensive set of data, it is clear the jobs situation is more precarious than proclaimed. The U.S. remains in a “recovery” period as the number of employed workers is still lower than before the pandemic. The contradictory survey results combined with very weak economic data reported lately should give one pause as to the state of the economy. The GDP estimates continue to confirm a recession is currently present. Do not be confused by one simple “survey” result.

The S&P 500 Index closed at 3,899, up 1.9% for the week. The yield on the 10-year Treasury 

Note rose to 3.10%. Oil prices decreased to $105 per barrel, and the national average price of gasoline according to AAA fell to $4.68 per gallon.


© 2022. This material was prepared by Bob Cremerius, CPA/PFS, of Prudent Financial, and does not necessarily represent the views of other presenting parties, nor their affiliates. This information should not be construed as investment, tax or legal advice. Past performance is not indicative of future performance. An index is unmanaged and one cannot invest directly in an index. Actual results, performance or achievements may differ materially from those expressed or implied. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy.

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