Headlines everywhere are calling the September jobs report dismal, and it shows people don’t want to work, and other misconceptions because the turnover was 300,000 under consensus expectations. Gloom and misfortune are everywhere, people don’t want to work, the government doesn’t want them to work.
I hate to say it, but I have a whole different point of view. I may not be politically correct from a Conservative point of view, but it was a solid jobs report. It’s true, it might not have been the best in history, but it was pretty strong.
Here is the key. Private sector jobs increased by 317,000. Remember private sector jobs? They are the most important jobs, and the upward revisions of private jobs in July and August came to over 100,000. So, in fact, private jobs increasing by about 414,000 with revisions were roughly in line with consensus estimates.
This is also why the stock market has not moved much, even slightly up. It was government jobs and especially government school jobs that crashed into this report. It has to do with crazy seasonal adjustments, which cannot keep up with various school closures and openings across the country linked to the pandemic.
Yet I’m still interested in free enterprise capitalism, which is much better than great government socialism, and one way to follow free enterprise capitalism is private employment. It seems to be working well, thank you. Sometimes you have to be empirical and objective, not political, in your economic analysis.
You know what? There are other good things in this report, again in the private sector. Household employment, driven mainly by small businesses (from which the unemployment rate is derived), increased by 526,000. That’s a large number.
As a result, the unemployment rate fell again from 5.2% to 4.8%. and the so-called underemployment rate called U-6 increased from 8.8% to 8.5%, and the employment-to-population ratio increased from 58.5% to 58.7%.
Now it’s still too low, but a year ago it was 56.6%. So it’s a bit of a creep in the right direction. not fabulous, but good. Here is a little more. Wages as measured by average hourly earnings jumped 0.6% and 4.6% last year. Its good. The total number of hours worked increased 0.8%, a large number, and 4.7% for the year.
Now here’s a little trick to help explain the economy. To understand consumer income or worker income, you take hourly earnings multiplied by hours worked. This is called the salary income approximation, and it rises to 9.5% in the last 12 months.
It’s huge. The inflation rate for the consumer price deflator was 4.3% for the year ended August. The CPI was 5.3%
but as you can see the rise in wages exceeds inflation despite what almost all commentators are saying.
Now the inflation rate is too high, I’ll grant you, and the Federal Reserve should stop funding reckless government spending and borrowing, and the Fed should end its quantitative easing, because otherwise the rate inflation will soar. even higher. With all this, the wages are high.
Plus, here’s a hint on future job numbers. In the past two weeks ?? and this from my friend Ed Hyman ?? open job applications plunged by 7 million people. That’s because the federal unemployment increase ended the first week of September. Of course, the benefits matter. They will enter the workforce and look for work. it may take months to play out, but it shows the potential for great numbers of future jobs.
Now, two final thoughts. Firstly, even though Q3 GDP is going to be weak, possibly because of the Delta variant breakout (which by the way flips around and back down), our economy is still a lot stronger than people are. think so. Just like the number of jobs today, the history of work is much stronger than people realize.
Second, and more importantly, we don’t need $ 6 trillion in additional spending, which will undoubtedly show up in the rate of inflation. Inflation, remember, is a tax on the middle class. We don’t need multibillion-dollar tax hikes that will throw a wet blanket over the Trump-induced pandemic recovery.
Higher taxes and inflation are double taxation on the middle class. We don’t need a Green New Deal that has already eroded America’s primacy in global energy markets. Natural gas, heating oil, crude oil, gasoline, all too expensive because of Biden’s energy policies that reversed Mr. Trump’s energy independence.
We don’t need a welfare state that damages jobs by paying people not to work. Senator Manchin is right. We need tests of means, deadlines and workfare. We don’t need another dollar in social spending. Not another dollar.
So the moral of my story is that my work is more specific and more interesting than anything you have heard or read so far. It’s empirical, not political. So save America. Kill the bill.
From Mr. Kudlow’s broadcast on Fox News.