Why We Can’t Trust U.S. Job Growth Numbers

A quick look at the recent numbers released by the U.S. Bureau of Labor and Statistics offers a promising picture of job growth in the United States. The nation has created an increasing number of jobs each month for the past twelve months, and the unemployment rate decreased from 5.7% to 5.5% from January 2015 to February 2015, which many see as an indication of good times to come. The numbers are certainly promising, but that’s just the thing of it—they’re numbers. And as anyone who’s taken a basic high school mathematics course knows, numbers can be manipulated.

Such is the case with the Bureau’s most recent data on job growth and unemployment. As Dawn Bennett, financial expert and CEO of Bennett Group Financial Services points out, the unemployment figure purported to have decreased .2% from January to February only included those who’d been actively seeking work within four weeks of the time of data collection. Those seeking work longer than this timeframe, which, let’s remember, is just one month, were categorized as discouraged workers, and individuals in this category were discounted from the total unemployment figure. However, we know there are plenty of reasons people look for work longer than four weeks, including holding out for full-time employment or simply believing there aren’t any suitable jobs available. Yet, these individuals, as well as those that are not considered eligible members of the labor force (approximately 23 percent of the population), were conveniently left out of this unemployment figure.

Seems a little misleading, doesn’t it?

The types of jobs that were added to the economy are also worth closer examination. While the Bureau of Labor & Statistics reports that 300,000 jobs were created in February, just what types of jobs were they? Analysis tells us that nearly 20% of the jobs created were for waiters and bartenders. While this is good news for those in the hospitality industry, we know that these jobs aren’t career positions, that they maintain high turnover rates, and that they’re often part-time. Yet again, by not distinguishing between the types of jobs created, the government is able to tout a rosier picture of job growth and the health of the economy.

What’s more, we’re still witnessing a significant outpouring of full-time jobs to workers overseas. This has largely been the result of a decade-long trade deficit between the United States and China, and has resulted in a net loss of more than 2.7 million American jobs. And even though the U.S. may be creating more jobs at present, when adjusted for inflation, the average American middle-class family is earning approximately 20% less in annual income than they were in 1984.

So does the reality of job growth and unemployment in America really give us reason to celebrate? Those like Bennett think not.

 

Bennett Group Financial Services LLC, based in Washington, D.C., is a comprehensive financial services firm committed to providing opportunities to clients’ as they seek long-term financial success. Its customized programs are designed with the potential to help grow, lower overall risk and conserve client assets by delivering a high level of personalized service and skill.

For more information, call 866-286-2268 or visit http://www.bennettgroupfinancial.com

Securities offered through Western International Securities Inc. (WIS), member FINRA/SIPC. BGFS and WIS are separate and unaffiliated entities.

About Dawn Bennett

Dawn Bennett is CEO and Founder of Bennett Group Financial Services. She hosts a national radio program called Financial Myth Busting http://www.financialmythbusting.com

She discusses educational topics and events in the financial news, along with her thoughts on the economy, financial markets, investments, and more with her live guests, who have included rock legend Ted Nugent, as well as Steve Forbes and Grover Norquist. Listeners can call 855-884-DAWN a as well as take podcasts on the road and forums for interaction.

She can be reached on Twitter @DawnBennettFMB or on Facebook Financial Myth Busting with Dawn Bennett ordbennett@bennettgroupfinancial.com

 

Do Investors Really Have a Reason to be Optimistic?

We’ve heard it time and time again since the start of the new year: the economy is on the upswing; job opportunities are increasing; Americans are optimistic about their chances of finding higher-paying jobs. The economy’s uptick and subsequent increased job opportunities were a main point of emphasis during President Obama’s January State of the Union address, and the media has followed suit with enthusiastic reports regarding expectations of pay increases and hiring sprees over the course of the next two years. But some financial experts and analysts, like Founder and CEO of Bennett Group Financial Services Dawn J Bennett, observes that what the President and the pundits are telling us doesn’t match up with actual economic conditions, and investors should take note.

The University of Michigan’s February consumer sentiment numbers are perhaps most telling of this disconnect between the government’s job prospect narrative and actual job outlook and growth. According to the report, fewer Americans are expecting higher incomes and better business opportunities, as numbers fell approximately 3 points from January. The numbers for actual job growth have also been disappointing. March’s growth numbers came in at just 126,000, far below analysts’ prediction of 245,000. The unemployment rate also has yet to decrease as would be expected in a growing economy, as it remains at 5.5 percent.

The Chicago Business Barometer, which measures business activity in the United States, dropped a substantial 14 points from its January numbers, signaling a marked decrease in the economy’s manufacturing sector. As Dawn J Bennett points out, when the Business Barometer sinks below 50 (as it has this February), it’s typically a sign of an impending economic downturn.

These figures accompany the announcement that the United States GDP fell a whopping 43% from the 3rd Quarter to the 4th Quarter in 2014, a far more marked decrease than what analysts had initially predicted.  Janet Yellen, Chairwoman of the Federal Reserve, gave further indication of a tepid economy by announcing that the Fed did not have any plans to increase interest rates in the coming year, which, were the economy to be improving, would be a logical course of action. Sustained interest rates are a subtle, yet extremely telling, indication that even the Federal Reserve is wary as to whether the economy will truly gain full steam in the coming months.

So what does this mean for the American investor?

Careful analysis of economic indicators like the Chicago Business Barometer, the University of Michigan consumer sentiment report, shifts in the GDP, and Federal Reserve activity will be essential for successful investment in the coming months. We’re currently in an economy in which public narrative and actual economic conditions wildly differ, and the wise investor will be the one who chooses what they pay attention to very carefully.