Employment Week

This week should more than usually interesting because of the Gallup situation. The spike in Gallup’s unemployment measure has continued, backing off only slightly to 8.7% as of Friday’s report.

The obvious explanation of a sudden rush to re-enter the workforce is rather undermined by a matching drop in payroll-to-population from 44.6% at the beginning of August to 43.7% as of last Thursday. Actually the peak was 45% in late June. “P2P” is based on the US adult population, currently about 241 million and growing about 200K per month, according to the Census Bureau.  A  0.9% change, taking into account population growth, represents a little less than 2 million jobs. The $trillion question is how much of this is to be reflected in the BLS numbers which will be reported on Friday. The potential implications for growth and Fed tapering are obvious.

Notably, Europe has the same situation – apparently bullish PMI reports while manufacturing employment declines. Unless some magical discovery is dramatically increasing manufacturing productivity, there’s something wrong with this data, either output or employment.

So, in summary: better than expected European manufacturing driven by surging exports to somewhere, forcing employers to cut jobs for 19 straight months and at an accelerating pace in August, in the context of record low loan creation.

Forgive us if we remain skeptical on Europe’s so-called “recovery”, which just may meet reality once the German elections are over in less than a month.

Of course the Syria situation will add some interest as well, thankfully the egomaniac in the White House was made to see sense at the last minute. Now we will see if Congress has the common sense to follow the UK’s lead, or the defense lobby will pay up for another war. This is, of course, all about the defense budget – who would dare to cut defense when we are in a war?

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