A private measure of unemployment is no better

Good morning everyone!

ADP, processor of almost everyone’s pay check, has its own private data on unemployment. The number of jobs shed in October by their reckoning was 203,000. One of the primary differences in the ADP survey and the Bureau of Labor Statistic’s is that ADP only counts private sector jobs and ignores government jobs.

What to watch out for: While the pace of the job loss is slowing, it is still a very high figure. Unemployment increasing at such high levels is very hard for the economy to compensate for. One of the reasons is that our population continues to grow at about 2%. At 305 million U.S. citizens that means that each year very roughly 6 million jobs need to be added just to keep up with new people entering the workforce. [Yes, I realize that the population expansion of 18 years ago is a more relevant way to determine who needs a job now.] This 6 million figure translates into 500,000 new jobs a month just for the figure to stay level. But with unemployment at almost 10% vs. a “normal” unemployment rate of around 6%, the economy has to not only catch up with the population but find jobs for the 4% of people normally not unemployed. Ouch!

So we need to see the bottoming of unemployment before we see consumer confidence start to improve. In the meantime, watch for the economy to grow through business investment and government spending.

Have an excellent day!

Jason