MONEY 57 - EMPLOYMENT

THIS MY 57^TH BLOG ON UNDERSTANDING MONEY TOOLS

There was a media release from the government stats the week of December 15^th that propelled the stock markets higher. All it took was to announce “jobless claims were down”. This inferred that the economy was again set to take off.

Now once again, with my subjective and analytical thinking hat on, let’s take a look. A stand-alone figure like this has little relevance to our overall economic health. Immediately what goes through my head is:

1)    How many people have given up trying to get employment?

2)    How many underemployed people are working?

3)    How many people are not included now because corporations have paid employees to take early retirement?

4)    How many people have taken some sort of part time work for the Holiday Season?

5)    How many people does this include who have part time jobs so employers don’t have to pay any benefits?

6)    Any more questions that need answering?

You read facts about employment that the government has released; are they true or have they been slanted or accounted for in a different manner than was standard years ago? I look at a figure or statement and think is it “qualitative or quantitative, is it material or immaterial, is it relevant or irrelevant”.  One or two figures released by the government don’t paint a true picture of anything.

Shall we try this in another dimension? Let’s say someone offers to pay you 100% interest on a loan. I’m going to apply qualitative, material and relevant thinking, and ask the person “for what period of time and how much money”.  If it is only $1 for a year it isn’t worth the paper to create an IOU. In other words you need more facts to make decisions whether it is about the success of the economy, or about making a loan.

Let’s look at this and see if we can read anything in regard to future economic outcomes and employment. We’ve discussed this in previous blogs, but the most important thing for the economy is good, high paying jobs so that the majority of people (middle class) have discretionary income left over after every pay period so they can purchase “want” goods, e.g. a new car, a new home, and the latest computer and technology items.

It has been tough especially the last 8 years or so, and the last 15 years you have seen the average middle class family income dropping. Regarding jobless claims down, will that remain? Since the Great Recession the USA has created about 1.75 million jobs, great! Now, here is something not stated much and that is that 3/4 of these jobs are in the oil and gas/energy related industry. As we all welcome gas prices are down at the pump, about 50% from the highs, or more.  This helps most people around the world except if you are in the industry or live in a country that pays its bills/relies on oil or gas production for exportation. Certain industries are welcoming the lower prices, especially trucking/transportation, airlines, delivery companies and farmers and people in the agricultural business. These companies buy large quantities of fuel far in advance to lock in favorable pricing. There normally is a lag time before these industries lower the prices to the public and make extra profit.  It may take a long time for oil prices to rise, therefore look for jobs away from the industry, again technology and health care.

Bottom line for this blog is don’t get too excited about the economy and jobs until you get more supportive facts. I am not a pessimist, however a realist. The US and world economies are in a questionable situation, and I will write my thoughts in a future blog.