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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: zonder who wrote (11181)	8/31/2004 9:37:11 AM
From: mishedlo	Read Replies (3) of 116555

Merrill Lynch on the Household Survey We continue to be amazed at how much time and energy the ‘pundits’ spend in trying to explain away the last couple of nonfarm payroll reports – again, many in the ‘Pollyanna’ crowd would rather point to the 629k job gain as per the household survey as opposed to the paltry 32k increase contained in the nonfarm survey. But those pundits did not articulate that 95% of that ‘entrepreneurial’ related employment jump in the household poll was in parttime jobs. And these pundits also did not tell you that even the BLS said that the nonfarm survey is the more reliable of the two. What nobody seems to question in that 600k+ household survey is, how that in July those over the age of 45 saw job gains of 400k, and those between the ages of 16 and 24 saw job increases of 170k, but the ‘breadwinners’ cohort (in the key 25-44) posted a job LOSS of 27k? This bi-modal distribution does, however, line up with the fact that 95% of that blowout household employment gain was in parttime … sonny was mowing lawns and granny was selling pies. Finally, we see research folks at the Fed published a report that totally refutes the notion that we should be paying close attention to the Household Survey, ostensibly because it will make us feel better. The San Francisco Fed just published a study titled “Two Measures of Employment: How Different Are They.” This is a must-read for the truth-seekers among us. The report notes that the ballyhooed household Survey contains “a large number of ‘proxy responses’ by household members who may have incomplete information on the employment status of other family members.” As a result of this and the puny sample size, “the household survey has drawbacks that may induce larger biases than the payroll survey.” How often have you heard that the nonfarm survey ‘fails’ to pick up all those entrepreneurs called ‘self-employed’ that all the growth-bulls cite as a missing link? Well, the San Francisco Fed has an answer – “self-employment should be countercyclical.” That’s right – when the economy is strong, we should be seeing fewer folks being forced to set up shop in the basement as companies step up the hiring process. The report actually concludes that “increases in self-employment … reported in the household survey may indicate a weak rather than improving labor market, suggesting that the household survey may send a false signal of employment strength”. So we think the fact that nearly one out of every three non-agricultural jobs that have been ‘created’ out of the beloved Household survey since April was in the “self-employed” category may not be something the ‘growth-bulls’ should be crowing about. A Growing Share of the Workforce Is In Part-time and Temp Employment. [Is that a good thing? - mish]

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