Lou Costello Labor Math Closes Out 2023

216,000 Jobs Created? Unlikely.

The Bureau of Labor Statistics decided to end 2023 on a high note, with the December Employment Situation Summary once again beating analyst expectations—if you don’t look too far past the headline numbers.

Total nonfarm payroll employment increased by 216,000 in December, and the unemployment rate was unchanged at 3.7 percent, the U.S. Bureau of Labor Statistics reported today. Employment continued to trend up in government, health care, social assistance, and construction, while transportation and warehousing lost jobs.

Buried at the bottom of the jobs report was their now routine admission of how badly the BLS overcounted jobs in prior months.

The change in total nonfarm payroll employment for October was revised down by 45,000, from +150,000 to +105,000, and the change for November was revised down by 26,000, from +199,000 to +173,000. With these revisions, employment in October and November combined is 71,000 lower than previously reported.

Even before we dig into the underlying detail of the December numbers, the BLS once again reminds us that Lou Costello Labor Math remains the golden rule of the Employment Situation Summary, and that we must take this data with several grains of salt.

I do not know what corrections will come to the December jobs numbers, but it is a safe assumption that there will be corrections, and an equally safe assumption that they will be to the downside.

When we dig into the detail of the December numbers, once again we find that the headline numbers don’t add up.

Wall Street was expecting a far smaller jobs number, although some analysts were willing to be relatively broad minded.

While the Dow Jones estimate is for a nonfarm payrolls gain of 170,000, Art Hogan, chief market strategist at B. Riley Financial, said the acceptable range is really something like 100,000-250,000.

“I just feel like we have a much better receptivity to good news being good news now that we know that that’s not going to induce another rate hike,” Hogan said. “It’s just going to push off a rate cut.”

Corporate media was equally pleased with the number, and went on to rhapsodize about how wonderful 2024 will be as a consequence.

Economists polled by Reuters had forecast payrolls increasing by 170,000 jobs. The economy added 2.7 million jobs in 2023, a sharp step-down from the 4.8 million positions created in 2022. That reflects cooling demand for both labor and in the broader economy following 525 basis points worth of rate hikes from the U.S. central bank since March 2022.

The data indicated that the economy avoided a recession last year and would likely continue to grow through 2024 as labor market resilience supports consumer spending. Roughly 100,000 jobs per month are needed to keep up with growth in the working age population.

Market reaction to the jobs numbers, however, was mostly an apathetic “meh”.

Equities had an initial burst of enthusiasm, which quickly faded, with the afternoon trading bringing the major indices just barely back into positive territory on the day.

Treasury yields followed a similar trajectory, moving sharply up, then sharply down, then moving incrementally back to a small rise on the day.

Predictably, Dementia Joe’s handlers decided to take another undeserved “victory lap” for “Bidenomics”, arguing once again that the positive job numbers are due to the economic brilliance of the Oval Office.

Acting Labor Secretary Julie Su took the madness to an epic level by proclaiming on CNN that everything in the jobs market was “by design”.

Co-host Brianna Keilar asked, “Are you going to be able to increase or expedite work permits? Is that on the table in these ongoing border and immigration talks?”

Su responded, “Yeah, so, the President has also been very clear that we need comprehensive immigration reform. We need a humane immigration policy that is going to also serve, not just the economy, but actually working people. We’ve been in a very tight labor market for some time, and that is by design. A tight labor market is good for workers. It increases worker power. It’s what has helped result in these wage increases and other improvements to working conditions, better retirement security, better health and safety protections, and the like. And so, I think the President has called for Congress to address the immigration issue. He has also called for more funding so that there can be a strong policy at the border. But what we’ve certainly seen is, throughout the economy, immigration is one reason why the economy is strong and that workers –.”

Yeah, she really did say all that.

Yet closer scrutiny of the jobs report tells us once again that Wall Street’s “ho-hum” reaction was largely misplaced, and the regime’s celebrations simply delusional. The numbers are not even remotely as good as that, and there is considerable cause for concern within those numbers.

First and foremost, we are presented with a sizable dichotomy between the Establishment Survey (which provides the payroll numbers and thus the “headline” figure for the Employment Situation Summary itself) and the Household Survey (which provides subsidiary numbers such as the unemployment rate). While the seasonally adjusted non-farm payroll figures show job growth of 216,000 jobs in the Establishment Survey, the Household Survey shows a decrease in the employment level of 683,000 people.

Even without the rather shocking drop in the employment level, we also have to confront the reality that, within the Establishment Survey itself, job growth has been getting progressively weaker throughout 2022 and 2023. December does little to suggest an alteration of that overall trend.

This has been a persistent discrepancy within the jobs report that has not been either addressed or resolved in recent years. If we index to January, 2021, employment levels from both the Establishment Survey and the Household Survey, as well as ADP’s National Employment Report, we quickly see that the Household Survey has routinely showed substantially less employment growth than any other survey.

Equally distressing is that, according to Household Survey data, the only reason employment levels are not much worse than they are is because part time employment rose in December, while the bottom fell out of full time employment. This is true whether we are looking at the unadjusted data or the seasonally adjusted data.

Clearly, 2023 was not a “great” year for American workers, and December was just as clearly a perfectly horrible month.

Nor should Dementia Joe’s clueless self-congratulations go unremarked. Contrary to the inane tweets of his handlers, the current regime’s record on jobs is not all that great.

For starters, going by the unadjusted Establishment Survey data, in December payroll sizes dropped by 167,000.

The general trend on payroll growth even with the seasonally adjusted data throughout Dementia Joe’s Reign of Error is downward—decreasing, not increasing, and certainly not even standing still.

By comparison, Donald Trump, during his first three years in office, had a much less pronounced softening of job growth.

To make matters even worse for the current regime, we should not forget that at the start of 2021, the US was still bouncing back from the Pandemic Panic Recession, a time when rising employment should be an easy layup for any Administration.

However, while there was some further recovery of jobs in 2021, it still took until May of 2022 for the overall employment level to get back to where it was at on the eve of the Pandemic Panic Recession.

Prior to May 2022, the economy was simply recovering from the brutal everything shock of the COVID lunatic shutdowns and the Pandemic Panic Recession they spawned.

Yet even after May 2022, Dementia Joe’s track record on jobs still only matches at best Donald Trump’s. If we extrapolate where job growth would have been were it not for the recession derailing everything, we quickly see that the current regime has only recently gotten close to the same growth trend, but still at a reduced absolute level.

If we compare Donald Trump’s indexed job growth record from 2019 to Dementia Joe’s record through 2023, they are approximately the same.

The Trump administration recorded a 1.1% increase in payroll size in 2019.

Dementia Joe’s regime recorded a 1.4% increase in payroll size in 2023.

Dementia Joe’s handlers are claiming that an aggregate payroll growth advantage of 0.3% over Donald Trump’s Administration is a sea change in America’s economic fortunes. The scary part is they might actually believe that to be true!

However, a comparison of the employment trends for both Administrations is instructive. If we consider what might have happened in Donald Trump’s Presidency had the Pandemic Panic not happened, the payroll growth for his four years in office looks like this.

While Donald Trump’s Administration did see a softening in job growth, Dementia Joe’s regime has seen a much more dramatic softening since 2021.

If we extrapolate the linear trend through the end of 2024, payrolls could on average be shedding thousands of jobs per month!

That would be quite the coda for “Bidenomics”.

Yet the shortcomings of the labor situation in the US do not end with mythical jobs “growth”. Americans ended 2023 by working overall fewer hours, with goods-producing (i.e., manufacturing) jobs working the fewest hours.

Within the goods producing job categories, only Mining and Logging ended the year with a longer work week.

The lack of work hours during the week has hindered wage growth in this country, contributing to workers' paychecks steadily losing ground to inflation from 2021 onward.

By comparison, workers’ paychecks actually gained ground on inflation during the first three years of the Trump administration.

We should note that even if one projects higher rates of inflation via various calculation methodologies (e.g., ShadowStats), 2017-2019 still is better for the average paycheck than 2021-2023. Shifts in magnitude do not alter the overall trend lines, particularly when the data is indexed to a common base period.

While some will argue that it is inappropriate to hold the government accountable for wage trends in the private sector, the rebuttal to that is that Dementia Joe’s handlers invite that accountability with their victory laps on X/Twitter. Donald Trump invites the same criticism in the same fashion. If politicians wish to take credit for economic success they must accept accountability for economic failure. One does not come without the other.

The refrain here is one that is all too familiar: once again, the headline BLS numbers do not withstand even mild scrutiny. Once again the data does not show anything for either Wall Street or Washington DC to tout as “success”. Once again the data does not show the jobs market in the US to be “strong”, “resilient”, or “tight”.

Once again we are presented with a jobs market that is “weak”, “sick”, and “toxic”.

Once again we see that neither Wall Street nor Washington care to look closely at the data, for fear of disrupting the narrative. Once again we see that both Washington and Wall Street vastly prefer Lou Costello Labor Math to reality.

Once again we see that the “expert” both on Wall Street and in Washington truly do not give a tinker’s damn about ordinary workers, the men and women whose lives and livelihoods were turned topsy-turvy by the Pandemic Panic Recession and which have not come even close to recovering what they had, much less catching up on any wage or earning growth they would have had but for that burst of government madness.

Wall Street might see the December jobs data as acceptable and “okay”. Main Street is not likely to be anywhere near as sanguine, for this is not an employment situation that is at all okay.

Workers in December lost jobs, lost hours, and lost wages. The BLS might try to paper over that reality but even their futzing of the numbers cannot hide that reality.

Wall Street wanted good news and the BLS delivered by obscuring once again the bad news lurking everywhere in the US jobs market.