Why the Bad Jobs Report Shocks Some of Us

Today's awful jobs report apparently threw some of us for quite a loop:

"This is an extremely troubling labor-market report, given how strongly stocks have rallied and how much expectations have been lifted with optimism around the consumer and housing," said Scott Anderson, economist at Bank of the West.

But look at it this way, Scott: if the stock market has been rising on a sea of liquidity (money printing by the Fed), then this rally really doesn't tell us that the future of the economy is rosy after all, right? And why exactly were you so optimistic about the consumer and housing? The consumer spending we've seen may not reflect growing wealth of the consumer manifesting itself in increased spending; it may simply be consumers, already in debt, spending as has been their habit for years and years - spending money they don't have. That's something to be optimistic about? As for housing, much of the buying has been by large investment funds created by Wall Street, not by individuals who want to buy a home for themselves. This is not a healthy recovery of housing based on fundamentals. It's an investment play by Wall Street professionals who have access to cheap money created by the Fed, to which they have exclusive access. It's speculative activity, not a fundamental change of direction.

So Scott, what's so surprising. You act shocked. Just relax and think this through and I'm sure you'll get it. Forget about your job of having to make everything look rosy for the bank's customers. If you don't, you'll keep banging your head against the wall. (And who knows, maybe this guy really does understand more than he indicates. He just can't say it or the bank will get rid of him. After all, he probably makes a good living, so why give up the income?)

You can read more HERE...but don't miss this: there's no longer any pretense about exactly how "unemployment" dropped in the midst of all this:

The unemployment rate, obtained by a separate survey of U.S. households, fell one-tenth of a percentage point to 7.6%, largely because of people dropping out of the work force.

When this point was first raised, the cheer-leaders said it wasn't true. They said that this idea was either sour grapes on the part of pessimists, or an exaggeration that ignored the "great news" that unemployment was dropping. Look at the difference between then and now. Now, it seems everyone understands the real reason behind the drop in unemployment.