More Job Market Malaise
Even if we give Zandi the benefit of the doubt and see combined upward revisions to December of 100,000 jobs in January and February — amounts which would be highly unusual in historical context, and are therefore not likely — that would still leave December's overall turn for the worse against November at 151,000, and its decline against the previous ten months at 108,000. That would still be just plain ugly.
The smiley-face crowd's next line of defense is that December was a one-off — some are even blaming inclement weather, which is pretty pathetic, given that those who predicted seasonally adjusted job additions of almost 200,000 already knew what the month's weather was like — and that the generally upward trajectory seen during most of 2013 will resume. There are many reasons to question that optimism.
Christmas shopping season spending came in positive compared to 2012, but not by as much as originally hoped. Those sales increases were achieved with deep discounting, which will certainly cut into retaliers' and suppliers' profit margins, limiting their ability to expand hiring or perhaps to even hold on to the employees they already have during the early months of 2014.
December's vehicle sales were only ahead of December 2012 by 0.3 percent. That too was blamed on inclement weather. That can't possibly explain all of the 6.3 percent decline seen at General Motors.
Last year's third quarter saw annualized economic growth of 4.1 percent. But about 40 percent of that came from a third straight quarter of inventory buildups. In the ADP conference call, Zandi cited unidentified statistics leading him to believe that inventories continued to increase at a brisk pace during the fourth quarter. If he's right, the whiplash effect during early 2014 from possible overproduction may be significant, and could negatively affect hiring. Job seekers should be hoping that he's wrong, and can perhaps take some comfort in ADP's 151,000 private-sector job miss compared to the government's Friday figures.
The final element of the mix is Obamacare. No one can possibly know what it will do to the economy and the job market, because the government has never tried to take over one-sixth of the economy.
Early returns aren't good. Employment in the healthcare sector itself declined by a seasonally adjusted 6,000, ending a streak of 124 consecutive months of gains. Disastrous rollouts at Healthcare.gov and at many of the state insurance exchanges have sown massive confusion and uncertainty. One thing you don't do as a business owner in such circumstances is hire a lot of full-time permanent people.
If there's a silver lining to any of this, it may be that bad employment news might persuade some of those in Washington preparing to sell out their country by pushing for illegal alien amnesty, deceitfully known as "immigration reform," to back off. But that's probably hoping for too much.