Larry Kudlow: The Jobs Report Was Better Than People Say

Well guys, headlines everywhere are calling September Job Recruitment Report bleak and showing people not wanting to work, gloom and doom, all because the baseline figure was 300,000 less than agreed expectations. So I read and see the gloom and the bleak doom, people don’t want to work, the government doesn’t want them to work, etc.

I hate to say it, but I have a completely different view. This may not be politically correct from a conservative point of view, but in fact, I will say, it was a solid jobs report. That’s right, it might not have been the best in history, but it was very powerful.

The key point here, which many people overlook, and I don’t know why: Private sector jobs rose by 317 thousand. Remember private sector jobs? They are the most important jobs, and upward revisions of special jobs in July and August reached more than 100,000 jobs.

In fact, jobs rose by about 414,000 as revisions were close to the target with consensus estimates.

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Which is why, by the way, the stock market hasn’t reacted much. I looked last time, it was just a smidge. Now, it was government jobs and especially public school jobs that crashed in this report.

This has to do with crazy seasonal adjustment problems, which can’t keep up with school closings and various openings related to the pandemic across the country.

But I’ve always been interested in entrepreneurship capitalism which is much better than big government socialism, and one way to keep track of entrepreneurial capitalism is private hiring, and it works very well, thank you very much, it was featured in today’s report. Sometimes you have to be empirical and objective, not political, in your economic analysis. And I’m sorry a lot of the commenters weren’t.

There are other good things about this report, besides the special functions. For example, domestic labor, which is mainly driven by small businesses, hence the unemployment rate, has risen by 526,000. This is a big number.

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Because of that, the unemployment rate fell again from 5.2% to 4.8%. This is very important. The so-called underemployment rate, called U-6, covers more land, decreased from 8.8 to 8.5%. The employment-to-population ratio increased from 58.5% to 58.7%.

Now that’s still very low, but a year ago it was just 56.6%. So it is moving in the right direction. It’s not great, but it’s good.

Here’s more: Wages, according to average hourly wages, jumped 0.6%, up 4.6% over the last 12 months. Meanwhile, total hours worked by 0.8% – a significant figure, and 4.7% more than for the year.

I’m throwing at you a lot of numbers, but they’re important numbers, because like I said, when you look under the hood at the private economy, jobs were very strong in September.

Now, here’s a little trick to help explain the economy and understand consumer or worker income. You take hourly earnings times hours worked, this is called proxy income from wages, which has jumped 9.5% over the past 12 months. It’s a huge number. I am happy that wages are rising, and I am happy to help the blue-collar middle-class workforce. Incidentally, their wages are increasing because the rate of productivity is also rising well.

Now, CPI inflation was 4.3% for the year ending in August. The consumer price index rose 5.3%.

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So you can see that the 9.5% wage hike is outpacing inflation despite what almost all commentators are saying. Now, don’t get me wrong, inflation is very high, that’s what I’m giving you. I don’t want 4% inflation, I don’t want 5% inflation.

And the Fed should stop funding the government’s bad spending and borrowing habits, and the Fed should end quantitative easing because if it doesn’t, the inflation rate will rise further.

But having said that, I stress the wages are solid. This is a good thing.

Now here’s a hint on future job numbers, in the last two weeks and this is from my friend Ed Hyman, continuing job claims have fallen by 7 million people. 7 million! massive decline. I think the main reason behind this is that the federal unemployment increase ended in the first week of September. Of course the benefits are important. If you stop paying people for not working, guess what? They will be back to work. And I think in the next few weeks, you’ll see a larger workforce, more people coming to work, more people getting those jobs. It could take a couple of months to run but it shows the potential for some pretty big job gains in the next few months.

Now, two final thoughts about all this. I know I’m very contradictory, but I’m trying to give you the truth.

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Even though Q3 GDP is going to be very weak, probably from the delta breakout, which is a breakout incidentally that is now rolling back and forth, but the economy is still a lot stronger than people think. Just like today’s major job number, the business story is much more powerful than people think.

But that’s my second point, and I think it’s more important. In this economy, perhaps in any economy, we don’t need $6 trillion in extra spending “stimulus.” This is undoubtedly the rate of inflation. It is a tax on the middle class. We don’t need multi-trillion tax increases that will put a lid on the recovery from the pandemic caused by Trump.

High taxes and inflation are a double tax on the middle class, and we don’t need a Green New Deal that has already diminished America’s standing in global energy markets. Nat gas, home heating oil, crude oil, and gasoline are all expensive because of Biden’s energy policies that upended Trump’s energy independence. We don’t need a well-deserved welfare state that will damage jobs by paying people for not working.

Joe Manchin is right. We need testing means, time limits, and we need fare requirements. We don’t need another dollar to earn welfare spending. Not another dollar! We do not need to embark on the European model. So, the moral of my story is that my post is more accurate and interesting than anything I’ve heard or read so far. It is experimental, not political.

And second, I will simply say Save America. Kill the bill.

This article is excerpted from Larry Kudlow’s opening comment on the October 8, 2021 edition of “Kudlow”.

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