Total nonfarm payroll employment increased by 171,000 in October, and the unemployment rate increased at 7.9%, the U.S. Bureau of Labor Statistics reported today. Employment rose in professional and business services, health care, and retail trade. The change in total nonfarm payroll employment for August was revised from +142,000 to +192,000, and the change for September was revised from +114,000 to +148,000.

So with this report another 255,000 (171 + 50 + 34) were added, quite a good number. If we could see 250,000 jobs added for 12 more months that would be quite nice – though still will not have recovered all the jobs cost by the too-big-too-fail credit crisis.

Employment growth has averaged 157,000 per month thus far in 2012, about the same as the average monthly gain of 153,000 in 2011.

Hurricane Sandy had no discernable effect on the employment and unemployment data for October. Household survey data collection was completed before the storm, and establishment survey data collection rates were within normal ranges nationally and for the affected areas.

Long-term unemployment remains a problem, in October, the number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 5.0 million. These individuals accounted for 40.6% of the unemployed (a higher percentage than normal – as it has been for the duration of the too-big-too-fail job recession.

The civilian labor force rose by 578,000 to 155.6 million in October, and the labor force participation rate edged up to 63.8%. Total employment rose by 410,000 over the month (I am guessing this is not seasonally adjusted – the highlighted figures normally quotes are seasonally adjusted figures). The employment-population ratio was essentially unchanged at 58.8%, following an increase of 40 basis points in September.

Related: Unemployment Rate Reached 10.2% (Oct 2009) – USA Economy Adds 151,000 Jobs in October and Revisions Add 110,000 More (Oct 2010, unemployment rate at 9.6%) – USA Unemployment Rate Drops to 8.6% (Nov 2011) – USA Lost Over 500,000 Jobs in November, 2008

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Big Income Losses for Those Near Retirement takes a look at some interesting data, including data on median income drops due to the too-big-too-fail credit crisis recession.

The post also includes data showing the only groups with income increases as those 65-74 years old and, 75 and over which is surprising. 25-34 took the 2nd largest drop decreasing 8.9%.

Another interesting tidbit is the percent of people over 65 with jobs. In 1960 20% of those over 65 had jobs. Which pretty much decreased steadily to 10% in 1986 and then has increased steadily to 17% in 2011.

Related: USA Individual Earnings Levels: Top 1% $343,000, 5% $154,000, 10% $112,000, 25% $66,000 –
Looking at Data on the Value of Different College Degrees – 60% of Workers in the USA Have Less Than $25,000 in Retirement Savings – Credit Card Regulation Has Reduced Abuse By Banks

After several poor months for job creation (adding well under 100,000 each month) we have some good news. Total nonfarm payroll employment rose by 163,000 in July, with the unemployment rate at 8.3%. Since the beginning of this year, employment growth has averaged 151,000 per month, about the same as the average monthly gain of 153,000 in 2011.

The change in total nonfarm payroll employment for May was revised from +77,000 to +87,000, and the change for June was revised from +80,000 to +64,000. Which means the total job gains for this report is 157,000 (163,000 +10,000 [for May] and -16,000 [for June]).

One of the continuing severe problems (since the credit crisis bubble burst) has been long term unemployment. In July, the number of long-term unemployed (those jobless for 27 weeks and over) was 5.2 million. These individuals accounted for 40.7% of the unemployed (a high figure historically).

Given all the problems created by the financial system failure (created over the last 15 years – in the USA and Europe) it is actually fairly amazing that we have been adding jobs nearly as much as we have. But climbing out of the huge whole we created for ourselves (by continually re-electing those that allowed the too-big-too-fail financial mess – and those we elect continue to reward their friends that created the mess instead of fixing it) is a huge task. It requires much better job creation than we have had this year.

Adding 150,000 jobs a month would be decent if we hadn’t created such a huge problem that digging out of it requires much better results. Moving back above that average is much better than being below it, but we really need to bring the new jobs created above 200,000 for a couple years to make a serious dent in the problems created earlier.

Related: USA add 117,000 Jobs in July 2011 and Adjusts Previous Growth in May and June Up 56,000 More – USA Unemployment Rate at 9.6% (Sept 2010) – Unemployment Rate Drops Slightly to 9.4% (Aug 2009) –
Over 500,000 Jobs Disappeared in November 2008
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Us treasury yield hit a incredibly low level years ago and they have continued to fall further. Granted this is mainly due to the bailout of the economy necessitated by the politicians favors to the too-big-too-fail financial institutions that have given those politicians so much cash over the years. Other factors are at play but the extent of the excessive punishment of savers is mainly due to political bailouts of bankers and bailouts of the economy caused by the bankers actions.

This extremely low rate environment is crippling to many retirees. The small percentage that actually did what they were told to have been blindsided by years of artificially low rates (and it is likely to continue for years). This has pushed some that would have been comfortable in retirement into an uncomfortable one an has pushed some from a challenging balancing act to essentially having to eliminate every possible expense (and even that may not be enough).

I can’t believe long term bonds are a sensible investment now. Of course I haven’t thought they were for 10 years, but they are even worse now. Bonds of “strong” governments (USA, Germany, Japan) are paying less than inflation (sometimes even less than 0 nominally – I think this has just been for short term issues so far).

I cannot see putting more than token amounts into long term bonds at these rates. Corporate bonds are not much better. The economic damaged caused by out of control too-big-too-fail institution is huge and continuing. And the politicians that have been paid lots of cash by those too-big-too-fail institutions continue to treat the too-big-too-fail players are favored friends. The yields are corporate bonds are not good for companies that are strong.

The alternatives are not great. But real assets, strong dividend stocks, strong company stocks, and short term bonds seem like better options to me in many cases. And hope we elect people that will put the economic interest of the country ahead of a few well paid friends at too-big-too-fail institution. They also need to eliminate the captured “regulators” that have facilitated the continued wrecking of the global economy. I don’t hold out much hope for this though. We keep re-electing those given lots of cash by the too-big-too-fail crowd and they continue giving them favors. We are getting what we deserve given this poor performance on our part but it is pretty annoying having to watch us vote ourselves into economic calamity.

Related: Buffett Cautions Against Buying Long Term USD Bonds – Is Adding More Banker and Politician Bailouts the Answer? – Bill Gross Warns Bond Investors – Congress Eases Bank Laws (1999)

When critics say that Europe is running out of time to deal with the financial crisis I wonder if they are not years too late. Both in Europe responding and those saying it is too late.

It feels to me similar to a situation where I have maxed out 8 credit cards and have a little bit left on my 9th. You can say that failing to approve my 10th credit card will lead to immediate pain. Not just to me, but all those I owe money to. That is true.

But wasn’t the time to intervene likely when I maxed out my 2nd credit card and get me to change my behavior of living beyond my means then? If you only look at how to avoid the crisis this month or year, yeah another credit card to buy more time is a decent “solution.”

But I am not at all sure that bailing out more bankers and politicians for bad financial decisions is a great long term strategy. It has been the primary strategy in the USA and Europe since the large financial institution caused great recession started. And, actually, for long before that the let-the-grandkids-pay-for-our-high-living-today has been the predominate economic “strategy” of the last 30 years in the USA and Europe.

That has not been the strategy in Japan, Korea, China, Singapore, Brazil, Malaysia… The Japanese government has adopted that strategy (with more borrowing than even the USA and European government) but for the economy overall in Japan has not been so focused on living beyond what the economy produces (there has been huge personal savings in Japan). Today the risks of excessive government borrowing in Japan and borrowing in China are potentially very serious problems.

I can understand the very serious economic problems people are worried about if bankers and governments are not bailed out. I am very unclear on how those wanting more bailout now see the long term problem being fixed. Unless you have some system in place to change the long term situation I don’t see the huge benefit in delaying the huge problems by getting a few more credit cards to maintain the fiction that this is sustainable.

We have seen what bankers and politicians have done with the trillions of dollars they have been given (by governments and central banks). It hardly makes me think giving them more is a wonderful strategy. I would certainly consider it, if tied to some sensible long term strategy. But if not, just slapping on a few more credit cards to let the bankers and politicians continue their actions hardly seems a great idea.

Related: Is the Euro Going to Survive in the Long Run? (2010) – Which Currency is the Least Bad? – Let the Good Times Roll (using Credit) – The USA Economy Needs to Reduce Personal and Government Debt (2009 – in the last year this has actually been improved, quite surprisingly, given how huge the federal deficit is) – What Should You Do With Your Government “Stimulus” Check? – Americans are Drowning in Debt – Failure to Regulate Financial Markets Leads to Predictable Consequences

Welcome to the Curious Cat Investing, Economics and Personal Finance Carnival. The carnival is published twice each month. This carnival is different than others in two significant ways. First, I select posts from the blogs I read (instead of just posting those that submit to the carnival). I think this provides readers a better selection of valuable material (many of the best blogs don’t take time to submit to carnivals). And second, I include articles when I think they are interesting. If you are interested in hosting the carnival, add a comment including a link to your blog.

• Savers, who did nothing to create the financial crisis, are being punished – “Our policy makers do need to think about what we are transferring to the banks,” Mr. Todd said. “Why is the public obligated to provide them with all those subsidies? Nobody will ask these questions.” [I agree, the large financial institutions are most responsible for the credit crisis and what they get is welfare paid for by others and they don't even admit to their welfare status, pretending that the large financial institutions are not getting billions of dollars in direct and indirect aid from the rest of us]
• You’d Be A Fool To Hold Anything But Cash Now, interview with David Stockman – “Q: You sound as if we’re facing a financial crisis like the one that followed the collapse of Lehman Brothers in 2008.
  A: Oh, far worse than Lehman. When the real margin call in the great beyond arrives, the carnage will be unimaginable.”
• The end of cheap China – “Labour costs have surged by 20% a year for the past four years… Labour costs are often 30% lower in countries other than China, says John Rice, GE’s vice chairman, but this is typically more than offset by other problems, especially the lack of a reliable supply chain.”
• Killing the competition: How the new monopolies are destroying open markets by Barry Lynn – “the basic characteristics shared by all real markets. Most important is an equality between the seller and the buyer, achieved by ensuring that there are many buyers as well as many sellers.” [this is fundamental to how capitalism provides benefits to the society. As markets are made less free (think of any market with very few buyer or sellers - that is lots of them today) the risks increase that society will lose to those few players who can extract monopolistic rents from the broken markets. The concept that free markets result in benefit to society through competition require real markets and competition, just using the word capitalism doesn't bring the benefits, the system must have capitalistic traits - John]
• What Portion Of Your Portfolio Should You Invest In Bonds? – “The universal rule is quite simple. If you own 100% of your portfolio in stocks and bonds you would invest so that: Bond proportion = your age %; Stock proportion = 100% – bond proportion” [I have a long comment on the post, I disagree with this specific advice today, the concept is sound, but bonds are not the right investment to balance the portfolio - John]
• Adam Smith versus Business by Sheldon Richman – “Smith knew the difference between being sympathetic to the competitive economy – which he called the ‘system of natural liberty’ — and being sympathetic to owners of capital (who might well have acquired it by less-than-kosher means, that is, through political privilege). He knew something about business lobbies.”
• USA Consumer and Real Estate Loan Delinquency Rates from 2001 to 2011 by John Hunter – “Residential real estate delinquency rates fell just 25 basis points (to a still extremely large 9.86%). Commercial real estate delinquency rates fell an impressive 186 basis points (to a still high 6.12%). Credit card delinquency rates fell 86 basis points to a 17 year low, 3.27%.”

This was a bad month for jobs in the USA. Not only did the U.S. Bureau of Labor Statistics report that the number of jobs remained at the same level as last month (125,000 additional jobs are needed for population growth, on average and we have huge losses from the credit crisis recession that have to be gained back) the last 2 months were revised down. The change in total nonfarm payroll employment for June was revised from
a gain of 46,000 to a gain of 20,000, and the July was revised down from gaining 117,000 job to gaining
85,000. That results in a total loss for this report of 58,000.

Still much better than the huge losses of several years ago but, along with the last few months, not a good sign for short term job growth. And the failure to address decades of favors given by politicians to too big to fail banks may actually create serious problems much sooner than most people feared. Pretty much everyone knew that the failure to address the main cause of the credit crisis was setting us up for again having the economy suffer huge blows due to the behavior of too big to fail institutions but I, and I think most people, thought it would be at least 5 years away and maybe even 10 before we had to seriously pay for the failures of our politicians to address this problem they (and their predecessors created).

It really seems like politicians don’t understand that their predecessors (decades ago) could afford to payoff large political donors and avoid dealing with problems and the enormous amount of wealth the economy was generating would let us prosper (even with lousy leadership), but that is no longer the case. The USA has used up huge economic advantages and that easy time is not coming back. Sadly the main hope for the USA is that other countries leaders create enough waste that the USA can remain competitive with all the waste our create (extremely lousy health care system, for example). It seems the American public doesn’t understand either, if anything we are electing even less intelligent and capable leaders today (over the last 10 years).

The USA has 14 million unemployed. Among the major worker groups, the unemployment rates for adult men was 8.9%, adult women 8.0% and teenagers 25.4%, whites. Of those 14 million the number of long-term unemployed (those jobless for 27 weeks and over) was about unchanged at 6 million in August.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) rose from 8.4 million to 8.8 million in August. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.

The average workweek for all employees on private nonfarm payrolls edged down by 0.1 hour over the month to 34.2 hours. The manufacturing workweek was 40.3 hours for the third consecutive month; factory overtime increased by 0.1 hour over the month to 3.2 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged down to 33.5 hours in August, after holding at 33.6 hours for the prior 6 months.

As bad as this news is, it could be much worse. The economy is actually growing (very slowly), probably. Many companies are actually still very profitable (I am not counting companies that have fake profits with congress approved ability to report fake values for their assets – Congress granted their too big too fail donors, this, and many other favors while most others are left out in the cold). The wealth in the USA, even after we have been consuming our capital to live beyond what we earn each year (for decades) is still extremely high. This allows us to live well and invest even with many bad practices in place. We continue to have many excellent companies doing great work and providing great jobs. Even with all the problems in the USA there are few countries that are in as enviable an economic position. The biggest problem I see is we have been squandering those advantages far too easily and quickly for far too long. That leaves us much more economically venerable than we need to be.

Related: Paying Back Direct Cash Bailouts from Taxpayers Does not Excuse Bank Misdeeds – USA Unemployment Rate at 9.6% (after losing 54,000 job in Aug 2010)

There are many good economic reasons to have multi-generational (at least 3 generations) households. There are some good social reasons too. There can be interpersonal benefits but also annoyances (which I think is why they decreased – plus we could afford it, the USA was living extremely richly).

The Return of the Multi-Generational Family Household

The percentage of the population in such households now is 16%, still significantly below the high of 24.7% in 1940.

Related: Mortgage Rates Falling on Fed Housing Focus – Personal Finance Basics: Long-term Care Insurance – Bankruptcies Among Seniors Soaring (2008)

The report on employment released today was not good news but it was less bad than feared. Total nonfarm payroll employment rose by 117,000 in July, and the unemployment rate was little changed at 9.1%, the United States Bureau of Labor Statistics reported today. Employment growth in July, follows little growth over the prior 2 months. Total private employment rose by 154,000 over the month. Sectors experiencing growth include: health care, retail trade, manufacturing, and mining. Government employment continued to trend down.

Some good news is found in the adjustments to the last two months job numbers. The change in total nonfarm payroll employment for May was revised from +25,000 to +53,000, and the change for June was revised from +18,000 to +46,000. That adds 56,000 jobs to the 117,000 jobs added in July and brings to the total for this report to 173,000 additional jobs. Still not great but much better than the last 2 months. The economy needs to add 125,000 a month to keep up with population growth.

And currently the economy needs to add much more to make up for all the jobs lost due to the too big to fail institution created credit crisis. The damage done to the economy by those institutions and continuing to be done in order to support those companies remains enormous. I believe we need to see 230,000 jobs added a month consistently (in order to be making ground up for the damage done), before we can believe we are doing well.

Remember it was just over 2 years ago we were losing hundreds of thousands of jobs a month. We are doing much better now, but fixing how broken things were is not easy. Between January of 2008 and February of 2010, the economy lost 8.75 million jobs. Since February 2010, 1.94 million jobs have been added. That means we have still lost 6,810,000 jobs and when you consider we have to add 125,000 a month to keep up we have 43 * 125,000 = 5,375,000 we haven’t added bringing a the total of jobs needed to over 12,000,000 (the number we need to add to get back to where we were). But truthfully we probably were at a bubble induced level at the peak so 12,000,000 is probably an overestimate of how many jobs we need to gain back.
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Although we usually write about investing advice, today we’re going to head in a slightly different direction and look at some entertaining films about the financial credit crisis. Hollywood was a bit slow, to get these movies released but now the movies on the crisis are coming quickly. Attempting to recover from the credit crisis is still dominating the economies of Europe and the USA.

Gold has been performing quite well as the markets worry about the aftermath of the credit crisis and the large amount government debt in many rich countries. Movies can provide some distraction from the worries about whether we should avoid risks in of the the stock market at the moment, if it’s a good idea to invest in gold via bullionvault.com or whether BRIC countries might really be where the action is. Movies certainly will have their version of action.

A popular movie about the financial crisis is ‘Inside Job’ (clip above). Directed by Charles Ferguson, who’d previously made the highly acclaimed ‘No End In Sight’ about the Iraq war, and given a voiceover by Matt Damon, the film won the Oscar for documentaries in 2011. It gained positive reviews all over the world for it’s simple explanations of a very complex topic.

Meanwhile on the other side of the Atlantic ocean, British director David Sington made ‘The Flaw’. This flaw in question refers to the admission by Alan Greenspan (former Federal Reserve Chairman) that his model of how the world works did not match up to the weird and wonderful nature of reality. Greenspan admitted that had mistakenly put too much faith in the self-correcting power of free markets. The film has not been as widely reviewed as Inside Job, but The Economist said that while it is unbalanced, it is worth a watch.

Wherever there is an obvious political point to be made, there is sure to be Oliver Stone not far behind yelling it out. ‘Wall Street: Money Never Sleeps’ stars young Shia LaBeouf as a Wall Street trader learning from the master: Gordon Gecko. The film even has a few cameos from figures from the financial world and is generally thought of as a good beginners guide to the crisis.

Finally, two films currently in production that look at the crisis. Firstly, Paul Giamatti will be starring in the fictionalization of Andrew Sorkin’s best selling investigation into the crisis, Too Big To Fail. George Clooney is also reportedly getting in on the act with ’700 Billion Man’, centred on Neel Kashkari, a one time Goldman Sachs executive who helped build the gigantic Troubled Asset Relief Program, aka the financial bailout.

We can’t guarantee these films will be balanced, but they should be interesting. Enjoy.

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