Dec Jobs Reports: Peeling Back The Noise and Confusion
2023 Jobs data concludes
Happy New Year to all Coastal Journal readers and followers! As we usher in the first week of 2024, let's critically examine the economic data that shaped the narrative of 2023, starting with this weeks last 2023 jobs report.
While the legacy media paints an economy that is soaring ever higher with the addition of 216,000 jobs and a U3 unemployment rate of 3.7%, the wisdom of the band Kansas urges us to "Rise above the noise and confusion to get a glimpse beyond the illusion." Peeling back the layers, a more concerning and potentially unsettling story emerges.
The report highlights that the majority of job additions stemmed from the government sector, leisure hospitality, health care, and social services (160k). On the surface, this may seem promising, yet the reality is that these jobs largely fall into the realm of low-skilled, low-wage positions and don’t normally lead to a production of goods or supply to help bring down prices of everyday goods. Inside Decembers report, a concerning trend unfolds as many individuals resort to juggling multiple jobs, particularly in leisure and hospitality (aka bartenders and waiters) 40k, just to meet their monthly financial obligations. Another shocking data point, full-time workers have plummeted by 1.5 million in a single month, and part-time workers have surged to 762,000, marking a record high.
Additionally, the number of Americans holding multiple jobs reached an unprecedented record high, 8.565 million.
Despite the seemingly positive headlines, the cost of living continues to rise at a rate of 4% in 2023 and total inflation since Jan 2021 a drastic 20%, posing increasing challenges for the average American to get by. The disconnect between headlines and reality creates a troubling narrative that cannot be ignored as recent PEW research states 46% of Americans say economic conditions are ok & 35% say its poor and only a tiny 19% of Americans rate current economic conditions as good.
Digging deeper into the data reveals a less-discussed aspect of the jobs report — the majority of job additions reported throughout 2023 have now been revised significantly lower. A staggering revelation unfolds as 10 out of the last 11 months' initial reports were revised downwards, suggesting that the initial optimism about a "strong economy" have been an illusion. Revisions from October and November alone show an overstatement of jobs by 71,000.
Furthermore, scrutinizing the real unemployment rate, the U6 rate, which encompasses all previously employed workers who stopped looking for work, stands at 7.1%, up from 6.5% in the previous year. This marks a rising unemployed Americans up 9.5% compared to 2022. Behind the headline noise and the confusion, a stark economic reality emerges, leaving many individuals genuinely concerned about their financial well-being today and into the future.
As the economy contends with these challenges, the impact of higher interest rates is becoming increasingly evident. The seemingly robust headlines of a strong jobs report create an illusion of an economy soaring to new heights. However, those who rode the wave of lower interest rates in March 2024, might now find that they soared too high, facing potential negative consequences as economic conditions evolve. Companies like Mobileye $MBLY, a leader in the AI chip market for autonomous cars who benefited in stock gains in 2023, find themselves in a predicament with a massive supply glut as demand vanishes. Their anticipated revenue for Q1 2024 is projected to plummet by -50% year over year, resulting in a staggering stock crash of -30% in a single day this week. Similarly, Foxconn, a notable electronic device company (Apple their largest customer), reported a grim -30% drop in December revenue on a year-over-year basis. Expressing significant concerns as some downgrades came out this week for the iPhone maker, and now questions loom over Apple's ability to reverse its 2023 trend marked by revenue declines in every quarter. This skepticism arises even as the company currently boasts its highest valuation in its history.
As we start the 2024 year off with a slew of data, In the face of these economic uncertainties, one is compelled to heed the timeless advice: "Carry on my wayward son." Until the headlines align more closely with the underlying economic realities.