-- Published: Thursday, 17 April 2014 | Print | Disqus
TECHNICAL SCOOP
CHART OF THE WEEK
Charts and commentary by David Chapman
26 Wellington Street East, Suite 900, Toronto, Ontario, M5E 1S2
Phone (416) 604-0533 or (toll free) 1-866-269-7773 , fax (416) 604-0557
david@davidchapman.com
dchapman@mgisecurities.com
www.davidchapman.com
Source: www.stlouisfed.org
Why has the level of employment in the US been falling? One would think that with a growing population and supposedly an economy that is improving that more of the population would be employed. It is not the case at all. Instead, the level of civilian employment to the population as a whole has been falling since 2000. It currently sits at levels not far above the high of the 1950’s and 1960’s a period when it was considered fairly normal that in a household the husband worked while the wife stayed home. (Note as well the rather interesting head and shoulders top pattern that formed at the top. It projected that the civilian employment population ratio would fall to at least 59. It is currently 58.9).
When one breaks down the civilian employment population ratio by gender one discovers that male employment population ratio has been falling since the 1950’s. In the 1950’s the ratio was over 80%. Today it is at 65%. Female participation had been rising for years but that ratio peaked in 2000 at around 58%. Today it is under 54%. Some of the sharpest drops have been in the 16-19 age group where their employment population ratio has been almost cut in half since 2000. A check of numerous categories of the employment population ratio by gender, age and race shows that almost all are in decline.
The civilian labour force has grown by some 16 million since 2000. Civilian employment however has only grown by about 9 million. Not only has civilian employment failed to keep up with the growth in the labour force it is lower by roughly three million from where it was at the peak in 2007. The civilian labour force participation rate was at its peak in 1999 at over 67%. Today it is at 63%. It too has been falling since 2000. A chart of the civilian labour force participation rate is below.
Source: www.stlouisfed.org
A declining participation rate has the perverse effect of actually lowering the headline unemployment rate. What that means is that as fewer people actually participate in the labour force it helps lower unemployment. That doesn’t mean they are not unemployed it just means they are not counted. Shadow Stats www.shadowstats.com has long pointed out that the real US unemployment rate is more like 23% rather than the headline unemployment (U3) of 6.7% that everyone focuses on. The Bureau of Labour Statistics reports two numbers: U3 the headline unemployment rate and U6 (currently 12.7%) that includes discouraged workers under one year and the marginally employed who want a full-time position. The Shadow Stats number reflects the methodology that was adjusted in 1994 by the Clinton administration to exclude discouraged workers unemployed for over one year. Seems if that you just can’t find a job even if you want one you are just not considered a part of the labour force any longer. In 2000, the Shadow Stats unemployment number stood at 10.5% vs. 23.2% today and is the only category that has gone up since 2010 when both U3 and U6 unemployment peaked.
So where have all the jobs gone? Millions of jobs have been offshored to India, China and Latin America. After all why pay someone $50,000 a year in the US when someone in India will do it for $20,000. Wages have been overall flat to declining since the 1990’s. Others have lost out to technology. Quite simply a human cannot compete with a robot even though that may not be the main technology reason that jobs have been lost. While all of the above are US numbers the situation is quite similar in Canada.
Is it any wonder then that the US (and Canadian) middle class is getting squeezed and disappearing and the lower or underclass is growing. Yet the officials claim that the economy is growing and unemployment is falling. It seems that the world is viewed primarily through rose coloured glasses as the disappearing jobs just become invisible. Could all of this come back to haunt us at some point?
Copyright 2014 All rights reserved David Chapman
General Disclosures
The information and opinions contained in this report were prepared by Industrial Alliance Securities Inc. (‘IA Securities’). IA Securities is subsidiary of Industrial Alliance Insurance and Financial Services Inc. (‘Industrial Alliance’). Industrial Alliance is a TSX Exchange listed company and as such, IA Securities is an affiliate of Industrial Alliance. The opinions, estimates and projections contained in this report are those of IA Securities as of the date of this report and are subject to change without notice. IA Securities endeavours to ensure that the contents have been compiled or derived from sources that we believe to be reliable and contain information and opinions that are accurate and complete. However, IA Securities makes no representations or warranty, express or implied, in respect thereof, takes no responsibility for any errors and omissions contained herein and accepts no liability whatsoever for any loss arising from any use of, or reliance on, this report or its contents. Information may be available to IA Securities that is not reflected in this report. This report is not to be construed as an offer or solicitation to buy or sell any security. The reader should not rely solely on this report in evaluating whether or not to buy or sell securities of the subject company.
Definitions
“Technical Strategist” means any partner, director, officer, employee or agent of IA Securities who is held out to the public as a strategist or whose responsibilities to IA Securities include the preparation of any written technical market report for distribution to clients or prospective clients of IA Securities which does not include a recommendation with respect to a security.
“Technical Market Report” means any written or electronic communication that IA Securities has distributed or will distribute to its clients or the general public, which contains an strategist’s comments concerning current market technical indicators.
Conflicts of Interest
The technical strategist and or associates who prepared this report are compensated based upon (among other factors) the overall profitability of IA Securities, which may include the profitability of investment banking and related services. In the normal course of its business, IA Securities may provide financial advisory services for issuers. IA Securities will include any further issuer related disclosures as needed.
Technical Strategists Certification
Each IA Securities technical strategist whose name appears on the front page of this technical market report hereby certifies that (i) the opinions expressed in the technical market report accurately reflect the technical strategist’s personal views about the marketplace and are the subject of this report and all strategies mentioned in this report that are covered by such technical strategist and (ii) no part of the technical strategist’s compensation was, is, or will be directly or indirectly, related to the specific views expressed by such technical strategies in this report.
Technical Strategists Trading
IA Securities permits technical strategists to own and trade in the securities and or the derivatives of the sectors discussed herein.
Dissemination of Reports
IA Securities uses its best efforts to disseminate its technical market reports to all clients who are entitled to receive the firm’s technical market reports, contemporaneously on a timely and effective basis in electronic form, via fax or mail. Selected technical market reports may also be posted on the IA Securities website and davidchapman.com.
For Canadian Residents: This report has been approved by IA Securities, which accepts responsibility for this report and its dissemination in Canada. Canadian clients wishing to effect transactions should do so through a qualified salesperson of MGI Securities in their particular jurisdiction where their IA is licensed.
For US Residents: This report is not intended for distribution in the United States.
Intellectual Property Notice
The materials contained herein are protected by copyright, trademark and other forms of proprietary rights and are owned or controlled by MGI Securities or the party credited as the provider of the information.
Regulatory
IA Securities is a member of the Canadian Investor Protection Fund (‘CIPF’) and the Investment Industry Regulatory Organization of Canada (‘IIROC’).
Copyright
All rights reserved. All material presented in this document may not be reproduced in whole or in part, or further published or distributed or referred to in any manner whatsoever, nor may the information, opinions or conclusions contained in it be referred to without in each case the prior express written consent of IA Securities Inc.
| Digg This Article
-- Published: Thursday, 17 April 2014 | E-Mail | Print | Source: GoldSeek.com
