Mike Whitney - An Economic Quagmire

A poor jobs report, higher than expected inflation in China, and another flare-up in the Eurozone sent stocks tumbling on Monday. US Treasuries rallied on news from the Labor Department that employers added just 120,000 non-farm payrolls in March, far below analysts most pessimistic predictions. The Dow Jones lost 130 points on the day, while 10-year Treasury yields slipped to Depression era levels of 2.03 percent. After three-and-a-half years of zero rates, $2.3 trillion in quantitative easing, and $4.4 trillion in additional bond sales (USTs),  a “sustainable” recovery is still nowhere in sight.

Friday’s BLS report was not entirely unexpected. TrimTabs analyst Madeline Schnapp explains what’s behind the sudden drop in new jobs from 200,000 per month (for 3 months) to just 120,000 on Friday:

“For months now we have been harping on the fact that the reason behind the big BLS job numbers in January and February was huge seasonal adjustments. Seasonal adjustments in January were nearly 2.2 million jobs, almost ten times the BLS January employment estimate and in February, the seasonal adjustment was 1.5 million jobs, more than six times the BLS February estimate. So now we come to March and the BLS seasonal adjustment is nearly half the February adjustment, actually 811,000 to be precise, and lo-and-behold the BLS employment estimate has come down out of the stratosphere to a more reasonable 120,000.” (“Jobs Grow 172K Monthly January through March”, TrimTabs)

Read More:

http://www.counterpunch.org/2012/04/10/an-economic-quagmire/