Labor Markets Worsen

This morning’s employment reports show a pervasive and broad weakness in the labor market. And frankly, I think the situation is actually considerably worse than the numbers show.

Let’s take a closer look. Construction, manufacturing, retail, wholesale, transportation, information, financial activities, and temporary help services are all down in June. The industries which appear to be adding workers are natural resources, utilities, professional and technical services, education and healthcare, and leisure and hospitality.

BUT!! I just don’t believe the apparent gains for professional and technical services, and for leisure and hospitality. In the professional category, the BLS data seems to be showing that architectural and engineering firms are adding workers. No, no, no—that can’t be true.

And the household survey shows that the unemployment rate in the leisure and hospitality industry—which primarily includes restaurants, hotels, and casinos—has jumped from 7.2% a year ago to 8.9% today. 8.9%!! That’s not the sign of an industry which is adding workers.

It may be time to take a look at the role that illegal immigrants are playing in this recession. I suspect that they are getting whacked hard, but not showing up in job numbers.

Taken all together, I am convinced that we are well into an official recession, once all the revisions are done.

    Before it's here, it's on the Bloomberg Terminal.