Before we get to the employment chartporn, I want to share a quick note regarding my two previous posts and handicapping football games. I SUCK AT HANDICAPPING NCAA FOOTBALL THIS YEAR! College is usually my bread and butter but for some reason my radar for college handicapping has been turned off and my normally mediocre NFL radar has been fine-tuned into a well-oiled machine. Go figure. Either way, if any readers out there placed college football bets based on my picks, I hope you learned your lesson. As for the show of hubris behind my so-called college football handicapping ability, well you can be sure I learned my own lesson.

The BLS provided it’s September NFP update last Friday and the markets loved all of it. Not loving it so much now, but the overreaction was stunning last week. Unemployment fell below 6% which means America is fully employed! Hooray! Breakout the champagne because everyone that needs a job has a job in America. Hitting the 5% mark makes it true. Remember, when unemployment in the 5% range meant full employment? I think Lady Yellen’s memory is little bit fuzzy. According to a recent report at Bloomberg, “The labor market has yet to fully recover,” Fed Chair Janet Yellen said at a press conference after the FOMC meeting. “There are still too many people who want jobs but can’t find them.”

So everything is awesome, but not? Damn, and here I thought we were in full recovery mode. CPI inflation is tamed FOREVER! Monetary inflation is make-believe. And unemployment reached its magical number, so let the jacking up of rates begin already. Let’s taper the asset purchases by the Fed down to zero and feel some tightening; our economy’s ready!

Alright enough with the snark, if you haven’t already been charted out by the financial blogosphere and other various news sources then I’ll give you your fill. We’ll try to look at the perception and the reality. Bear in mind as you read these charts snipped from various other sites, that they’re all generated off of BLS data. You can go right to the BLS site yourself for verification. There you’ll find all the data tables needed to plug into Excel and create your own graphs. I readily admit that I’m way too lazy for that so enjoy your reblogged content.

The first chart, courtesy of Carpe Diem, shows the 12-month change in NFP over the last decade. Basically, it shows that annual job growth is at a new high since the last peak in 2006.

Of course, this bit of great news coincides with an all-time high in temp hirings. Because nothing says full employment like setting a new record for temporary hires who will soon be unemployed again. Chart is also courtesy of Carpe Diem via FRED.

So this chart obviously speaks to the quality of the jobs being created out there, but you can’t review a new post-recession low in unemployment without reviewing the labor participation rate and its new lows. The next several charts regarding labor participation are all courtesy of the financial conspiracy theorists’ home site, Zero Hedge.

Allow me a quick indulgence here to rant on Josh Brown, The Reformed Broker, as he so unaptly stated in his own post last Friday regarding the NFP, “Losers will crawl out of their coffins and crypts to whine about the labor force participation rate, but no one cares. Think tank economists want things to get worse so they have some firepower for Fox News and MSNBC tonight. The reality is, the economy is growing as expected – slowly but surely – and there’s nothing “wrong” with today’s release. ” What a load of sellout, dickbag nonsense.

I remember when this guy used to offer fairly witty insights into the markets despite his own less than savory pathway into the field of finance. Now he’s so impressed with himself that he has to avoid reality, Krugman-style. I get that he’s now an established best-selling author, Yahoo Finance contributing personality, sometimes TV commentator, and CEO of a wealth management firm, so he’s had to sacrifice some of his original personality for some wealth and fame. No begrudgements here. Many famous and wealthy can be labeled a “sellout” but usually the only people who use that title, do so out of envy and/or disgust at their own lack of success. I assure you that’s not the case here. I’m just appalled at the sack this guy has in calling fellow reporters, bloggers, and media commentators, a “loser” for referring to the facts regarding America’s employment situation. This clown fish has been officially un-favorited at the MarginRich blogroll, because all 8 of my followers are really going to care. Okay, enough about Josh Brown. Wait, one more burn, what’s with the Something About Mary hairstyle?

    

Anyways, the percentage of working age Americans in the workforce has reached a 36 year low…but America’s fully employed at 5.9%. Right. A fair percentage of the decline in US unemployment numbers are directly attributed to the decline in the labor participation rate. There are a record 93 million working-age Americans that are not in the labor force. These facts have been reported on ad nauseam, but let’s drill down on the participation rate to the year the Great Recession started.

Many of Josh Brown’s ilk as disregarders of the labor participation rate will simply attribute the declining rate entirely to retiring employees. As I shared almost a year ago, the Philly Fed already tried to officially go down that route but the information just doesn’t conveniently jive. Lo and behold, look what demographic group was the largest gainer of job additions in September.

What do you know? It was the boomers and people in retirement age. Are we to believe that the demographic group of 55 and older is the backbone of America’s economic and employment recovery? Lest one think that this is an aberration or a one-off event for the month of September, there’s a chart for that, too. This trend has really picked up speed since the Great Recession.

Sorry millennials. You’re $80-Gs in debt for an education that got you a temp job where you report to a manager, aged 55 – 69, who has just been newly hired. Life’s tough. The youngest boomers and gen x don’t exactly have it a whole lot easier, but at least they’re entrenched in their jobs held from the Great Recession, where they’re just forced to complete double the work for the promise of a raise that hasn’t materialized in 6 years.

Since America is fully employed now, there should be much more income available for consumption to really begin to juice the economy. Especially since the tapering is near completion and we’re on the doorstep of the ever-so-important holiday shopping season. Unfortunately, we’ve hit a little roadblock in that department too as wages have been stagnating for some time now. Have a look at whose wages are actually growing, courtesy of BofA.

Unfortunately, only the most educated are consistently seeing growth in income generation. However, this statistic rides shotgun with the fact that a college degree is continuing to lose its edge as a value-adding tool for a new entrant into the workforce. Additionally, most of the middle-class, the back bone of the consuming public, fall into the educational categories below Master’s degree. Thus, negative comps at Wal-Mart, McDonalds, etc.

Demand is declining as exhibited by declining top-line revenues. We’re seeing more and more negative YoY comparable sales numbers across multiple industries. Earnings growth going forward probably won’t be driven by consumption so much as by share repurchases. I don’t want to be the constant doom and gloomer in the corner of the room brooding by myself, but if everything is so damn rosy why doesn’t it feel that way to the average American? You can’t just read the beige books, NFP reports, ISM reports, PCE and CPI price indexes, and all the other governmental reports while continuing to turn a blind eye to the genuine outlook here in the US.

Couple all this information with current stock market behavior and there’s reason to maintain a cautious stance. Last month I reported on the divergences occurring within the equity markets, offering that it was a time to take caution and build cash levels. I hope readers listened. Oil is tanking and it will generate a lot of financial buzz as it allows investors a much better entry point for previously missed opportunities. It will also provide a pseudo-subsidy to the American consumer. However, as some very important countries in the world rely on a higher price of oil, I can see where geopolitical conflict intensifies with Middle-Eastern concerns as well as Russia.

The currency markets are creating set-ups to coincide with the previously described events and that may lead to additional downside action in equity markets but possibly upside action in the commodity markets(except oil), specifically the precious metals. Please observe the following chart, courtesy of Kimble.

The currencies are important to keep watch on as they can be leading indicators for other asset classes. I hope you’ve built some cash levels to take advantage of the opportunities being created in several asset categories, because if you think this current sell-off is THE BIG ONE, you’re mistaken. We may get a very scary drawdown, however markets of all shape and size will see new highs going into next year and investors will want to be positioned to take advantage of the major momentum in asset prices that builds up to a legitimate bear-change in trend.

Oil and gas have sold off indiscriminately. If you felt like you were left behind in those areas, then be keeping a close eye. I wouldn’t be in a rush to start grabbing shares though, as the oil price may ride lower and for a longer time period than you’d think likely. Additionally, rig counts will take time to level off so drillers could remain depressed as well. We’ll see a bounce in driller names, but we’ll probably also see a resumption of their downtrend. Cash, a watchlist, and patience are the best friends of the prudent investor shopping for value. In the meantime, if you’re looking for a job then stop reading this damn article and go hit the Manpower agency to get a temp job you can call your own.