Job "Weakness" is Illegals and Feds
We got a double-helping of jobs numbers that beat market estimates, even as the unemployment rate crept up a tenth of a percent.
The underlying numbers were surprisingly strong, though left-wing media, of course, painted it black. For CNN it was “troubling.” Marketwatch called it “tepid.”
Axios gave up and just called it “confusing.”
Strong Jobs if You’re American
On Tuesday the Bureau of Labor Statistics reported jobs numbers for October and November -- usually it’s just one month, this time it was two because of the shutdown.
By BLS’ count, the economy lost 105,000 jobs in October and added 64,000 for November.
Coming to a net loss of 41,000 jobs.
Now, that sounds grim, but there’s two very big caveats.
First, Federal workers made up all of the lost jobs. In fact, over the 2 months Federal workers lost 162,000 jobs.
That’s fantastic for taxpayers, and it means the headline loss of 41,000 turns to a gain of 121,000 non-parasite jobs.
The even bigger one is deportations.
DHS hasn’t announced exact numbers for October and November, but since Trump took office deportations -- including self-deportations and the old fashioned kind -- have been running about 250,000 per month.
Which is worth at least 100,000 jobs per month — 200,000 over the 2 months.
In other words, BLS says we lost 41,000 jobs. Controlling for Federal layoffs flips it to a 121,000 gain. And controlling for deportations takes it above 300,000 jobs gained.
Americans Flooding into Labor Market
Even the rise in the unemployment rate is good news because it’s not driven by falling jobs, it’s driven by Americans coming into the workforce.
Which they do when they think they can get a job.
The key here is unemployment only counts people who are actively looking for work -- sending resumes, going to interviews.
If they’re playing League of Legends in Mom’s basement -- or homeless in Philadelphia -- they don’t show up as unemployed.
Statistically, they may as well be retired.
Only when they start looking for work do they they show up as unemployed.
And according to the BLS Household Survey that’s exactly what happened, with labor force participation rising by 3 ticks since July -- nearly a million people.
So putting it all together, Americans gained 321,000 jobs in two months while a million Americans entered the workforce.
If that’s tepid Marketwatch needs a new dictionary.
Millions of Jobs in the Pipeline
For months now the media — and the Federal Reserve — have been chasing a jobs slowdown. Which, it turns out, is entirely made of Federal layoffs and deportations.
Meanwhile, millions of jobs are in the pipeline between an inflationary Fed and trillions of investment driven by tariff on-shoring.
A general rule of thumb is every 1% cut to Fed interest rates is worth a million jobs. And every $1 trillion of investment is also worth a million jobs.
The Fed’s already cut a point and a half — with another half-point telegraphed for next year.
Meanwhile, Trump’s touting north of $5 trillion of incoming investment.
So ballpark 7 million jobs on the way in the next couple years.
What’s Next
Once you dig into the numbers — and allowing for the fact that young people are facing real headwinds — Trump’s biggest vulnerability in the midterms is not a jobs slowdown.
It’s the inflation that comes with fast growth when Congress is spending like drunk sailors with Dad’s Amex Platinum.
Essentially, growth bids up prices, and so does Congress.
Prediction market Kalshi is currently forecasting a $600 billion rise in federal spending for the year. Which is quite a change from the trillions in cuts Congressional Republicans pretended to support in the DOGE days of summer.
That’s enough to send inflation back over 3% — which could cost Trump the midterms. While the Fed -- and the media -- chase a job mirage.
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Excellent analysis. It is remarkably underreported that Trump has successfully reduced the federal civilian workforce by around 271,000, representing more than a 10 percent reduction and returning it to the Clinton-era level of about 2.1 million. That's a huge and welcome accomplishment. Now, do contractors, especially those affiliated with left-wing universities.
Thank you. Excellent analysis, Peter.