Larry Kudlow: The jobs report was better than people are saying


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The main point that many have not noticed is the statistics of the private sector.

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OK guys, headlines everywhere the September Jobs employment report is disappointing and showing people don’t want to work, gloom and doom, all because the topline numbers were 300,000 less than the consensus expected. That’s why I keep reading and watching the gloomy gloom and doom, people don’t want to work, government doesn’t want them to work, etc.

I hate to say it, but my point of view is completely different. It may not be politically correct from a conservative standpoint, but really, I’m going to say, it was a solid job report. That’s right, may not be the best in history, but it was very strong.


The key point here, overlooked by so many, and I don’t know why: private sector jobs increased by 317,000. Remember private sector jobs? They are the most important jobs, and upward revisions in private jobs exceeded 100,000 in July and August.

And in fact, about 414,000 private jobs were growing with the revision, which was on target with consensus estimates.

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And that’s why, by the way, why the stock market didn’t react very much. Last time I looked, it was just a smidge down. Now, it was government jobs and especially government school jobs that came crashing down in this report.

It has to do with crazy seasonal adjustment problems, which can’t keep up with the various pandemic-related school closures and openings across the country.

But I’ve always been interested in free venture capitalism which is much better than big government socialism, and one way to track free venture capitalism is private employment, which is doing great, thank you very much, and it’s in today’s report. Have you seen. Sometimes, you need to be empirical and objective in your economic analysis, not political. And I’m sorry there weren’t so many commentators.

And, there are more good things in this report apart from private jobs. For example, household employment, which is primarily driven by small businesses, and this is where the unemployment rate originates, was 526,000. This is a big number.

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And because of that, the unemployment rate again came down from 5.2% to 4.8%. It is very important. And the so called unemployment rate is called U-6 and covers even more ground which falls from 8.8 to 8.5%. And the employment to population ratio increased from 58.5 to 58.7%.

It is much lower now, but it was only 56.6% a year ago. So it is moving in the right direction. It’s not fab, but good.

And here’s something else: Wages, as measured by average hourly earnings, jumped .6%, up from 4.6% for the past 12 months. Meanwhile, total hours worked worked up .8% — a huge number, and up 4.7% for the year.

I’m throwing a lot of numbers at you, but they are significant numbers, because as I say, when you look at the private economy under the hood, jobs were very strong in September.

Now, here’s a little trick to help you understand the economy and understand consumer income or worker income. You take the hourly earning time, hours worked, and it’s called the wage income proxy, and it’s increased 9.5% over the past 12 months. This is a huge number. And I’m glad wages are rising, happy to help blue-collar middle class workers. And by the way, they are increasing their salary because the productivity rate is also increasing well.

Now, the inflation rate for consumer price deflation was 4.3% for the year ended August. On the other hand, the Consumer Price Index rose 5.3%.

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So you can see, rising wages at 9.5% is outpacing inflation despite what almost all commentators say. Now, don’t get me wrong, the inflation rate is very high, I give you that. I don’t want 4% inflation, I don’t want 5% inflation.

And the Fed should stop funding the government’s poor spending and borrowing habits, and the Fed should end its quantitative easing because if they don’t the inflation rate will go even higher.

But having said that, I keep the wages strong. And that’s a good thing.

Now, here’s a hint about future job numbers in the past two weeks and this one from my friend Ed Hyman, with claims of jobs continuing to drop by 7 million people. 7 million! huge fall. I think the federal unemployment plus-up, mainly, ended in the first week of September. Of course profit matters. If you stop paying people for not working, guess what? They’ll be back to work. And I think in the next few weeks, you’ll see a bigger workforce, more people coming to work, and more people getting these jobs. It may take a few months to play out but it shows the potential for some pretty big job gains in the next few months.

Now, two final thoughts on all this. I know I am being very contradictory, but I am trying to tell you the truth.

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Even though third quarter GDP is going to be very soft, perhaps from a delta breakout, a breakout that is now rolling and coming back down, but the economy is still stronger than people thought. Like today’s topline jobs numbers, the labor story is stronger than people think.

But here’s my second point, and I think it’s more important. In this economy, perhaps in any economy, we don’t need $6 trillion in additional spending “stimulus”. This will undoubtedly be the rate of inflation. Which is a tax on the middle class. And we don’t need a multi-trillion tax hike that would throw a wet blanket on the recovery of the Trump-induced pandemic.

High taxes and inflation are a double tax on the middle class, and we don’t need a green new deal that has already undermined America’s primacy in world energy markets. Nate gas, domestic heating oil, crude oil, gasoline, are all very expensive because Biden energy policies have overturned Trump’s energy independence. And we don’t need an entitlement welfare state that will actually damage jobs by paying people not to work.

Joe Manchin is right. We need testing, deadlines, and we need workplace requirements. And we don’t need another dollar of entitlement welfare spending. Not another dollar! We don’t need to adopt the European model. So, the moral of my story is that my job is more accurate and more interesting than anything you’ve heard or read to date. This is empirical, not political.

And second, I’ll just say save America. Hit the bill

This article is adapted from Larry Kudlow’s opening remarks on the October 8, 2021 edition of “Kudlow.”

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