I hear that question often from our clients across the world. They are purchasing investment homes in Michigan and wondering if our economy here can handle that many rental homes.
Because people without jobs don't typically pay their rent on time, those investors are always worried about that reality.
So, as a layman, I will see what we can figure out from looking at the numbers from a lot of different angles.
According the Bureau of Labor statistics, the unemployment rate for Michigan at the end of the first quarter was 5.2%. Sounds great, doesn't it?
But, remember that the official number given by the US government tends to be the U-3 rate. That rate includes total unemployed as a percentage of the civilian labor force. Huh? It really just counts the people who don't have any job and have been looking for work in the last 4 weeks.
The government is awesome at numbers. They love playing with them. Heck, we have an entire department in our government that works on statistics. Our tax money hard at work. I will admit that I got a 0.0 the first time I took statistics at Oakland University!
There is another number that they release called the U-6 number, which includes people who are "marginally attached" to the labor force, people who have part-time jobs when they want full-time jobs and those in the U-3 number.
That number for Michigan at the end of the first quarter was 11.2%. Crazy how everyone can move numbers and find one that makes them feel better, no?
The U-3 rate for Metro Detroit at the end of May was 4.9%. The government does not release the U-6 by metropolitan areas.
Of course, can we trust the numbers that come out? It is a good question. Let’s remember that the in May the government expected the economy to add 162,000 jobs. They had to eat a little crow though and announced that the real number was 38,000. A month later, they realized it was more like 11,000.
Who is counting this stuff? Are we just guessing? It would be easier to figure out the number of unicorns living in my niece’s head than how many jobs are being created.
No wonder no one digs deeper themselves. Looking into this stuff makes my head hurt and I can see why most people say, “I am just going to go with whatever the news, and/or my favorite politician says.”
Then there are the participation numbers, those can also blow your head up. American Thinker’s Rick Moran explains it this way:
On the surface, the January jobs numbers appear to be "not bad." There were 151,000 jobs created, and the official unemployment rate dropped below 5%.
But the story inside the numbers is really, really awful. The Bureau of Labor Statistics calculates job creation and loss using two different measurements: the Current Population Survey and "Establishment" data from the Current Employment Statistics. Usually, the two measurements are roughly the same.
But how do you explain this, BLS?
Consider these BLS numbers based on household data. In January, there were 25,328,000 "foreign born" workers employed, a one-month drop of 98,000.
In January, there were 123,710,000 "native born" men and women employed, a one-month drop of 567,000.
Analysts note that there are several ways to count jobs created and lost but the losses shown among men and women, foreign born and immigrants, is significant, said a congressional expert, who told Secrets, "Maybe big thing this month is just the decline in number of native born workers drops over half million in a month?"
That means that the actual number of jobs created was about 650,000. What kind of jobs were they? Zero Hedge Blog refers to the "Waiter and Bartender Recovery" – an apt way to describe the fact that 70% of those jobs are minimum-wage positions.
So overall, my personal belief is that jobs are still a bit weak and the numbers don’t tell any story but the one the government wants us to know. Heck, we are trying to hire about 10 people right now and we have gotten 50 responses in the last 18 hours.
But, what do I know, I am still counting unicorns.....