Charting the US Jobs Recovery - DelMarva + DC Edition - May 2014

Most media discussions on the US Jobs Recovery focus on just one number - the headline Unemployment Rate.  To add color to the first number, financial pundits like to add a second number - the Labor Force Participation Rate.  Both are intertwined and affect each other.  But in the aftermath of the Great Recession, there is a third, much more meaningful number that is almost never discussed - the Employment to Population Ratio.

Definitions

Now, what are these numbers?  Many people will give you a technical description that can be hard to grasp and make your eyes glaze over the minute you hear them.  But the reality is simple.

The Unemployment Rate is the percentage of:

PEOPLE WHO WANT  A JOB BUT DON'T HAVE ONE (Unemployed)/
LABOR FORCE

The Labor Force is:

PEOPLE WHO WANT AND HAVE JOBS (Employed) + PEOPLE WHO WANT A JOB BUT DON'T HAVE ONE AND ARE LOOKING FOR ONE (Unemployed)

The Labor Force Participation Rate is percentage of:

[PEOPLE WHO WANT AND HAVE JOBS (Employed) + PEOPLE WHO WANT A JOB BUT DON'T HAVE ONE AND ARE LOOKING FOR ONE (Unemployed)]/
WORKING AGE PEOPLE

Working Age People are generally defined as PEOPLE WHO ARE 16 YEARS AND OLDER.  In reality, they are:

[PEOPLE WHO WANT AND HAVE JOBS (Employed) + PEOPLE WHO WANT A JOB BUT DON'T HAVE ONE AND ARE LOOKING FOR ONE (Unemployed) + PEOPLE WHO ARE NOT IN THE LABOR FORCE (Not in Labor Force)]

The category PEOPLE WHO ARE NOT IN THE LABOR FORCE includes:


PEOPLE WHO ARE IN THE MILITARY
PEOPLE WHO ARE INSTITUTIONALIZED
PEOPLE WHO ARE STUDENTS
PEOPLE WHO ARE HOMEMAKERS
PEOPLE WHO ARE RETIRED
PEOPLE WHO ARE MARGINALLY ATTACHED TO LABOR FORCE (INCLUDING DISCOURAGED WORKERS)


The Employment to Population Ratio is the percentage of:

PEOPLE WHO WANT AND HAVE JOBS/
WORKING AGE PEOPLE

In other words, PEOPLE WHO WANT AND HAVE JOBS/
[PEOPLE WHO WANT AND HAVE JOBS + PEOPLE WHO WANT A JOB BUT DON'T HAVE ONE AND ARE LOOKING FOR ONE + PEOPLE WHO ARE NOT IN THE LABOR FORCE


How does this work out?

According to this chart from the popular financial blog, Calculated Risk, the US, in May 2014, gained back all the jobs lost since the Great Recession started in November 2007.

But this is deceptive.  For one, the working age population of the US grew by 15.795 million people or 6.81% from 2007 to May 2014, while the labor force grew by 2.489 million people or only 1.63% during the same period.   The number of employed persons actually shrank by 233,000 people and unemployed people grew by 2.721 million people or 38.44% during the same period. People Not in the Labor Force grew by 13.266 million or 16.85% during the same period.

United States
Employment Situation
In Thousand Persons
									2007 to May 2014
	2007	2008	2009	2010	2011	2012	2013	May 2014	Variance	% Variance
Civilian Non Institutional Population	231,867	233,788	235,801	237,830	239,618	243,284	245,679	247,662	15,795	6.81%
Labor Force	153,124	154,287	154,142	153,889	153,617	154,975	155,389	155,613	2,489	1.63%
Employed	146,047	145,362	139,877	139,064	139,869	142,469	143,929	145,814	-233	-0.16%
Unemployed	7,078	8,924	14,265	14,825	13,747	12,506	11,460	9,799	2,721	38.44%
Not in Labor Force	78,743	79,501	81,659	83,941	86,001	88,310	90,290	92,009	13,266	16.85%

Source: bls.gov

For the United States, the headline Unemployment Rate has dropped down significantly, from a peak of 9.9% in 2009 to just 6.3% as of May 2014.  The Labor Force Participation Rate continues to drop and is now at 62.8% - levels not seen since the late 1970's when women started entering the workforce in droves.  The Employment to Population Ratio has only recovered marginally from its recessionary low of 58.3% to just 58.9% in May 2014.  It is nowhere near its pre-recession average.  In other words, job growth has been growing only barely faster than the growth in the working age population.

Economists have attributed to this phenomenon to increased retirements among the elderly.  But the Bureau of Labor and Statistics itself  is projecting large increases in the Labor Force Participation Rate among people aged 65 and older. The reality is fewer people can afford to retire.

Regional Comparison

So how does the DELMARVA + DC Region stack up to the rest of the United States?

Delaware

The state of Delaware is in a funk, employment-wise.  Its Labor Force Participation Rate, at 60.8% as of May 2014, is even lower than the 62.7% Labor Force Participation Rate the state registered in 1976, the earliest available BLS.Gov data.  Although its Unemployment Rate has dropped from a peak of 8.0% in 2010, to just 5.9% as of May 2014, its Employment to Population Ratio, at 57.2% as of May 2014, is still hovering near the bottom at 56.7% in 2013.

Maryland

Like Delaware, Maryland's Labor Force Participation Rate continues to trend lower, hitting 66.7% as of May 2014 - levels not seen since the late 1970s.  Its Employment to Population Ratio has yet to bottom out. At 62.9% as of May 2014, it is reaching levels not seen since the early 1980s.  Its Unemployment Rate, however, has dropped sharply, from a peak of 7.9% as of 2010 to just 5.6% as of May 2014.  As the previous data indicates, much of the drop has come from people dropping out of the labor force altogether.

Virginia

Virginia has seen a sharp uptick in its labor force participation rate, from a post-recessionary bottom of 66.4% in 2013, to 67.4% as of May 2014.  Likewise, its Employment to Population Ratio has improved to 63.9% as of May 2014.  Unemployment Rate has dropped from its 2010 peak of 7.1% to just 5.1% as of May 2014.

District of Columbia

The District of Columbia's Labor Force Participation bottomed out at 67.8% in 2011, bounced up to the 69.3% level for 2012 and 2013 and is down again to 68.2% as of May 2014.  Its Employment to Population Ratio bounded up sharply from a low of 60.9% as of 2011 to 63.5% as of 2013 and now stands at 63.0% as of May 2014.  Its Unemployment Rate, which reached a peak of 10.2% as of 2011, now stands at 7.5% as of May 2014.

Philippine Government Budget Deficit as a % of GDP

The credit rating of the Philippine Government was recently upgraded one level up investment grade (from BBB- to BBB) by Standard & Poors last May 8, 2014.  Aside from solid economic growth of 7.2% in 2013, government finances have been on a steady uptrend.  The government deficit, at -1.42% of GDP, is less than half of the -3.49% level when President Aquino assumed power in 2010.

Source: NSCB.GOV.PH, BSP.GOV.PH

8990 Holdings, Inc.: The Case of the Disappearing Past Due Installment Contract Receivables

In a previous blog post titled "Has the Philippine Real Estate Bubble Already Burst?", we wrote on a little known factoid buried deep within the bowels of the financial statements of 8990 Holdings, Inc. (otherwise known through its stock ticker "HOUSE"), that HOUSE's level of Installment Contract Receivables (ICRs) that are over 90 days past due jumped 500% in the nine months from December 31, 2012 to September 30, 2013.

8990 Holdings Inc.
Installment Contract Receivables, Past Due but Not Impaired
In Php
	Audited	Unaudited
	December 31, 2012	September 30, 2013	% Change
Less than 30 days	76,438,532	102,996,723	34.74%
31 - 60 days	31,128,884	30,426,033	-2.26%
61 -90 days	26,930,290	10,163,708	-62.26%
Over 90 days	39,365,086	236,008,574	499.54%
Total	173,862,792	379,595,038	118.33%

These figures were taken from HOUSE's interim financial statements as of September 30, 2013 which contained audited figures for December 31, 2012 and interim figures for the nine months since then.  The document can be found here and also on the website of the Philippine Stock Exchange.  The Annual Report can be found here and here.

Today, those figures are very much gone or reduced.  The level of past due ICRs were reduced by almost 80% for the very same figures that were audited as of December 31, 2012.  

8990 Holdings Inc.
Installment Contract Receivables, Past Due but Not Impaired
In Php
	Interim Report	Annual Report
	Audited	Audited
	December 31, 2012	December 31, 2012	Variance	% Variance
Less than 30 days	76,438,532	18,426,966	-58,011,566	-75.89%
31 - 60 days	31,128,884	5,049,846	-26,079,038	-83.78%
61 -90 days	26,930,290	5,910,360	-21,019,930	-78.05%
Over 90 days	39,365,086	6,357,158	-33,007,928	-83.85%
Total	173,862,792	35,744,330	-138,118,462	-79.44%

Despite an almost 40% jump in sales, the level of past due ICRs were even lower at year end 2013 than they were at year end 2012.

8990 Holdings Inc.
Installment Contract Receivables, Past Due but Not Impaired
In Php
	Interim Report		Annual Report
	Audited	Unaudited	Audited	Audited
	December 31, 2012	September 30, 2013	December 31, 2012	December 31, 2013
Less than 30 days	76,438,532	102,996,723	18,426,966	3,824,739
31 - 60 days	31,128,884	30,426,033	5,049,846	2,403,551
61 -90 days	26,930,290	10,163,708	5,910,360	2,177,276
Over 90 days	39,365,086	236,008,574	6,357,158	15,993,266
Total	173,862,792	379,595,038	35,744,330	24,398,832

HOUSE dependence on ICRs to fuel sales has only increased since December 31, 2012.

8990 Holdings Inc.
Installment Contract Receivables/Sales
In Php
	Audited	Unaudited	Audited	Audited
	December 31, 2012	September 30, 2013	December 31, 2012	December 31, 2013
Installment Contract Receivables	4,672,109,197	8,165,199,990	4,672,109,197	9,777,920,990
Sales	2,888,596,423	4,367,429,533	3,830,644,048	5,356,098,815
Days Sales	437	505	329	493

So has the risk to its stockholders. 8990 Holdings Inc.
Installment Contract Receivables/Stockholders Equity
In Php
	Audited	Unaudited	Audited	Audited
	December 31, 2012	September 30, 2013	December 31, 2012	December 31, 2013
Installment Contract Receivables	4,672,109,197	8,165,199,990	4,672,109,197	9,777,920,990
Stockholders Equity	3,948,015,021	6,049,131,256	3,948,015,021	6,595,847,184
Installment Contract Receivables/Stockholders Equity	118.34%	134.98%	118.34%	148.24%

8990 Holdings Inc.
Real Estate/Stockholders Equity
In Php
	Audited	Unaudited	Audited	Audited
	December 31, 2012	September 30, 2013	December 31, 2012	December 31, 2013
Real Estate Inventories	2,040,532,596	2,081,143,259	2,040,532,596	2,243,559,834
Land held for Future Development	1,010,474,241	3,605,811,050	1,010,474,241	3,784,727,576
Investment Properties	142,365,067	140,860,631	142,365,067	141,928,584
Total Real Estate	3,193,371,904	5,827,814,940	3,193,371,904	6,170,215,994
Stockholders Equity	3,948,015,021	6,049,131,256	3,948,015,021	6,595,847,184
Real Estate/Stockholders Equity	80.89%	96.34%	80.89%	93.55%

8990 Holdings Inc.
ICRs & Real Estate/Stockholders Equity
In Php
	Audited	Unaudited	Audited	Audited
	December 31, 2012	September 30, 2013	December 31, 2012	December 31, 2013
Installment Contract Receivables	4,672,109,197	8,165,199,990	4,672,109,197	9,777,920,990
Real Estate	3,193,371,904	5,827,814,940	3,193,371,904	6,170,215,994
Total	7,865,481,101	13,993,014,930	7,865,481,101	15,948,136,984
10% Losss	786,548,110	1,399,301,493	786,548,110	1,594,813,698
Stockholder's Equity*	3,948,015,021	6,049,131,256	3,948,015,021	6,595,847,184
Impact of 10% Loss	19.92%	23.13%	19.92%	24.18%

* Excludes Proceeds from Follow-on Offering

Impairment Losses

Based on its Annual Report, the company has now made provisions for impairment losses of Php 2,795,106 as of December 31, 2013, whereas they recognized none in the years before.  This is a step in the right direction.

Meanwhile, what happened to all those past due ICRs?

Charting the US Jobs Recovery - DelMarva + DC Edition

Most media discussions on the US Jobs Recovery focus on just one number - the headline Unemployment Rate.  To add color to the first number, financial pundits like to add a second number - the Labor Force Participation Rate.  Both are intertwined and affect each other.  But in the aftermath of the Great Recession, there is a third, much more meaningful number that is almost never discussed - the Employment to Population Ratio.

Definitions

Now, what are these numbers?  Many people will give you a technical description that can be hard to grasp and make your eyes glaze over the minute you hear them.  But the reality is simple.

The Unemployment Rate is the percentage of:

PEOPLE WHO WANT  A JOB BUT DON'T HAVE ONE (Unemployed)/
LABOR FORCE

The Labor Force is:

PEOPLE WHO WANT AND HAVE JOBS (Employed) + PEOPLE WHO WANT A JOB BUT DON'T HAVE ONE AND ARE LOOKING FOR ONE (Unemployed)

The Labor Force Participation Rate is percentage of:

[PEOPLE WHO WANT AND HAVE JOBS (Employed) + PEOPLE WHO WANT A JOB BUT DON'T HAVE ONE AND ARE LOOKING FOR ONE (Unemployed)]/
WORKING AGE PEOPLE

Working Age People are generally defined as PEOPLE WHO ARE 16 YEARS AND OLDER.  In reality, they are:

[PEOPLE WHO WANT AND HAVE JOBS (Employed) + PEOPLE WHO WANT A JOB BUT DON'T HAVE ONE AND ARE LOOKING FOR ONE (Unemployed) + PEOPLE WHO ARE NOT IN THE LABOR FORCE (Not in Labor Force)]

The category PEOPLE WHO ARE NOT IN THE LABOR FORCE includes:

1. PEOPLE WHO ARE IN THE MILITARY
2. PEOPLE WHO ARE INSTITUTIONALIZED
3. PEOPLE WHO ARE STUDENTS
4. PEOPLE WHO ARE HOMEMAKERS
5. PEOPLE WHO ARE RETIRED
6. PEOPLE WHO ARE MARGINALLY ATTACHED TO LABOR FORCE (INCLUDING DISCOURAGED WORKERS)

The Employment to Population Ratio is the percentage of:

PEOPLE WHO WANT AND HAVE JOBS/
WORKING AGE PEOPLE

In other words, PEOPLE WHO WANT AND HAVE JOBS/
[PEOPLE WHO WANT AND HAVE JOBS + PEOPLE WHO WANT A JOB BUT DON'T HAVE ONE AND ARE LOOKING FOR ONE + PEOPLE WHO ARE NOT IN THE LABOR FORCE


How does this work out?

According to this chart from the popular financial blog, Calculated Risk, the US, in April 2014, is very close to gaining back all the jobs lost since the Great Recession started in November 2007.  By this Friday's Jobs Report from the Bureau of Labor Statistics (BLS), we might have gained back all the jobs lost by May 2014.

But this is deceptive.  For one, the working age population of the US grew by 15.572 million people or 6.72% from 2007 to April 2014, while the labor force grew by 1.721 people or only 1.12% during the same period.   The number of employed persons actually shrank by 280,000 people and unemployed people grew by 2.001 million people or 28.27% during the same period. People Not in the Labor Force grew by 13.581 million or 17.59% during the same period.

United States
Employment Situation
In Thousand Persons
									2007 to April 2014
	2007	2008	2009	2010	2011	2012	2013	April 2014	Variance	% Variance
Civilian Non Institutional Population	231,867	233,788	235,801	237,830	239,618	243,284	245,679	247,439	15,572	6.72%
Labor Force	153,124	154,287	154,142	153,889	153,617	154,975	155,389	154,845	1,721	1.12%
Employed	146,047	145,362	139,877	139,064	139,869	142,469	143,929	145,767	-280	-0.19%
Unemployed	7,078	8,924	14,265	14,825	13,747	12,506	11,460	9,079	2,001	28.27%
Not in Labor Force	78,743	79,501	81,659	83,941	86,001	88,310	90,290	92,594	13,851	17.59%

Source: BLS.gov


For the United States, the headline Unemployment Rate has dropped down significantly, from a peak of 9.9% in 2009 to just 6.3%.  The Labor Force Participation Rate continues to drop and is now at 62.8% - levels not seen since the late 1970's when women started entering the workforce in droves.  The Employment to Population Ratio has only recovered marginally from its recessionary low of 58.3% to just 58.9% in April 2014.  It is nowhere near its pre-recession average.  In other words, job growth has been growing only barely faster than the growth in the working age population.

Economists have attributed to this phenomenon to increased retirements among the elderly.  But the Bureau of Labor and Statistics itself  is projecting large increases in the Labor Force Participation Rate among people aged 65 and older. The reality is fewer people can afford to retire.

Regional Comparison

So how does the DELMARVA + DC Region stack up to the rest of the United States?

Delaware

The state of Delaware is in a funk, employment-wise.  Its Labor Force Participation Rate, at 60.6% as of April 2014, is even lower than the 62.7% Labor Force Participation Rate the state registered in 1976, the earliest available BLS.Gov data.  Although its Unemployment Rate has dropped from a peak of 8.0% in 2010, to just 5.8% as of April 2014, its Employment to Population Ratio, at 57.1% as of April 2014, is still hovering near the bottom at 56.7% in 2013.

Maryland

Like Delaware, Maryland's Labor Force Participation Rate continues to trend lower, hitting 66.6% as of April 2014 - levels not seen since the late 1970s.  Its Employment to Population Ratio has yet to bottom out. At 62.9% as of April 2014, it is reaching levels not seen since the early 1980s.  Its Unemployment Rate, however, has dropped sharply, from a peak of 7.9% as of 2010 to just 5.5% as of April 2014.  As the previous data indicates, much of the drop has come from people dropping out of the labor force altogether.

Virginia

Virginia has seen a sharp uptick in its labor force participation rate, from a post-recessionary bottom of 66.4% in 2013, to 67.2% as of April 2014.  Likewise, its Employment to Population Ratio has improved to 63.9% as of April 2014.  Unemployment Rate has dropped from its 2010 peak of 7.1% to just 4.9% as of April 2014.

District of Columbia

The District of Columbia's Labor Force Participation bottomed out at 67.8% in 2011, bounced up to the 69.3% level for 2012 and 2013 and is down again to 68.1% as of April 2014.  Its Employment to Population Ratio bounded up sharply from a low of 60.9% as of 2011 to 63.5% as of 2013 and now stands at 63.0% as of April 2014.  Its Unemployment Rate, which reached a peak of 10.2% as of 2011, now stands at 7.5% as of April 2014.