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US Economy 'Heading for a Wall': Stockman

The jobs numbers on Friday were a mixed bag, with employment rising far less than expected in January, but the unemployment rate falling to its lowest level since April 2009. But one former federal budget director thinks these numbers tell a different story.

David Stockman
AP
David Stockman

"These numbers were bad if we look at a little bit of trend in composition, and not just one month at a time," David Stockman, former OMB director under President Reagan, told CNBC Friday.

"Where is the half-million jobs that were lost in the last thirty days that no one talked about? I'm talking about the once a year, re-benchmarking of the number of absolute jobs in the economy," Stockman said.

"Thirty days ago we were told 130.7 million jobs in the economy, in December, this morning it was 130.2," he said, adding, "that's the half million."

"Over the last 19 months, since the recession ended, we had 130.7 million jobs in the economy. This morning they said we had 130.2, we're still down a quarter of a million jobs from when the recession ended," Stockman added.

In addition, the U.S. is issuing three times more bonds a month than the GDP is growing, he said, adding, "I don't think we are headed for a cliff, I think we are heading for a wall."

"The fiscal situation is certain, in my view, because the political parties are totally paralyzed, to lead to a bond market conflagration—that's when the yield really soars, that's when the sell off really begins to happen, and that's when Congress and the White House finally wake up," Stockman said.

Also the unemployment rate fell from 9.4 percent to 9.0 percent, something Stockman believes is a result of "the participation rate in the labor force...dropping like a rock month-after-month."

"If we had the same participation rate this January that we had a year ago, the unemployment rate reported this morning would've been 9.9 percent or 10 percent rounded, not 9," he said.

"So we lost a million-and-half people, jobs, who weren't looking, who aren't in the labor force," Stockman concluded.

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