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According to the most-watched establishment survey of jobs, there were fewer layoffs than expected in April (539K vs. 600K). But according to the household survey, which often does a much better job of reflecting reality at turning points in the economy, only 14,000 jobs were lost. The reality might be somewhere in the middle of these two surveys; either way, today's news marks a significant inflection point for the economy. The labor market is nowhere near as bad today as it has been in recent months. This is one more in a long and growing list of signs that we've seen the bottom of this recession and the economy is probably growing.
5 comments:
Scott,
How much of this was due to government added jobs?
Apparently there were about 60,000 new Census jobs in April. But even adjusting for that, the household survey result was pretty impressive, reflecting an unambiguous slowdown in job losses.
Scott,
The good news about the household survey was that the number of employed actually increased by 120,000 on a seasonally adjusted basis, the first such increase in exactly one year. This suggests that GDP should be touching bottom soon.
The bad news is that the unemployment rate reached 8.9% and so is on a trajectory to exceed even the most pessimistic of forecasts. (The worst that I had seen was from the OECD which predicted that the US unemployment rate would average 9.0% in the second quarter.) Such slack in the labor market is going to create tremendous downward pressure on compensation, and normally in a recovery it is personal consumption that gets the ball rolling.
We're hardly out of the woods yet but at least the contractionary portion of the recession seems to be drawing to a close.
The unemployment rate is a very lagging indicator, so I don't really pay much attention to it. It can also be misleading. If confidence returns, as it seems to be doing, then discouraged ex-workers might decide to go out looking for a job and this would push the unemployment rate up, even though it would be a healthy development.
And as you know, I don't believe that "slack" is a determinant of inflation. In fact, I see more prices rising every day, even as the economy's "slack," or idle resources are presumably increasing.
The household data picks up the early signs of recovery and it is indeed a positive. Ironically, the MSM ignored the household data in 2004 when they were invested in the "jobless recovery" theme and focused solely on the establishment survey data. Now, watch the MSM to start lovin' the household survey as shows glimmers of optimism while the establishment survey lags. This new-found love for the household survey will be used to bolster arguments that the stimulus package is doing wonders.
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