Friday, February 5, 2010

The bottom in employment is in sight


This chart shows two measures of the number of private sector jobs in the economy, one using a survey of known establishments, the other using a random telephone survey. Both are now saying that job losses are almost a thing of the past. The ADP survey of jobs is also in agreement, as shown in the chart below. Within one or two months we should see clear evidence of a net increase in jobs.


It may be awhile before we see any meaningful decline in the unemployment rate, however. The next chart shows the unemployment rate, which appears to have peaked. This is largely due to the fact that the labor force (those with a job and looking for a job) has declined by almost 2 million over the past 8 months (lots of discouraged workers leaving the labor force). If the economy gets back on its feet, the labor force is likely to start expanding as worker confidence returns. To keep the unemployment rate from rising we'll need to see jobs rising by 200,000 or so a month, and we aren't likely to see that until we get closer to the November elections.

High unemployment is thus going to be a major focus of the elections. With luck it will spur discussion of why the many hundreds of billions in "stimulus" spending have failed to stimulate. The correct answer, of course, is that the money should have been used to finance a cut in the tax rate on labor and capital.

10 comments:

alstry said...

Scott,

How many workers do you think we will loose as technology replaces humans in many sectors of the economy....especially manufacturing?

For example, Kindles will replace the need for libraries and bookstores and freeing up tens of millions of square feet of retail space. eMail is shuttering the Postal Service. NetFlix is replacing video store and creatively destoying the need for additional millions of square feet of retail and office space. And the internet is moving banking away from branches to online applications freeing up even tens of millions more square feet of retail space.

Just the above contemplates millions and millions of employees and hundreds of billions $ worth of real estate going vacant.

Maybe higher unemployment and higher vacancies is a sign of progress?.......the only problem is we have an economy that is not structured for high unemployment and such restructuring could be very convulsive.....and potentially lead to conflict.

Your thoughts?

Jerry said...

Oh my god! Can't he be blocked?
That shinning orb in the sky is the sun, there is no need to fear everything. For crying out loud,
man up!

Scott your blog has been a godsend. Thanks and keep up the great work.

brodero said...

I am beating a dead horse....

Follow the 52 week moving average of nonseasonally adjusted jobless claims....

alstry said...

Fear???

This is the most exciting time in human history. Not too many years ago, it took over 50 men to farm a couple thousand acres....today it takes one.

That is called progress my friend.

It appears you are the one that is afraid of change......as millions and millions of people are about to lose their jobs to progress and the advancement of man.

rg32 said...

Jerry and Scott --- One of my favorite writers says --- while on the New York subway---- “if you don’t look them in them eye, they aren’t really there.” That is what I keep saying about that other “hopefully non-existent” poster. Best regards…….

狂猪 said...

I like to make the following prediction base on the following chart from Calculated Risk

http://2.bp.blogspot.com/_pMscxxELHEg/S2wfr6jIdyI/AAAAAAAAHcM/dfZbflHVHYg/s1600-h/PercentJobLossesJan2010.jpg

I predict the rate of job recovery will be as fast (maybe even slightly faster) as the rate of job lost during the down turn.

Notice for all previous 10 recessions, the number of months it took for job to recover from the bottom to pre-recession peak level is approximately equal or even slightly less than the number of months required to go from pre-recession peak to recession bottom.

There was no exceptions, including the so call jobless recovery of 2001 and 1990 recessions. I also think the concept of jobless recovery is bunk. In the 1990 and the 2001 recessions, there simply weren't that much job loss that need recovering!

alstry said...

You guys are unbelievable....

Alstry is all about progress. And nothing will move us forward faster than shrinking BIG government. If we just cut government in half, back to where it was not too many years ago, think how much better off we would all be????

Further right now we have over 21,000,000 people working directly for government....not including independent contractors and workers that are employed because of entitlement payments such as health care and elder care.

Just by cutting government in half, we could probably eliminate at least 10-20 million of unnecessary jobs.....and hopefully reallocate them to more productive areas.

America has been progressing since its inception......I am not sure why anyone wouldn't applaud cutting at least 10,000,000 jobs from current government...think of all the taxes we would save?

Closer To Home said...

Compounding the 8,000,000 unemployed and the 2,000,000 discouraged are two other issues. First is the increased productivity employers have found in order to respond to the recession. Second, average hours worked is down to 33 hours/wk. Together, the country may need to add 7-8,000,000 jobs to get back to 50%.

We also have a lot of early boomers delaying retirement because of losses in their investments and continued unstable conditions.

agnieszka said...

alstry-

I'm sure technology will replace jobs- but at the same time it will create jobs. Those machines and robots will require people to make them, maintain them, program them, etc. Of course it may not be a one to one ratio- but those new jobs will likely be more skilled and better paying as overall productivity will rise. And this higher income level should create some additional spending that will in turn spur more production as those people spend on goods and services that were previously out of their reach.

I never understand why people fear technology replacing manual labor- do we want to turn back the industrial revolution?

alstry said...

I agree......I never understood why people equate full employment as necessarily positive....when driving efficiency, the less employed generating the same output, the more efficient.

Could you imagine if we were still at 40 acres and a mule for farming just to maintain full employment?

Heck, look how much more efficient we are today with 20 million people fewer working than just a couple years ago...in come cases producing more.

Where the problem comes in is with the lower taxes being paid for our current massive government structure....

......but the solution is easy.

Fire half of all government workers, reduce the pay of the rest, and cut out entitlements and we would have a budget surplus tomorrow.

Big deal, our economy would shrink a bit for the short term.......but the foundation would be set for unprecedented advancements as we continue to more forward at accelerating rates.

I have no doubts that at least another 15-20 million more Americans will lose jobs in upcoming months, and it is NOT likely many of them will be replaced UNTIL we develop and implement new technologies.

But for those of you that like full employment....maybe government should revert back to granting 40 acres and a mule for every unemployed citizen.