Friday, June 4, 2010
According to the household survey, private sector jobs have risen at an annualized pace of 1.4% over the past six months. That number will very likely approach 2.5% next month, assuming only modest gains in employment in June, because the bottom in employment was last December. A 2.5% rate of growth in private sector jobs would be entirely consistent with a modest decline in the unemployment rate; the labor force tends to grow about 1% over time, but it has not grown much at all in the past few years, so we ought to expect labor force growth to be closer to 2% for the next 6-12 months; thus 2.5% jobs growth will only result in a minimal reduction in unemployment. In any event, while this does not look at all like a robust recovery, it is nevertheless a recovery, and I see no sign that it is about to end. The market needs to look beyond the establishment survey—things are nowhere near as bad as the headlines suggest.
Posted by Scott Grannis at 11:58 AM