Friday, November 2, 2012

5 million jobs and counting

The economy has generated about 5 million new jobs since early 2010. The pace of jobs growth has been disappointing, but it has been relatively steady. More importantly—since the market is still very fearful of another recession—there are no signs here of any emerging weakness. Private sector jobs growth is decent, but not strong enough to result in any meaningful decline in the unemployment rate, which remains high. 


This chart shows the total number of jobs according to the Establishment and the Household Surveys. Both are showing a net gain of about 5 million jobs since early 2010. That works out to a little over 150,000 jobs per month on average.


This chart of the labor force (those who are working plus those who are looking for work) shows that it tends to grow about 1% per year. One salient feature of the current recovery is the lack of growth in the labor force—the result of approximately 7 million people apparently deciding to "give up" looking for a job. However, in the past year the labor force has resumed its trend growth rate of 1% per year and has reached a new high. On the margin this is a modest positive, since it reflects increased optimism and a more dynamic workforce.


If the 7 million people who have given up looking for work should decide to get back in the hunt, the unemployment rate would jump to something like 12%. Most of the decline in the unemployment rate during this recovery is due to the unprecedented number of people who have dropped out of the labor force.


This chart shows only private sector employment, by excluding the 20-22 million people who are employed by various levels of the public sector. Note how much more volatile the household survey is. On average, both surveys are saying the same thing, and they are consistent with an economy that is growing at a 2-3% pace. That growth rate can be decomposed into 1.5-2% jobs growth and 1% productivity growth. Nothing to write home about, but neither is it something to disparage.


This chart compares private sector to public sector jobs. This recovery has seen a substantial decline in public sector jobs (about 600K), but the declining trend appears to have stalled. Public sector jobs are flat year to date. This suggests that state and local governments have managed to bring their expenses more into line with their revenues, and that is another positive change on the margin.

7 comments:

Bill said...

Enough to re-elect Obama?

ofset said...

Hi Scott, what do you think of this video:

http://video.cnbc.com/gallery/?video=3000126851&play=1

Santelli's take on jobs number.

Scott Grannis said...

I doubt that this report will have any impact on the election. Although 2+% growth has been and continues to be the case, and although the market has been braced for worse, 2-3% growth is not enough to restore prosperity and/or a general sense of well-being. Everyone knows this has been a miserable recovery. On economics, Obama loses without question.

As I've argued for a very long time, the economy has been growing in spite of Washington's best efforts to help it. You can never underestimate the ability of the US economy to overcome obstacles.

Benjamin said...

Obama failed to think about the Fed. If the Obama camp has monetary policy, it is a mystery even yet. On this count, he gets an "F," and I would give an even lower grade, like a "G" or an "H" if they exisred.

I hate to say it, but Romney is very blurry on monetary policy also. If he takes Ryan's advice and goes to a gold standard, it could be a disaster.

Interestingly, Romney's five-page plan to revive the economy does not even mention monetary policy. And he has been very very quiet about the topic for months.

My hope is that Romney and John Taylor plan a more-aggressive monetary policy, geared for growth. That could be the big surprise of a Romney election.

I hope so.

Dr William J McKibbin said...

Hi Benjamin, you said you hoped that assuming Romney is elected, that he will pursue a more aggressive monetary policy -- in fact, the President and Congress create fiscal policy, but have little to say about monetary policy, which is the domain of the Federal Reserve -- but yes, fiscal policy has been asleep at the wheel over the past 50 years -- hopefully, government spending will be instantly cut by at least 40% by whomever is elected to office -- in fact, I am not sure that a 40% cut in government spending is near enough -- that's why I should be elected President -- I would convene Congress and surround the capital building with machineguns -- no one would be permitted to leave the Capital building until real legislation was written by the hands of our elected officials that cut government spending dramatically -- lobbyists seeking to approach the capital building would be arrested on site and detained until after the Congress had finished its business -- what I say here sounds radical, but mark my words, if spending is not cut, then the Federal government as we know her is unlikely to survive the next President's term of office -- watch and learn...

Dr William J McKibbin said...

PS: I wrote the above only half in jest...

Tom Nugent said...

Scott,
I think you should separate the data on public sector jobs into federal vs. state and local. The states have to balance their budgets, Obama doesn't. So I think the federal number is going up while state and local are going down, two different stories.