“Here we go again! Economists: Employment gains are ‘implausibly high’”
Well, saying I told you so in crass. But quoting myself saying I told you so? Perfectly acceptable and in the best of taste. Because I told you so — a year ago, a few months ago, and yesterday, even amid speculation that the unemployment numbers simply couldn’t be massaged enough to stay below 8%:
My prediction: there’s no way in hell Labor lets that number go up over 7.9%. If they do, that’s an admission that even they are tired of covering for this guy and his corrupt Administration, and it’s time for him to go.
Guess they’re holding onto some of that hope — enough so that they’re willing to engage in methodology that changes reality into perception.
Recall all the eyebrows that were raised last month at the huge jump, nearly 900,000 jobs — in the September household jobs survey conducted by the Bureau of Labor Statistics. The last time the economy added that many, it was growing at a white-hot 9.3% — not 2%. And it was way out of line with the more well known payroll survey.
The results led Gallup’s chief economist to say that the “household results should be discounted. … The obvious conclusion is that a new employment measure is needed.”
But in October we had another mega-month, at least according to that survey. Household employment jumped 410,000. Here is the economics team of John Ryding
Conrad DeQuadros at RDQ Economics:
The economic data for October continue to be relatively upbeat as the gain in payrolls and the upward revision to employment growth in the prior two months put the level of payrolls in October some 255,000 above the previously reported level for September. The employment gains in the household survey (about 1.3 million over the last two months) are implausibly high and we still expect to see an eight-handle on the unemployment rate again before the end of the year.
Translation: Unemployment is headed back to the 8% level after the election.
The thing is, though, it’s already there. And we most of us know it. But because 8% seemed to be judged the magic number from which no President could return, everything possible has been done to push the number below that mark in the run-up to the election. As many knew it would be.
Here’s more Pethokoukis, putting even the dubious 7.9% minor uptick in unemployment into perspective:
1. If we suddenly had a string of months where job growth was the same as in October, it would take 7 more years — until 2019 ! — to get back to the Bush unemployment low of 4.4%. Even if we averaged 210,000 jobs a month, we wouldn’t close jobs gap until 2021.
2. We are now 41 months into the recovery, and we have recovered just 55% of the 8.9 million lost private sector jobs from the Great Recession. During the Reagan recovery, it took just 10 months.3. Back in early 2009, White House economists Christina Romer and Jared Bernstein predicted the unemployment rate would be 5.2% in October 2012 if Congress passed the $800 billion stimulus. As the above chart shows, they weren’t even close.4. In October, average hourly earnings for all employees on private nonfarm payrolls edged down by 1 cent to $23.58. Over the past 12 months, average hourly earnings have risen by 1.6%. Yet inflation is up 2% over the past year. That means worker take-home pay is declining.5. As economist Doug Holtz-Eakin notes: “Average weekly hours of work declined. Average hourly earnings declined. The average weekly earnings and index of weekly hours showed sharp declines.” Not good.
6. The shrunken workforce remains shrunken, although the labor force participation rate did nudge up last month, a good sign. But if the labor force participation rate was the same as when President Obama took office, the unemployment rate would be 10.6%.
7. If the participation rate had just stayed steady all year, the unemployment rate would be 8.2%.
8. The broader U-6 gauge, which also measures underemployment, dropped just a smidgen to 14.6%.
9. Employment growth has averaged 157,000 per month thus far in 2012, about the same as the average monthly gain of 153,000 in 2011. Excruciatingly slow progress.
10 . The average duration of unemployment actually jumped to 40.2 week from 39.8 weeks. And the percent unemployed 27 weeks or more surged to 40.6% from 40.1%
Bottom line: Anemic economic growth of around 2% not only puts the U.S. economy at heightened risk of recession, but is also too slow to a) generate enough jobs to quickly close the jobs gap, and b) boost take-home pay. Anyone satisfied with or hyping this report does a great disservice to the America worker.
…and here’s ALG describing the kinds of jobs being created, many of them, outside service industry jobs, what they are calling “defensive jobs”:
One area in the report that sticks out like a sore thumb is that only 21,000 of the total number of jobs reported to have been created were in industries that create anything. The rest are service industry jobs, many of which appear to be more related to protecting a company from the effects of government regulations than actually increasing a company’s financial health. Defensive hiring to deal with big government is not healthy, as it is just another drag on businesses ability to fund expansion that results in real job growth.
Leaving all that aside — because it deals with the way the government self reports, and with the way the media uses as it’s “official” number the U-3 — here’s another take on the true state of the economic recovery as it pertains to jobs:
The seasonally-adjusted SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994. That estimate is added to the BLS estimate of U-6 unemployment, which includes short-term discouraged workers.
The U-3 unemployment rate is the monthly headline number. The U-6 unemployment rate is the Bureau of Labor Statistics’ (BLS) broadest unemployment measure, including short-term discouraged and other marginally-attached workers as well as those forced to work part-time because they cannot find full-time employment.