Reader Frank de Libero has been looking at the Jobs market, focusing on the Jobs per thousand (JPT) adults number. This post looks at how that relates to consumer spending. I wonder… if the number of jobs falls, or the quality of the jobs falls (leading to a decrease in real per capita income), what happens?
On March 18, I posted a short article on a job creation index that takes into account population growth. This allows comparisons across time and categories, such as presidential administrations; it permits the use of objective criteria for evaluating job growth, like comparing to an average; and cuts through misinformation such as “X number of jobs were created last month which meets so-and-so’s expectations.”
This past Sunday Tom Petruno, Los Angeles Times, wrote an informative article on the three risks facing Wall Street. (And thanks to The Big Picture for pointing this out.) The three risks are a dive in consumer spending, a downturn in corporate earnings, and the tanking of the dollar’s value. The reason for this post relates to the first, consumer spending, and its correspondence to JPT (Jobs per Thousand adults), the job creation index of March 18.
Accompanying Petruno’s article was a graph containing three plots, one for each of the risks. The first plot was a bar chart showing the annual percentage change of real consumer spending. I’ve played around with the JPT index for many months, maybe a year, and so it’s part of me. The consumer spending bar chart looked familiar, like maybe it was behaving similar to the JPT. Consumer spending and job growth ought to have some correspondence.
The following graph replicates Petruno’s bar chart and then overlays an annual average JPT. It sure seems to confirm the correspondence between the two. What do you think?
This is interesting. It further validates, at least for me, both the rightness and value of JPT as a metric. In this chart we have two independently derived measures, jobs and consumer spending, one from BLS and the other from BEA, that both show — unfortunately — declining consumer economic health, and potential increased economic risk.
On a separate issue, cactus and I discussed posting an updated JPT chart the first Friday of the month for the next few months. For the remainder of the year, the Bureau of Labor Statistics will release its new and updated payroll estimates on each first Friday. I’ll update and post the JPT for the next 3-4 months to hopefully determine if it is useful to others and thus whether or not to continue posting beyond that.
The first post will be on April 6. In that post I also plan to include a chart and brief discussion on the tight relationship between the working-age population (ages 18-64) and the payroll numbers. I hope you’ll find it as interesting as I have.