The employment report was basically more of the same and was very discouraging.
Even though the headline number reported a large 431,00 increase in employment, most of this was temporary Census jobs. Private employment only increased 41,000, significantly less than in the previous few months.
The unemployment rate fell, but that was just as much a result of a rise in discouraged workers as a rise in employment as measured by the household survey.
Even the diffusion index ticked down.
As in previous months the rise in aggregate hours worked rose nicely even though it was only up 0.3% as compared to 0.4% in the last few months.
Wage gains were also moderate as average hourly earnings rose 0.3% and were up only 1.9% over the last 12 months. But because of the gains in hours worked average weekly earnings continued to improve.
No way to sugar coat this – it is mutt dog ugly.
“The unemployment rate fell, but that was just as much a result of a rise in discouraged workers “
And yet, last report the unemployment rate up was do to encouraged workers looking for job because the prospect of getting a job was so great?
The flower shop has turned from being up 1.5% first quarter to down 4% for year to date.
I have to agree with STR and it does reinforce my concern that we are in an era of sustained high unemployment/underemployment due to a variety of factors unrelated to the liquidity crisis/business cycle recession. Indeed, given the sluggish rise in employment during the housing bubble and the stagnant real wage increases for labor during the entire Dumbya administration, I would argue that the housing bubble masked the economic reality since at least 2000, that globalization, the large influx of immigrants and the inability or unwillingness of large sections of the labor pool to train for very high tech jobs, that we likely have a pool of 15-20% of the labor force that formerly worked at good paying blue and white collar jobs who can only find work at minimum wage jobs if at all. In a consumer driven economy, that is not going to get the job done in terms of driving growth. Arguably, the trend goes back to the Carter/Reagan years when the rustbelt arose, but we had the tech revolution during Clinton years to get us through the 90’s. Unless something else comes along, I think we have to face the reality of very slow growth for a very long time and that raises important policy issues like how long can we afford to fight 2 overseas wars and keep using a large portion of gdp to fund the military/industrial complex.
Really ugly chart at Business/Insider – Clusterstock
It would have been nice if they had gone back to 1929. Uncharted waters to say the least
One thing that doesn’t look at all bad is the 3.7% annualized rise in aggregate hours over the past 3 months. It is mostly the result of a rise in average weekly hours. It also probably signals a GDP gain of roughly 3.7%, maybe even a bit higher if we get a decent bit of productivity gain. That is, unless the three month average slows markedly in the June report.
Hmph. I heard a minor business wonk on the radio who said that the 431,000 hirings didn’t count because almost all of them were Census hirings. Ergo, she said, Obama isn’t doing his job because … businesses aren’t hiring, but he is?
I would have thought this was proof that business wasn’t doing its job.
K Harris, your comment is right about private real GDP, but you have to add government on to this.
Terry, not everybody can become a software engineer or a C+++ Programmer. I took a bunch of programming courses in college 25+ years ago and I can say that unless you’ve got the knack for IT, it is very difficult to master and if it wasn’t so difficult, a significant amount of that pool of unemployed labor would be employed. We need an industrial policy with new paradigms for careers for the people who can’t become engineers and scientists.
Perhaps, it is fewer workers working more hours which would impact productivity gains.
This story at Huffington Post contributes news of a new and quite disturbing trend – Refusal of businesses to consider hiring people who are currently unemployed.
At dinner last night a friend who works as a director of a medium software company confirmed he is seeing the same restrictions at openings in other firms.
As an employment strategy it may be nominally defendable: 1> Why take a chance on somebody who has lost a job if you have an opportunity to steal a worker from a competitor 2> Especially considering you’re not likely to have to offer them much in pay or benefit improvements – for some workers the fear of cutbacks is enough to make a switch. 3> Hiring the currently employed means you’re already screening for people who are adapted to the new regime – more unpaid overtime, reduced expectations of raises or promotions etc.
But if this trend is more than a minor blip it means the currently unemployed are likely to form a more or less permanent underclass. Once finding a job is no longer a reasonably widely held expectation but actually something only the people who already have jobs are entitled to things are likely to get quite a bit uglier. How high can they build the walls around those gated communities anyway?
And it ought to be something policy makers are paying attention to. Once this trend takes hold in the mainstream the permanently unemployed underclass will only grow larger. As others have observed it’s probably time for the government to move from being the lender of last resort into becoming the employer of last resort.
As Dr. Black has observed, with short term T-bill rates under 1% and long term rates at 4 points and change it’s a ridiculously cheap time for the government to hire people to rebuild crumbling infrastructure etc. It should be rather easy to find literally hundreds of projects that have immediate returns that are considerably higher than the prevailing interest rates.
Fewer workers working more hours would, if total hours worked rose, still mean a drag on productivity. In the officials productivity stats, hours count. Number of workers is not a factor.
ARRA spending patterns suggest one last lift to GDP in Q2, with some chance of a lift to Q3. Total government employment trended lower through February, then rose in response to Census hiring. I don’t know how BEA accounts for Census in GDP stats, so I’m left with ARRA.