Scenes from the April employment report: the Fed just can’t kill the employment “beast”
Scenes from the April employment report: the Fed just can’t kill the employment “beast”
– by New Deal democrat
There’s no economic news this morning, so let’s take a closer look at some important trends from last Friday’s April jobs report .
As I and many others wrote, an important theme was that the deceleration in job gains continued, as shown in this graph since January 2021 (note 222,000 is subtracted so that latest average is at zero level):
The last 3 months have averaged 222,000 jobs, the lowest since the pandemic recovery began in 2020.
But on an absolute scale, in the past 40 years, an average of 222,000 jobs per month over a 3 month period has been better than about 80% of all Quarters (graph subtracts 222,000*3 so that quarterly average equivalent to last 3 months shows at zero):
So, on an absolute scale, all that has happened is that the white-hot jobs growth of 2021, which slowed to red hot jobs growth in the first half of 2022, has now cooled to simply hot jobs growth.
All of which has resulted in the highest employment to population ratio among the prime age population since the 1990s tech boom (current level of 80.8% is subtracted to show as zero):
And I won’t even bother to show the current unemployment rate, which is equivalent to the lowest in nearly the past 70 years.
As I also pointed out on Friday, there was some mixed data among the leading employment sectors: temporary (gold) and residential construction (red) did decline, but manufacturing (blue) increased to a new post pandemic high:
If all three have or are in the process of rolling over, in the past 30+ years that has typically occurred many months before the actual onset of ensuing recessions:
Why is employment holding up so well in the face of the turning down of so many other indicators – not just leading indicators, but also things like industrial production or real retail sales?
I believe it has to do with employment still having a way to go to “catch up” with the huge increase in total consumption, including consumption of services, in real terms. Here is what growth in real consumption and employment look like since the end of the Great Recession. Since generally consumption of goods (but not services) increases faster than employment, I have normalized the trend line in consumption to best show the comparison during the last expansion:
There remains a large gap between the growth in consumption, and the growth in employment to service that consumption. To paraphrase “Hotel California,” the Fed keeps stabbing the economy with their steely knives, but they just can’t kill the employment beast.
April jobs report: deceleration continues, with sharp downward revisions to previous months’ gains, Angry Bear, New Deal democrat
Biden and McCarthy to Discuss Debt Limit as a Possible Default Looms
NY Times – May 9
President Biden will meet with Speaker Kevin McCarthy at the White House on Tuesday in a critical face-to-face confrontation that will frame their showdown over the federal debt and spending in the weeks before the nation is set to default on its obligations for the first time in history.
With the American and perhaps the global economy hanging in the balance, the meeting will be the first sit-down session between the Democratic president and Republican speaker since February. But even the terms of the discussion are in dispute: Mr. McCarthy insists the president negotiate a debt ceiling deal with him, while Mr. Biden insists the meeting will just be an opportunity to tell the speaker that there will be no negotiations over the limit.
The meeting in the Oval Office will feature Mr. Biden, Mr. McCarthy and three other congressional leaders: Representative Hakeem Jeffries of New York, the Democratic leader in the House, and Senators Chuck Schumer of New York and Mitch McConnell of Kentucky, the Democratic and Republican leaders in the Senate. But Mr. Biden and Mr. McCarthy are the key players, locked in a political game of chicken to see who will blink first on raising the debt ceiling. …
With the federal government expected to default on its debt as soon as June 1 without an agreement, Mr. McCarthy and his Republican caucus have refused to raise the debt ceiling without commitments to major spending cuts. Mr. Biden has said he would discuss ways to reduce the deficit but has refused to link any spending decisions to the debt ceiling increase, arguing that Congress should simply raise the ceiling as it has for generations to pay for spending already approved. …
Neither side expects any breakthrough at the session, scheduled for 4 p.m., but instead the leaders plan to use it to emphasize their positions in the dispute, in effect setting the parameters for the debate that will play out over the next few weeks. In recent years, such standoffs have not been resolved until the final hours and days before a deadline — or the deadline is extended.
Mr. Biden has indicated that he is willing to have a separate discussion with Mr. McCarthy and the Republicans over spending that is not directly linked to the debt ceiling legislation. White House officials said the president plans to push Republicans to consider the tax increases and prescription drug savings he laid out in his most recent budget, which would reduce deficits by an estimated $3 trillion over 10 years, as part of a larger package to reduce debt accumulation over time. …