Summary: Most people focus on the month-to-month changes in the jobs report, which consists mostly of noise (recently unpleasant noise). The year-to-date and 12-month changes are more reliable, but miss the current trends. Here we look at the change during the past two months. We remain in a slow recovery, somewhat faster than in 2010. Enjoy this progress, as it was bought at great cost. A cost we cannot long continue to pay, borrowing and squarndering the money ($ which instead could be rebuilding America).
- Household survey
- Establishment survey
- Other important metrics
- For more information about US economy
Here we examine the October employment report from the Bureau of Labor Statistics. They conduct two surveys: one of households, one of businesses. They are not directly comparable, each giving different perspectives on the US economy. Today we look at the change during the past 2 months. The picture painted is consistent with the many other streams of information about the economy — effective rebuttal to the partisans who believe that government data is faked to re-elect Obama.
The important detail to know about the recovery: during this period the government’s public debt increased $139 billion — 7.3% of GDP (see debt here and GDP here), one of the higher fiscal deficits in the world. Our shiny recovery results from massive borrowing and spending.
In other words, organic growth has not yet resumed. The US economy has stabilized and slowly improves due to the massive “drugs” of monetary and fiscal stimulus. Both have severe side-effects, which at some unknown point in the future will become problematic or untenable. But the worst side effect was unexpected: the stimulus eliminated pressure for reform. We have had the New Deal stimulus without the New Deal reforms (some of which failed, but the others laid the foundation for the great post-war boom).
(2) The Household survey
The Current Population survey is a simple survey of households, with large error bars but no revisions. It’s worth watching because it’s the basis for the headline unemployment rate, it gives some useful data not in the more-accurate business (establishment) survey, and because some research suggests that the household report shows inflection points before the establishment survey.
During the past year, the number employed growing at the roughly same rate as the civilian non-institutionalized population, although with large variances month to month. But not in September and October, during which the household report shows employment growth four times faster than the establishment report (+1,283 vs 319, both in thousands). The Household report might be showing an inflection point in the economy. It’s too early to say.
Here are seasonally adjusted numbers, in thousands.