Summary: Looking at today’s employment report (PDF here) we can draw three big conclusions. Oddly enough, these are not obvious to all.
- The change in June was statistically about zero
- The cumulative change over the past year was very small
- This is bad news; worse might lie ahead
- For more information
(1) The change in June was statistically about zero
Compare the June employment report results to the 90% confidence level for the monthly employment reports:
(a) The household survey (CPS, source of the unemployment rate): 128,000 + or – 280,000 (essentially unchanged).
(b) The establishment survey of non-farm employment (CES): 80,000 +or – 100,000 (ditto). This has been the case for quite a while. Looking at the recent CES monthly changes:
- April: +68,000
- May: +77,000
- June: +80,000
(2) The cumulative change over the past year was very small
(a) The not seasonally adjusted change over the past 12 months of non-farm jobs per the establishment survey: 1.8 million (1.3%). Due to revisions to the data, year-over-changes in the household survey are too complex for us to do here.
(b) Look at the changes this year, the seasonally adjusted change from January to June (in thousands). Note both surveys agree on the change in jobs.
The establishment survey:
The household survey provides a broader context:
|Not in labor force||87,874||87,992||118||0.1%||0.3%|
Population = civilian, non-institutionalized, age 16+.
(3) This is bad news; worse might lie ahead
Many who look at these numbers debate the tiny details, but ignore the large fact: both measures show slow recovery from the depths of the recovery. Very slow recovery.
We are applying powerful fiscal and monetary stimulus to get this slow recovery. Near-zero interest rates plus borrowing $1.3 trillion dollars over the past 12 months (data here), and we get only a 1.3% increase in jobs. The annualized increase so far this year runs at roughly the same rate — with no evidence of the powerful sustainable recovery the optimists have promised so many times since the trough in Spring 2009. The reason is obvious: the stimulus provided first aid. It stabilized the economy, buying time for measures to rebalance our warped somewhat dysfunctional economy. We wasted that time (as we squandered the stimulus spending).
Now for the bad news: the world economy is slowing. The economic and social stress of a slowly growing world might be heavenly compared to what lies ahead if the world slumps again into recession in its weak condition.
For More Information about the US economy
- A status report about the US economy (we party so hard we cannot hear the alarms ringing), 27 March 2012
- About America’s economic recovery: the good news and the bad, 1 May 2012
- About the May jobs report – a few new jobs, bought at great cost, 1 June 2012
- The Titanic’s lessons for us about the coming economic crisis, 4 June 2012
- America is rich and powerful because we can borrow. Will this debt build a stronger America?, 5 June 2012
- US economic update. Everything that follows is a result of what you see here., 8 June 2012