Summary: The key thing to know about the latest job report is the same thing to know about all 2014’s job reports: there has been no change to the trend. No sign of the acceleration so confidently forecast by so many. This confirms the other economic indicators, amidst the slowing world economy. Leave the analysis of the minutia to specialists; the big picture is important and easy to see. Because the expansion grows old, and the next recession approaches (especially with the Fed determined, for good reason, to normalize interests beginning next year).
“Significant monetary stimulus, the end of fiscal austerity, a booming housing market, a cheap dollar, record corporate cash balances — if the US economy does not significantly accelerate in the coming quarters, it never will. We assume it will …”
— Michael Hartnett (Chief Strategist, Bank of America), 12 September 2013 (red emphasis added)
The core economic statistics for the US are jobs and wages (these are coincident indicators, showing where we were in the last few months). As I (and others) have reported, the predictions of optimists and pessimists alike have been wrong during the past 5 years. The US has grown steadily by most metrics at roughly 2% per year. Slow, especially with the gains going largely to the 1% (hence the GOP wins, bringing them control of most elements of the US Federal and State government machinery).
Here is the monthly nonfarm jobs growth (SA). Do you see a boom in 2014? The second half of 2014 (after an unexpected winter slowed Q1 growth)? This month’s “strong” report resulted from “America’s Sudden Fascination With Hiring Young Women” as waitresses.
Let’s smooth out those wiggles. Here is the same data, but the year-over-year changes, NSA, during the past 10 years. Looks like we’re at peak job growth. Is that good or bad?
Let’s compare the past 10 years with the post-war period of real growth. Same data, YoY, NSA. The new century has been pretty weak for American workers, despite years of unprecedented fiscal and monetary stimulus (slowly winding down).
Now for the bad news: wages, a long sad story. No sign of acceleration during the past five years (SA data, YoY).
But why should we expect growth in real wages? Real wages have been roughly flat since 1970. All the gains from America’s growth have gone to the 1%.
This is your economy, shaped by our political choices. Don’t complain unless you work to change it. Previous generations overcame greater challenges.
For More Information
(a) See all posts about economics.
(b) Recent posts about this economic cycle:
- Are we following Japan into an era of slow growth, even stagnation?, 18 November 2013
- Has the Fed blown another housing bubble?, 30 January 2014
- The dilemma of the US economy: can’t take off & too close to the brink, 9 July 2014
- Has America’s economy entered the “coffin corner”?, 10 July 2014
- Economists forecast a boom soon. The numbers show slowing. Who is right?, 21 July 2014
- See the true trend of the US economy, hidden in the daily news, 1 August 2014
- It’s not too soon to worry about the US economy. There are things worse than slow growth., 18 September 2014
- Listen to the slowing US economy, hear echoes of Japan, 24 September 2014
- 3 graphs tell the story about the US economy, hidden amidst the noise of the jobs report, 6 October 2014
- Look at the economy. Fight the illusion of normality. Feel the weirdness., 8 October 2014
(c) About the greatest monetary experiment, ever:
- Important things to know about QE2 (forewarned is forearmed), 21 October 2010
- Bernanke leads us down the hole to wonderland! (more about QE2), 5 November 2010
- The World of Wonders: Monetary Magic applied to cure America’s economic ills, 20 February 2013
- The World of Wonders: Everybody Goes Nuts Together, 21 February 2013
- The greatest monetary experiment, ever, 20 June 2013
- Different answers to your questions about the momentous Fed decision to delay tapering, 20 Sept 2013
- Do you look at our economy and see a world of wonders? If not, look here for a clearer picture…, 21 September 2013
- Two warnings about quantitative easing, the taper, and what comes next, 27 September 2013
- Dr Hunt explains the great monetary experiment. It will be historic, no matter what the result., 20 October 2013
- The great monetary experiment enters a new phase, with America as the stakes, 27 October 2013
- The key to understanding the future of QE3, and the future of our economy, 12 November 2013
- How to predict the outcome of this great monetary experiment, and how we got into this box, 15 November 2013