The vital things to know about the latest employment report

Summary: The March employment report is important, confirming the slowing of the US economy. This post skips our usual numbers blizzard, focusing instead on the vital numbers, and debunking both the hype and hysteria about this most important of the economic statistics. {1st of 2 posts today.}

Contents

1. Summary of this important report.
2. Has Obama’s recovery helped the middle class?
3. The bottom line.
4. Does this signal a recession coming soon?
5. For More Information.

 

(1)  Summary of this, the most important economic number

The March employment report was one of the worst in the past 3 years. See the Highlights for the pictures. Nonfarm payroll employment increased by 126,000 in March and 197,000 per month over the past 3 months — compared to 269,000 over the prior 12 months. This slowing is consistent with that of the other economics indicators in the past month.

Keep a sense of proportion about these numbers. There are 140 million jobs in America, done by 147 million employed workers. The monthly changes are small and so difficult to measure accurately. Watch the patterns instead.

 

The weakness was broad. The 4 sectors with the largest slowdowns were in the construction (-1 thousand vs +26 in the past 12), manufacturing (-1 vs +20), leisure/hospitality (+13 vs +33), and mining (-11 in March; it’s lost 10,000 per month in 2015 vs 4,000/month last year). Despite the hysteria of the bears, mining is a small sector. It is important for some areas, but of minor impact to the nation.

Among the most important numbers in this report is wages. The average workweek for production and nonsupervisory employees in the private sector decreased 0.1 hour to 33.7 hours (-3.5% SAAR). Their average hourly earnings rose by 4 cents to $20.86 (+2.3% SAAR). These offset each other, so the average weekly earnings was almost unchanged (down 5¢ to $857.67).

That was the pattern for the March report, with most of the details little changed from February. You’ll see people obsess over the tiny wiggles in the March numbers. They are mostly statistical noise. Watch the trends instead. The overall pattern was slowing.

(2) Has Obama’s recovery been a “real” recovery?

The confident “no” you hear from the Right (e.g. Fox News) and the Left is absurdly false. Wages, hours, part vs full-time employment — they’ve all improved, albeit only slowly (and less than the bounty enjoyed by the 1%). The number of jobs by working aged people (age 15-64) has increased by 10.2 million (+7.8%) since the recession ended in June 2009. That’s more than this group’s population has increased (+6.4 million, +3.2%).

Hours of average people (production and non-supervisory workers) remain stalled for the 6th month at 34.7 per week, as employers keep people at less-than full time and avoid overtime (both showing the surplus of workers over demand). Average hourly earnings and weekly wages are up only 1.8% YoY, slightly ahead of inflation.

Let’s avoid the partisan chaff and see the facts. We should do better than this in a recovery, especially with corporate profits and income of the 1% doing so well. This is a weak recovery for the US economy — the aggregate numbers for America. As a separate issue, the recovery’s benefits are not well distributed. That is a political problem. We should expect to get shafted so long as we remain politically apathetic and passive. That’s the Great Circle of Life in the real world.

(3) Does this signal a recession in the near future?

No. The bears scream “recession” at every slowdown, but few slowdowns become downturns. The US economy is like a supertanker: it changes course only slowly. Look at the last cycle. The Fed’s Labor Markets Conditions Index peaked in January 2006 at 13.9. The recession started in December 2007. It troughed in December 2008 at –38.6.

We pay attention to slowing so you can prepare — which also takes time — and because the next recession might be not just unusually painful but also difficult to fix.

(3)  For More Information.

If you liked this post, like us on Facebook and follow us on Twitter. See all posts about economics, monetary policy, and stimulus programs. Of special interest are these about the state of the economy:

1. Dreams of a boom fade & attention turns to secular stagnation.
2. Highlights of the jobs report, the good news & the bad.
3. New economic data only deepens the mystery.
4. Updating the recession watch; & what might the government do to fight a slowdown?
5. Economic status report: good news plus chaff from doomsters.