Summary: Another jobs report, more clickbait headlines about the monthly noise. Here’s a look beneath the glitz to the important news. The US economy continues slow steady growth, with continued signs of slowing. Also, 47% of new jobs went to foreign-born workers during the past year. Important matters. Too bad neither the candidates, journalists, or Americans care about such things. On to the next astounding soundbite!
- The noise: monthly changes in jobs.
- The important news about the trend in number of jobs.
- A clearer trend: total number of hours worked.
- Where were the new jobs?
- What about the info sector jobs machine? Let’s all become programmers!
- A red flag: growth in temp workers has slowed to almost zero.
- It’s not a “Starbucks Economy”. See the slow but steady wage growth.
- Explosive news: 47% of new jobs went to foreign-born workers.
- Conclusions and For More Information
Here are the monthly numbers that generate the exciting headlines!
It’s noise. The trends are almost impossible to clearly see.
Graph of the monthly change in jobs since Jan 2013 (SA).
Here is a more useful graph. Employment is still growing, but slowing.
Do you see why the monthly outpourings of joy or despair during the past 4 years?
The real story is the stability of the slow growth in the US economy.
Graph of the year-over-year percentage growth in jobs (not seasonally adjusted).
Here is an even more useful graph: total hours worked in the private sector.
Total jobs combines full-time and part-time, as if they’re the same.
This more clearly shows the slowing during the past year.
Where were the new jobs in July? Same as usual.
Professional & biz services, education & health care, leisure & hospitality.
Graph of the change in jobs during July by sector (SA).
What about the information sector, our 21st century jobs machine?
We tell youth: “Go to the info sector!”
Reality: only slow growth. Total growth over 5 years: 4.0%.
Graph of year-over-year percent job growth in the info sector (SA).
Temporary workers are the first to get fired, and so are a leading indicator.
The number of temp workers fell 6-12 months before the past 2 recessions.
(Total employment is a lagging indicator.)
The slowing of temp growth this year gives a warning.
Graph of monthly change in temporary help services jobs (NSA).
The US is not a “Starbucks Economy”.
Wage growth is typical of past cycles: slow then accelerating (NSA).
But it seldom grows fast, or for long. That’s for profits, not wages.
Who is getting the jobs?
Employment of foreign-born workers grows faster than natives.
Of the 2,715 new jobs created in the past year, 47% went to foreign-born workers.
Growth in workers by place of birth (NSA): index with June 2009 = 100.
The US economy continues to grow slowly, but almost every metric shows that the rate of growth is slowing. While we cannot yet see the next recession, the data suggests that we should begin to prepare — perhaps it will arrive in early 2017. Raising interest rates now would be quite mad.
Much of what you read about jobs is malarkey. The real story is untold because it is boring (not useful clickbait): The miracle of growth in the US economy (spoiler: its slow but steady). The really astonishing news: neither candidate has much to say about a US economy stuck in “slow” (other than vague promises to kiss it and make it better).
For More Information
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- Why America’s growth is slowing, and a solution — Imagine bringing June Cleaver from her 1957 home to today’s equivalent; she’d be astonished at our lack of progress. See how we’ve underperformed futurist Herman Kahn’s 1967 expectations for the year 2000.
- Larry Summers gives us the bad news. Worse, the only solution is more of the same.
- Do we face secular stagnation or a new industrial revolution?
- The IMF warns us of economic stagnation & suggests fixes. We should listen.
- Ben Bernanke sees the great slowdown in technological progress.
- Poorly prepared Boomers retiring means hard times for them and for America.
- The Fed sees years of slowing growth. Prepare for years of political turmoil.
- As boomers retire they create a drag on US GDP that will last for decades.
The latest and best book about this
The essential reading to understand this aspect of modern America — shaping our future while we sleep — is The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War. From the publisher…
“In the century after the Civil War, an economic revolution improved the American standard of living in ways previously unimaginable. Electric lighting, indoor plumbing, home appliances, motor vehicles, air travel, air conditioning, and television transformed households and workplaces. With medical advances, life expectancy between 1870 and 1970 grew from forty-five to seventy-two years. Weaving together a vivid narrative, historical anecdotes, and economic analysis, The Rise and Fall of American Growth provides an in-depth account of this momentous era. But has that era of unprecedented growth come to an end?
“Gordon challenges the view that economic growth can or will continue unabated, and he demonstrates that the life-altering scale of innovations between 1870 and 1970 can’t be repeated. He contends that the nation’s productivity growth, which has already slowed to a crawl, will be further held back by the vexing headwinds of rising inequality, stagnating education, an aging population, and the rising debt of college students and the federal government. Gordon warns that the younger generation may be the first in American history that fails to exceed their parents’ standard of living, and that rather than depend on the great advances of the past, we must find new solutions to overcome the challenges facing us.
“A critical voice in the debates over economic stagnation, The Rise and Fall of American Growth is at once a tribute to a century of radical change and a harbinger of tougher times to come.”