Economics, Pethokoukis

Is this as good as it gets? | October’s dismal ‘New Normal’ jobs report

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The U.S. economy added 171,000 people to nonfarm payrolls in October — including 184,000 in the private sector — the Labor Department said on Friday. The government also said 84,000 more jobs were created in August and September than initially estimated.The unemployment rate ticked up to 7.9%.

Now let’s put those numbers in context:

1. If we suddenly had a string of months where job growth was the same as in October, it would take 7 more years — until 2019 ! — to get back to the Bush unemployment low of 4.4%. Even if we averaged 210,000 jobs a month, we wouldn’t close jobs gap until 2021.

2. We are now 41 months into the recovery, and we have recovered just 55% of the 8.9 million lost private sector jobs from the Great Recession. During the Reagan recovery, it took just 10 months.

3. Back in early 2009, White House economists Christina Romer and Jared Bernstein predicted the unemployment rate would be 5.2% in October 2012 if Congress passed the $800 billion stimulus. As the above chart shows, they weren’t even close.
4. In October, average hourly earnings for all employees on private nonfarm payrolls edged down by 1 cent to $23.58. Over the past 12 months, average hourly earnings have risen by 1.6%. Yet inflation is up 2% over the past year. That means worker take-home pay is declining.
5. As economist Doug Holtz-Eakin notes: “Average weekly hours of work declined. Average hourly earnings declined. The average weekly earnings and index of weekly hours showed sharp declines.” Not good.
6.  The shrunken workforce remains shrunken, although the labor force participation rate did nudge up last month, a good sign. But if the labor force participation rate was the same as when President Obama took office, the unemployment rate would be 10.6%.
7. If the participation rate had just stayed steady all year, the unemployment rate would be 8.2%.

8.  The broader U-6 gauge, which also measures underemployment, dropped just a smidgen to 14.6%.

9. Employment growth has averaged 157,000 per month thus far in 2012, about the same as the average monthly gain of 153,000 in 2011. Excruciatingly slow progress.

10. The average duration of unemployment actually jumped to 40.2 week from 39.8 weeks. And the percent unemployed 27 weeks or more surged to 40.6% from 40.1%

Bottom line: Anemic economic growth of around 2% not only puts the U.S. economy at heightened risk of recession, but is also too slow to a) generate enough jobs to quickly close the jobs gap, and b) boost take-home pay. Anyone satisfied with or hyping this report does a great disservice to the America worker.

9 thoughts on “Is this as good as it gets? | October’s dismal ‘New Normal’ jobs report

  1. The U-6 unemployment/underemployment rate remains stuck around 14.6%. Obama’s NEW NORMAL is killing the middle class.

    America can’t handle 4-more years of such horrific underutilization of our labor force. Household incomes can’t recover back to pre-Obama norms with a U-6 stuck at very hostile levels.

    • Its worse. Clinton changed the way unemployment was calculated. I can only guess it was for reasons like this – to take the heat off underperforming Presidents, and for whatever reason, GW didn’t bother to push back. I am hoping Romney restructures a lot of this and gets rid of the BS, but I am doubtful….

      Anyway, here is how much worse… 23%.

      http://www.shadowstats.com/alternate_data/unemployment-charts

      But your point stands.

      By the way, we are seeing the beginning of the zombie apocalypse in NYC (dumpster diving, fighting over fuel). This is just a taste of what we will have to go through in the future…

  2. Average of 157,000 jobs created per month translates to 3140 jobs/state/month. Interestingly, there are 3141 counties or equivalent entities (according to USGS http://gallery.usgs.gov/audios/124#.UJP-lIbNke8). That translates to 50 jobs/county/month nationwide. If your county created 50 jobs in a month, would you think it was a thriving economy? Or an impressive recovery? Think of these numbers in digestible and local terms and the results are shockingly frightening.

  3. 11. There is something historically different about this recession and its aftermath: in the past, local government employment has been almost recession-proof. This time it’s not. Going back as long as the data have been collected (1955), with the one exception of the 1981 recession, local government employment continued to grow almost every month regardless of what the economy threw at it. But since the latest recession began, local government employment has fallen by 3 percent, and is still falling. In the equivalent period following the 1990 and 2001 recessions, local government employment grew 7.7 and 5.2 percent. Even following the 1981 recession, by this stage local government employment was up by 1.4 percent…

    Without this hidden austerity program, the economy would look very different.

    http://economix.blogs.nytimes.com/2012/06/11/americas-hidden-austerity-program/

  4. Cassidy at NYorker is claiming more people are working now than when Obama took office. Cassidy claims 4.4 m jobs were lost Jan 09- Feb 10, non-farm- all of them have been recoverd. I don’t know where Cassidy is getting his info, short view?

  5. “2. We are now 41 months into the recovery, and we have recovered just 55% of the 8.9 million lost private sector jobs from the Great Recession. During the Reagan recovery, it took just 10 months.”

    Once again, a ludicrous comparison made to Saint Ignatious Reagan’s “recovery” made possible only by Paul Volcker.

    In doing so, Mr. Pethokoukis provides us all with his economic bona fides- no doubt found in a Cracker Jack box.

    Who is stupid enough to buy into this nonsense?

  6. “Is this as good as it gets? | October’s dismal ‘New Normal’ jobs report”

    Only if Obama is re-elected. It’s painfully obvious he understands nothing about economics.

  7. Id like to know why CNN Money isnt taken to task for its “electioneering”. How can they make sweeping statements (see their home page for specifics) like this and expect to be taken seriously?

    NEW YORK (CNNMoney) — The U.S. economy now has more jobs than it did when the president took office in January of 2009.

    With the addition of Friday’s fairly strong jobs report, plus upward revisions over the last couple of months, there are now 194,000 more jobs than there were in January of 2009, according to data from the Bureau of Labor Statistics.

  8. All recessions accelerate existing trends in the economy and this last one just exposes the mismatch between the skills available and those needed. As Carnevale et al (2012) point out, those with just a high school diploma or less lost over 5 million jobs in the recession, and lost another quarter million in the recovery. Those with a Bachelor’s degree actually gained almost 200,000 jobs in the recession, and a further 2 million in the recovery. Unless US education improves, we are never getting back to 5% unemployment.

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