Friday, October 7, 2011
U.S. Employment Still at Recession Levels in September
The 'Helicopter Economics Investing Guide' is meant to help educate people on how to make profitable investing choices in the current economic environment. We have coined this term to describe the current monetary and fiscal policies of the U.S. government, which involve unprecedented money printing. This is the official blog of the New York Investing meetup.
The non-farm payrolls report for September indicated the U.S. economy added 103,000 jobs last month. Mainstream media immediately jumped on the number as proof the U.S. is not in a recession. It indicates no such thing.
While it seems reasonable to assume that employment can't increase at the begging of a recession, this did not happen in December 2007 when the Great Recession began. Total U.S. non-farm payroll employment actually peaked in January 2008 at 137,996,000. It then declined until hitting a low point of 129,246,000 in February 2010, many months after the recession supposedly bottomed in June 2009. Total employment in September 2011 was only 131,334,000, not even remotely close to levels four years earlier. These figures can be viewed at: http://research.stlouisfed.org/fred2/data/PAYEMS.txt.
The internals of the employment situation for September were not encouraging either. In their press release, the BLS admitted right up front that the end of a strike by the Communication Workers union added 45,000 jobs to the 103,000 total. This leaves only 58,000 jobs being created during the month. More than that amount came from only two sources -- health care and construction. The largest increase in jobs was 41,000 and they were created in the "health care and social assistance" category. Like education, many of these jobs are funded by the government either directly or indirectly, yet they are counted as private sector jobs. The government promulgates this fantasy and the mainstream media mindlessly repeats it.
Another 26,000 jobs somehow came from construction. At least the BLS didn't claim they came from the struggling residential real estate market. Almost all of these new jobs came from the heavy and civil construction category. Perhaps the federal government is building another Hoover Dam and forgot to mention it to the public? This is sort of an eyebrow raising number to say the least.
So in September 2011, there were 6,649,000 less employed people in the U.S. than when the Great Recession began in 2007. This is after over two years of supposed recovery. Based on the recent net increases in the labor force, the U.S. needs to create approximately 150,000 new jobs a month for the employment situation to just hold steady. To reduce the official unemployment rate of 9.1% would require adding a much larger number of jobs every month. This is not happening. As for whether or not the U.S. is in a recession, an unemployment rate of 9.1% has always indicated a recession in the past. Is there any reason to think "things are different" this time around?
Author: "Inflation Investing - A Guide for the 2010s"
Organizer, New York Investing meetup
This posting is editorial opinion. There is no intention to endorse the purchase or sale of any security.