Now the Bad News: Those August Jobs Were Rented
Despite what some on Wall Street say, the August jobs report shows little hope for recovery.
Well, the medication has had no such effect during the eight months since December. We've regained only 1.5% of the 8 million jobs lost during the prior two years in the goods-producing and core private-business-services segment of the economy. Stated differently, the rate of gain has been essentially a rounding error -- a pick-up of 15,000 jobs per month compared to the 330,000 per month loss rate during the Great Recession.
At the last eight months’ growth rate it would take 44 years to recover the jobs lost in these segments since December 2007, and more than a half century to retake the employment level first reported when Bill Clinton was president.
It will be argued, of course, that job growth in these categories will soon accelerate, thereby drastically foreshortening this mind-boggling delay in the recovery scenario. But why? The national economy is self-evidently defaulting to stall speed. After an inventory-fueled rebound of 5.0% in the fourth quarter of 2009, GDP growth rapidly cooled to 3.7% in this year’s first quarter and 1.6% in the second quarter. And after the recent big downward revision of June construction spending, last quarter’s figure is going to get even slimmer.
At the same time, already reported results for July and August on key drivers like core CapEx, residential construction, inventories, and foreign trade virtually guarantee that the GDP expansion rate will be close to zero in the third quarter. Not surprisingly, the latest bullish mantra is that this stall is merely the pause that refreshes, and that the big rebound is -- yet again -- just around the corner. But an examination of the specific headwinds facing the “fiscally dependent” segments of the job market, as well as those economic precincts that produce goods and core private services, suggests that any such turning point lies years into the future, at best.
First, the nation’s unsustainable reliance on fiscally dependent job growth can't be gainsaid. During the seven-year boom ending in December 2007, total non-farm payroll growth averaged about 86,000 per month. About 22,000 per month of this growth was attributable to “half-job” gains in the leisure and hospitality segment. Beyond that, the remaining 62,000 new jobs each month were entirely sourced out of the nation’s public exchequer. Specifically, the HES complex (including state and local education) generated 57,000 new jobs per month and Core Government Operations (federal, state, and local government outside of education) added a further 10,000 monthly. That was it. Those vast stretches of GDP that host what's otherwise known as the “private sector” gave birth to lots of puts and takes among various job categories within, but generated zero job growth as a whole during the greatest boom in post-war history.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.