Recession Watch

The employment situation. On the establishment side, down 62K jobs. On the household side, the unemployment rate held steady because 144K of the 155K fall in household-survey unemployment left the labor force.

Dean Baker is first out of the gate with his take on these June job numbers:

Employment Rate Drops as Economy Sheds 62,000:

The employment to population ratio (EPOP) ratio fell to 62.4 percent in June, its lowest level in more than three years, as the economy lost another 62,000 jobs in June. This was the sixth consecutive month in which the economy lost jobs. The private sector lost 91,000 jobs in June. With the April and May numbers revised down by 76,000, the job loss in the private sector over the last three months has been 273,000, an average of 91,000 a month. The private sector has now shed 578,000 jobs since employment peaked in November.

Job loss continues to be led by construction and manufacturing.... Employment in residential construction has fallen by 15.8 percent since its peak in February of 2006. By comparison, real spending is down by almost 50 percent over this period. The fact that employment has fallen so much less than production undoubtedly reflects the fact that many undocumented workers never showed up in the employment data.

Manufacturing lost 33,000 jobs in June....

The temporary help and the larger employment services sectors are both shedding jobs at rapid rates, losing 30,400 and 56,900 jobs, respectively in June. These two sectors, which are often seen as harbingers of future employment trends have, respectively, lost 150,000 and 200,000 jobs since January....

The news in the household survey is consistent with the weak picture in the establishment data. The June EPOP is a full percentage point below the peak hit in December of 2006. It is 2.3 percentage points below the peak hit in April of 2000, a difference that corresponds to 5.4 million fewer people having jobs.

The biggest falloff has been among teenagers, who have seen a drop of 4.5 percentage points in their EPOPs. (The EPOP for black teens fell to 19.6 percent, the lowest rate since March of 1984.)... The economy has entered a slow motion recession. It is not seeing the dramatic plunges in jobs that characterized prior recessions, but the collapse of the housing bubble is slowly sinking more and more sectors of the economy.

Private sector job gains in the Bush years may fall below 3 million by November.

Comments

[supersaurus]

"Private sector job gains in the Bush years may fall below 3 million by November."

that's about 32,000 jobs/month. isn't the growth required around 150,000/mo to keep up with workforce population growth, and isn't 32,000/mo therefore a large net loss?

[Berkeley Choate]

To my layperson mind, the unemployment and inflation rates are flawed to the point of uselessness. If the unemployment rate cannot reflect a recession, what good is it? And when inflation doesn't take in account such huge items as housing prices, what good is it?

Do tell....

[jerry]

"left the labor force."

This is of course a statement of (a dubious) definition, rather than of actual knowledge. And yeah, what BC said right above.

[Ken Houghton]

It's a good thing the Republican Party repudiated the idea of "small government" during this Administration. Deciding to hire many more government workers is the only thing keeping the "recovery" looking as if there ever was one.

[anne]

Think simply to the 96 months of the Clinton Administration when an average 225,000 jobs were created each month. The finest 52 months of the Bush Administration showed an average of 160,000 jobs created, while we have now gone 6 months with loss of jobs each month. However the Clinton years were marked by strong trade expansion, a strong dollar, increased taxes especially on the wealthiest. The budget deficit was continually cut until there was actually a surplus, inflation was markedly controlled and interest rates were low. Productivity growth was high.

[anne]

Through the Bush years, taxes have been lowered especially for the wealthiest, the dollar has significantly weakened, interest rates are low but inflation in critical areas such as energy and food has been a problem for relatively lower income people. Social spending has decreased as a portion of national income, while defense spending has increased. Social spending has actually fallen slightly in real per capita terms through the Bush years. Wages and benefits for ordinary workers have lagged relative to corporate revenues and productivity gains.

Corporate investment through the Bush years has been low relative to fine corporate revenues and relative to the Clinton years. Continual emphasis on defense spending through the Bush years has had remarkably little growth effect.

[anne]

http://www.epi.org/printer.cfm?id=3017&content_type=1&nice_name=webfeatures_econindicators_jobspict_20080703

July 3, 2008

Weekly paychecks take hit as job market deteriorates
By Jared Bernstein with research assistance from James Lin

The U.S. job market continues to weaken, as payroll contracted for the sixth straight month and unemployment remained at 5.5%, according to today’s jobs report from the Bureau of Labor Statistics. Weekly paychecks for most workers over the past year are up only 2.8%, well below the growth of inflation.

The number of jobs in America has now fallen every month this year, and is down 438,000 since it peaked last December. Also, in another sign of expanding weakness, the BLS revised employment counts down for April and May by 52,000 jobs. It also helps to look only at what is happening in the private sector. Since government jobs are less sensitive to the business cycle, private sector employment is a more telling indicator of the impact of market conditions. Having peaked in November of last year, non-government payrolls are down 578,000, including 91,000 in June.

The wage front

On a yearly basis, hourly wages of the bottom 80% of the workforce in blue-collar production or non-managerial service jobs grew 3.4%, the lowest yearly growth rate since January 2006. A year ago, this growth rate was 4.1%, solid evidence that the weak job market is placing downward pressure on workers’ wages.

Although workers’ weekly hours were unchanged last month, they are down over the past year. The combination of diminished weekly hours and slowing hourly wages resulted in a 2.8% growth in weekly paychecks over the past year, the lowest growth rate since September 2005. With annual inflation tracking upwards of 4%, this means falling real earnings and diminished buying power for workers’ paychecks.

These decelerating wage trends tilt sharply against any evidence that faster price growth is driving faster wage growth. Instead, the weak bargaining power of most workers means they are subject to pressures from three sides: declining jobs and hours, slower hourly wage growth, and faster price growth. This punishing combination is lowering their living standards and is surely behind the historically very low readings on consumer confidence....

[anne]

So 160,000 jobs created for 52 months equals 8.32 million minus 438,000 over 6 months brings the 58 month total to 7.88 million or the monthly average to 135.9.

While 225,000 jobs created for 58 months would have been 13.05 million.

We have been through 58 months of 7.88 million job created as opposed to 13.05 million jobs that would have been created had we maintained the growth of the Clinton years. Policy matters.

[anne]

Correcting:

So 160,000 jobs created for 52 months equals 8.32 million minus 438,000 over 6 months brings the 58 month total to 7.88 million or the monthly average to 135,900.

While 225,000 jobs created for 58 months would have been 13.05 million.

[kharris]

BC,

If I may ask, what is useful to the layperson in knowing that a "recession" is underway that is not useful in knowing that the share of people seeking work but unable to find it is rising? I participate in the labor market. I want to know whether finding a job is getting harder or easier. I supply services in the economy. I want to know whether demand for those services is likely to be impaired by weak household income growth. Both of those things can be read as directly from the jobless rate, and sooner, than from headlines proclaiming recession.

[Barbara Lahey]

We may not fit the terms of an official recession yet (thanks stimulus check) we just had the first retraction in our GDP of .03% so its on its way!

http://recession.org