June Jobs Swoon: America’s Labor Market Depression Continues
This was not the employment report either the American worker or the Obama campaign wanted to see right now. The Labor Department said the U.S. economy created just 80,000 jobs in June, less than the 90,000 economists had been forecasting. And private-sector job growth was just 84,000, down sharply from 105,000 in May. Not doing fine.
The unemployment rate stayed at a lofty 8.2%.
As a research note from RDQ economics put it: “The good news is that employment growth is not slowing further but there is no sign of it picking up either. At this pace, job creation is not fast enough to lower the unemployment rate with the labor force growing at close to 150,000 per month on average.” Shorter: Stagnation Nation
This continues to be the longest streak — 41 months — of unemployment of 8% or higher since the Great Depression. And recall that back in 2009, Team Obama predicted that if Congress passed its $800 billion stimulus plan, the unemployment rate would be around 5.6% today.
Just 75,000 jobs were created, on average, per month in the second quarter vs. 226,000 in the first quarter. And for the year, monthly job creation has averaged just 150,000 vs. 153,000 last year. Both numbers are extremely weak.
But those top-line numbers actually overstate the health of the labor market.
– If the size of the U.S. labor force as a share of the total population was the same as it was when Barack Obama took office—65.7% then vs. 63.8% today—the U-3 unemployment rate would be 10.9%. Even if you take into account that the LFP should be declining as America ages, the unemployment rate would be 10.5%.
– The broader U-6 unemployment rate, which includes “all persons marginally attached to the labor force, plus total employed part time for economic reasons,” is 14.9%, up a bit from May.
– The average duration of unemployment ticked up to 39.9 weeks.
– It will take 219,000 net new jobs a month for unemployment rate to be below 8% on Election Day if current participation rate holds steady.
– Job growth during the three-year Obama recovery has averaged just 75,000 a month for a total of 2.7 million. During the first three years of the Reagan Recovery, job growth averaged 273,000 a month for a total of 9.8 million. If you adjust for the larger U.S. population today, the Reagan Recovery averaged 360,000 jobs a month for a three-year total of 13 million jobs.
– The U.S. work force remains shrunken with just 58.6% employed.
None of this should be surprising. The economy grew a bit less than 2% last year, and we averaged about 150,000 new jobs a month. We are growing a bit less than 2% this year, and job growth is averaging about 150,000 jobs a month. And there are few signs the rest of the year will be any better. And given a) how the eurocrisis is AGAIN flaring up, and b) China continues to slow, it sure seems like 2% growth and 8% unemployment is a best-case scenario with plenty of downside risk — for the economy and the Obama campaign.
- Comment (6)
- · Quote
- · UnfollowFollow (2)
Comments:
May '12
Re: June Jobs Swoon: America’s Labor Market Depression Continues
Nice report James.
This data doesn't show the impact of SCOTUS Sebelius decision. I think a lot of employers were taking a wait and see approach with respect to the decision. Now that the employers I talk to have seen the decision the verdict is 'how do you hire anybody?' Additionally, we have talked about setting up multiple companies so that none of them have more than 49 employees creating more accounting and legal issues, etc.
I am not aware of a path between now and November that has a report better than today's. 200k? That is a fantasy.
May '11
Re: June Jobs Swoon: America’s Labor Market Depression Continues
"The Labor Department said the U.S. economy created just 80,000 jobs in June, less than the 90,000 economists had been forecasting. "
Isn't this the 41st month in a row economists have been forecasting better job growth than actually happened? I wonder why that is?
By the way, June's number will be revised down next month when all the figures are finally analysed...as usual.
Jun '12
Re: June Jobs Swoon: America’s Labor Market Depression Continues
If -- and I stress the if -- the old canard about voters voting their wallets holds true this year, Obama could be headed for a Mondale-level defeat.
On the other hand, this has been a year when a lot of supposedly inviolable political "rules" have been broken... including the one about the South Carolina GOP primary winner always being the candidate, so perhaps the voting the wallets one will go down too.
Dec '10
Re: June Jobs Swoon: America’s Labor Market Depression Continues
"...Even if you take into account that the LFP should be declining as America ages, the unemployment rate would be 10.5%...."
I just want this to be clear: that this figure includes the number I have heard, which I believe was 10,000 Boomers leaving the work force, every day? Is the figure I'm quoting correct? Does Jim's estimate include 300,000 people per month retiring?
May '12
Re: June Jobs Swoon: America’s Labor Market Depression Continues
ConservativeWanderer: If -- and I stress theif -- the old canard about voters voting their wallets holds true this year, Obama could be headed for a Mondale-level defeat.
On the other hand, this has been a year when a lot of supposedly inviolable political "rules" have been broken... including the one about the South Carolina GOP primary winner always being the candidate, so perhaps the voting the wallets one will go down too. · 2 hours ago
Was thinking the same thing after the report this morning. Is this year different? My concern is that as bad as things are we have allowed so many of our brothers and sisters to look to the fed gov't for handouts that it will be a challenge to break that cycle.
Dec '11
Re: June Jobs Swoon: America’s Labor Market Depression Continues
At this rate it will take another 62 months to get back to pre-recession peak employment. The peak was in January 2008, 53 months ago.