We Waited Three Weeks for This?

 

Maybe the federal government should have stayed shut down. If it had, then we wouldn’t have to pick through the lousy September jobs report for some good news. And it isn’t easy. Non-farm payrolls increased just 148,000 last month, the Labor Department said, less than the 180,000 that Wall Street economists had been expecting.

Now, maybe this number will be revised higher. But right now, it suggests a decelerating labor market — not one that’s gaining momentum. As economist Justin Wolfers points out, quarterly job growth over the past four quarters has declined from 209,000 (4Q 2012) to 207,000 (1Q 2013) to 182,000 (2Q 2013) to 143,000 (3Q 2013). To put that quarterly number in context: At a 143,000 jobs a month pace, it would take until 2022 — eight years and 10 months — before the job market returned to pre-Great Recession levels, according to the Hamilton Project’s Jobs Gap calculator.

Not much reason in these numbers for the Federal Reserve to taper its bond buying: Barclays:

In light of the moderate tone of the September employment report, we have pushed out our expectation for the first Fed tapering in the pace of asset purchases to March 2014 from December 2013. We now expect the Fed to finish the asset purchase program in September 2014, later than our previous expectation of June 2014.

A few other points:

1. While the unemployment rate dipped to 7.2%, the employment rate — that share of the adult civilian population with a job — stayed flat at 58.6%. (See above chart.) It’s barely risen from its recession lows and is exactly where it was in November of 2009.

2. Likewise, the labor force participation rate remained unchanged at 63.2%. It if were back at pre-recession levels, the jobless rate would be 11.2%. Factoring out demographics probably gives you a “real” jobless rate in the 9-10% range. Indeed, the broader U-6 unemployment-underemployment rate dipped just a bit to 13.6%.

Peth2.jpg3. One bit of good news is that the September data suggest that, for now at least, Obamacare is not causing a surge in part-time employment at the expense of full-time jobs. Last month, according to the volatile household survey, full time employment was up 691,000, part-time employment down 594,000. So since last December, the economy has created about 1 million full-time jobs vs. a loss of 100,000 Peth3.jpgpart-time jobs. From The Wall Street Journal: 

The uptick in part-time employment earlier this year now looks like a statistical blip: Part-time employment fell in late 2012, then rebounded in early 2013, and has now fallen for two consecutive months.

See the BLS charts to the right.

4. We are still a ways off from the 5% unemployment rate Team Obama predicted for September 2013 if Congress passed its $800 billion stimulus plan.

Peth4.jpg

There are 11 comments.

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  1. Profile Photo Member
    @FloppyDisk90

    The civilian employment ratio is an interesting time series.  It varies within a fairly narrow range (note vertical axis scale) and it’s only in the last 30 years where it’s been above (and stayed above) 58% .  I concede it’s not a good sign that it’s dropped and not recovered, I’m just not so sure it’s any more important than unemployment, which continues to creep down.

    • #1
  2. Profile Photo Inactive
    @flownover

    No, its the republicans fault. Just saw something that extrapolated loss of jobs during the shutdown to 120,000 !! Lions and tigers and bears….

    We need to start the pool on how long the dems will try to draw this one out. Biggest success they have had in months is the media’s concoction of shifting the blame. 

    New paradigm of power games, fakery abounds !

    And the long game or long con will be all about their tongue bath media and how long they can stay lubricious.

    • #2
  3. Profile Photo Inactive
    @Neolibertarian

    James Pethokoukis

    We are still a ways off from the 5% unemployment rate Team Obama predicted for September 2013 if Congress passed its $800 billion stimulus plan.

    The Obama makes stupid statements and predictions because the Republicans claim that “Reagan created 20 million jobs.”

    Claiming that is as false as the Obama declaring “recovery summer,” and full employment by 2013.

    Republicans need to stop it. Post hoc, ergo propter hoc. Reagan only hired within the Executive Branch. The other jobs were created by someone else, which Reagan, himself, loved to point out.

    The Obama gets away with making stupid statements and predictions because the Conservatives haven’t decided to destroy what’s left of the “mainstream media.”

    Until they consciously decide to destroy the progressive hacks and masquerading partisans in the “news media,” then every sign that tells me we’re riding a static sine wave, will be reported with the same blind optimism that gets disappointed each time the BLS figures show that we’re only riding a static sine wave.

    • #3
  4. Profile Photo Member
    @drlorentz
    FloppyDisk90: The civilian employment ratio is an interesting time series.  It varies within a fairly narrow range (note vertical axis scale) and it’s only in the last 30 years where it’s been above (and stayed above) 58% .  I concede it’s not a good sign that it’s dropped and not recovered, I’m just not so sure it’s any more important than unemployment, which continues to creep down.

    It does indeed vary within a narrow range, but it’s not that noisy so changes are meaningful.

    A lengthier time series is instructive. You have to go back to the beginning of the Reagan administration to find today’s low numbers. It was consistently much higher for two decades. By much higher I mean many times higher than the fluctuations the occurred, even including recessions, in those 20 years. A superficial look at the graph says employment has taken a real hit this time and there’s been no significant recovery. Compare with past recessions; it’s not pretty.

    EMRATIO_Max_630_378.png

    • #4
  5. Profile Photo Inactive
    @DocJay

    Don’t worry McCain might run.  He’ll fix everything for you.  

    • #5
  6. Profile Photo Inactive
    @JeffY

    One graph to rule them all. To the left the Keynesian fiction minus the unruly animal spirits. To the right, the inexorable conclusion of economic logic.

    lf0728_figure_014.jpg

    (h/t Liberty Fund)

    • #6
  7. Profile Photo Member
    @FloppyDisk90
    drlorentz

    FloppyDisk90:

    It does indeed vary within a narrow range, but it’s not that noisy so changes are meaningful.

    A lengthier time series is instructive. You have to go back to the beginning of the Reagan administration to find today’s low numbers. It was consistently much higher for two decades. By much higherI mean many times higher than the fluctuations the occurred, even including recessions, in those 20 years. A superficial look at the graph says employment has taken a real hit this time and there’s been no significant recovery. Compare with past recessions; it’s not pretty. · 14 hours ago

    Yea, I actually copied this chart into my post but it didn’t show up.  Agree 100% it’s not good.  But we had some fairly robust growth periods in the 50’s & 60’s where the rate was significantly lower.  My point is a straightforward unemployment rate seems to be more closely tied to economic health then the civ employment rate and unemployment is inching down.  Anemic, yes.  Bad?  Open for debate.

    • #7
  8. Profile Photo Member
    @drlorentz
    FloppyDisk90

    Yea, I actually copied this chart into my post but it didn’t show up.  Agree 100% it’s not good.  But we had some fairly robust growth periods in the 50’s & 60’s where the rate was significantly lower.  My point is a straightforward unemployment rate seems to be more closely tied to economic health then the civ employment rate and unemployment is inching down.  Anemic, yes.  Bad?  Open for debate.

    I think you are overlooking an important change since the 1950s and 1960s: the demographics of the workforce. Most significant is the higher proportion of women in the workforce. Note the secular rise that began in the 1970s. While 56% participation might have been right for the 1950s, it is no longer appropriate for today.

    The new normal was 62-63%. A drop of about six percentage points from there (out of ~60) is worrisome. If that’s going to be the new new-normal, it’s a significant step down.

    • #8
  9. Profile Photo Member
    @FloppyDisk90

    I’m not sure “appropriate” is a meaningful descriptor in the context of economic activity which is defined by efficiency, output, and equilibrium.  Even so, I concede it’s a significant step down.  Note, however, it dropped circa 2001 and never recovered.  So you can make the argument that something structural was going on prior to the crash.  I’m not trying to whitewash it.  But it’s just one data series to be weighed against the other indicators.  

    • #9
  10. Profile Photo Member
    @JohnDavey

    4. We are still a ways off from the 5% unemployment rate Team Obama predicted for September 2013 if Congress passed its $800 billion stimulus plan.

    I…. got nothin’.

    • #10
  11. Profile Photo Inactive
    @SteveMacDonald

    Stagnating unemployment, USD heading south, US debt & FED balance sheet going vertical, tepid at best global growth projections, Sec Treas & Pres. doing their best to project an imminent default risk leading to HK exchange margin increases on short term US Treasury collateral & Dagong downgrade. Real confidence building stuff.

    I put the risk of QE heading downwards at zero. If the FED doesn’t buy a huge chunk of treasury issuance, who will? and at what interest rate? 

    However, not to worry. Once the savings via Obama Care start rolling through and President McCain is inaugurated, all problems will be in the rear view mirror.  Happy days will be here again!

    • #11
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