Thursday, October 23, 2014

Employment Update: September 2014

The Bureau of Labor Statistics (link) issued new employment number on October 3. According to the report, the economy added 248,000 jobs in September. BLS also corrected its August figures, upward, by 69,000 jobs. Therefore the net gain, since the last report, has been 317,000.

As a percent of total employment, the Goods-Producing sector represented 13.7 percent of jobs and 11.7 percent of gains since August. The Private Service Producing sector accounted for 70.5 percent of total jobs and 83.5 percent of all gains. Government was 15.1 percent of total jobs and 4.8 percent of gains. So the “action” was all in the Service Producing segment. Within that major category, the top three gainers were Professional and Business Services, Retail Trade, and Leisure and Hospitality; they accounted for 60.2 percent of all gains in September.

The month-by-month chart follows. The orange bar reflects changes made to August numbers in the September report.


Data showing annual results and an annualized projection for 2014 are next:



Last month the 2014 projection was 2.598 million for the year. This month the projection has improve and now stands at 2.732 million.

In May of this year, the economy recovered the loss of 8.663 million jobs lost in the Great Recession. Since then I’ve been tracking recovery of new jobs not created while we were making up losses. To keep up with the growth in the workforce, a number driven by demographics, we need to created 87,300 jobs every month. Once that number is met, anything in excess may be counted against what I’ve labeled the Growth Deficit. That number stood at 6.635 million in April, just before we caught erased the losses created by the Great Recession.

As of July, we had already recovered 7.1 percent of that deficit. The numbers were good enough in September to change that recovery rate to 12.3 percent, as shown in the last graphic:


Employment is headed in the right direction now, but its “quality” is only so-so. The economy is adding service employment, not least temporary positions; those accounted in September for nearly 8 percent of all new jobs created.

Saturday, September 6, 2014

Employment Update: August 2014

Numbers for August, released by the Bureau of Labor Statistics yesterday (link), produced an interesting mix of reaction. Some observers deplored the results, some suggested that BLS hadn’t gotten them right, yet others pointed out that uneven performance of this indicator is a normal phenomenon.

The BLS reported that 142,000 jobs were created in August. Those who expected at least 200,000 were disappointed. At the same time, BLS also revised July results downward from 209,000 to 181,000, a loss of 28,000 jobs. Therefore the net gain in August was just 114,000 jobs.

The Retail sector lost 8,400 jobs—once more underlining that consumer confidence may not be as robust as assumed. The Information sector (read communications media) lost 3,000. Manufacturing employment remained unchanged from July. Mining and Construction both produced fewer jobs than in July. The pattern is familiar by now. The basic industries are still sluggish. All the gains are coming from the Service categories.

Herewith the monthly chart, with July colored tan to indicate that results for the month were revised downward:

Data showing annual results and an annualized projection for 2014 are next:


Last month the 2014 projection was 2.774 million for the year. This month the projection has dropped to 2.598 million because of the July changes and the lackluster August results. The projection for 2014, however, still remains the best since 2007.

In May of this year, the economy recovered the loss of 8.663 million jobs lost in the Great Recession. Since then I’ve been tracking recovery of new jobs not created while we were making up losses. To keep up with the growth in the workforce, a number driven by demographics, we need to create 87,300 jobs every month. Once that number is met, anything in excess may be counted against what I’ve labeled the Growth Deficit. That number stood at 6.635 million in April, just before we erased the losses created by the Great Recession.

As of July, we had already recovered 7.1 percent of that deficit. The numbers were good enough in August to change that recovery rate to 8.9 percent, as shown in the last graphic:


The trend is still positive, but some kind of “new normal” seems to try to deny the eager observers of the economy the triumphant feeling that we’re heading for what we really like: “irrational exuberance.”

Wednesday, September 3, 2014

PCE: The Real Measure of Confidence

We hear it said quite frequently that Personal Consumption Expenditures represent 70 percent of Gross Domestic Product. Such a rough approximation is false, by and large. The last time the PCE was at or above 70 percent was in the 1929-1939 period, thus roughly coinciding with the Great Depression. Thereafter it dropped into the 50s and has been gradually rising in percentage since, as illustrated in the following table:

PCE as % of GDP
Year
79.9
1932
54.9
1942
59.7
1952
61.6
1962
60.0
1972
61.0
1982
64.5
1992
67.5
2002
68.0
2012
68.1
2013

What this tabulation teaches is that PCE is, these days, closer to “two thirds of GDP”—and that when consumer confidence really tanks, the numbers start going up and come close to touching 70 percent. Notice also that the lowest number in that table comes in 1942—when GDP had swollen with expenditures on war. But whether we are nearer 60 or closer to 70 percent, the obvious is staring us in the face. It is what ordinary people spend that makes an economy. And these expenditures are driven by personal necessity and—if PCE is growing at rates above population increase—spending is also driven by personal choice. Such is still the case for this period: the U.S. population grew at a rate of 0.9 percent annually (1999-2013) over against PCE growth at 2.2 percent. (All of the numbers shown here, by the way, are based on real, meaning inflation-adjusted, dollars.)

When people spend money, corporations begin to hire and invest. When demand is sluggish, the economy—unless artificially stimulated by government expenditures—will reflect the public’s lack of confidence.

This, of course, suggests that incentivizing corporations—as by keeping interest rates artificially low—only incentivizes speculation, not investment or hiring. Therefore the Fed, and thus monetary policy, is never enough to produce confidence in the real public, which controls two-thirds of the economy, and only stirs up those at the 1 percent level who are into investing and such.

The following chart shows the relationships between PCE and GDP for the recent 2000-2013 period:


In this period, the GDP generally lags PCE, growing at a lower rate (2.0% 1999-2013 versus PCE which grew at 2.2% in the period). The GDP appears to be waiting; and even when growth of the PCE signals rising confidence, the GDP is following it sluggishly at best. In the most recent survey of consumer confidence, conducted by The Conference Board, Consumer Confidence was up 2.1 points but CEO confidence was down by a point. That illustrates my point. The CEOs are still waiting for a more robust sign of growing public confidence. Meanwhile the markets are reaching new highs—which reflects the confidence of the rootless 1 percent that lives in the clouds.

Saturday, August 30, 2014

Growth Tremors in Europe

Once more, in the news this morning, gloom and doom (as if we didn’t have enough of that already). The reason for this is that, in Europe, German (-0.6%), French (-0.1), and Italian (-0.8) Gross Domestic Product numbers came in negative for the second quarter compared with the first. The change in Europe’s total GDP was a positive 0.2 percent, but in our day and age positive growth at such low levels is viewed with alarm.

In our times nobody asks how much growth is necessary in our economies. In other words: What is the underlying measure? The underlying measure, it seems to me, is population growth. Whenever GDP growth exceeds population growth—and the more it does so the more true this is—we are engaged in unnecessary overconsumption.

Just to check this out, I looked to see where European population growth now stands. “Now” in this context is 2012, the last year for which UN statistics are available. That year the growth stood at roughly 0.18 or 0.19 (I’m taking data from a graph). Therefore the Q2 GDP growth in Europe is just a shade higher than actual population growth. The two, in other words, are in equilibrium. I am showing the population graphic below; I found it here; the data for it come from this UN report (link).



Sooner or later, and all over the world, we will have to adjust to GDP growth rates that match population growth rates pretty closely rather than diverging sharply—as in the graphic that I’m reproducing from a previous post:


Why? Because the Age of Oil is drawing to a close and we shall be obliged to adjust to the “new normal” eventually. This reasonable projection is simply never seriously pondered by our media which are still convinced that nothing is changing at the basic levels of the world economy. But things are changing. Europe may be ahead of its time and Angela Merkel wise rather than foolhardy in insisting on austerity.

Thursday, August 28, 2014

Employment Update: July 2014

Since the last Employment Update that I published, for April 2014, three others have been issued by the Bureau of Labor Statistics (BLS), the last one, for July, here. I’ve been diverted from blogging by various changes in our lives, most notable buying and selling houses and, for us, a big move.

In that period, wouldn’t you know it, in May 2014, to be exact, the U.S. Economy finally erased the job losses produced by the Great Recession in 2008 and 2009. That job loss was 8.663 million jobs, measured as follows:

In December 2007, total employment stood at 138.35 million. In December 2009, it had dropped to 129.687 million. The difference between these dates is the loss. In May 2014, employment finally reached 138.497 million, therefore just barely exceeding the previous high at the end of 2007. By July of this year, that last Employment Report from the BLS, total employment was 139.004 million, therefore still growing in the right direction.

An updated chart, showing the economy’s performance since December 2007, follows. Following it is a chart showing total losses and gains, actual for 2007-2013 and an annualized projections for 2014.




Now that we have recovered the jobs lost in the Great Recession, another process is beginning. It is the creation of new jobs necessary to meet the needs of population increase—to accommodate the growth of the labor force. As I have shown before (here), in the 2010-2020 period, we need to add 87,300 jobs every month just to keep up with the population. If we take the period 2008-2013, plus the first four months in 2014 (when we were still just replacing lost jobs), we were building a deficit. The period described is 76 months. The deficit, therefore was 6.635 million jobs as April 2014 ended.

Since April, we have had job gains in excess of 87,300 every month. In May, with job gains of 229,000, 141,700 jobs (229-87.3) could be counted against call it the accumulated Growth Deficit of 6.6 million jobs. The economy is now in sunnier climes. Therefore in just the May to July period we’ve already managed to recover 7.1 percent of that deficit—rather than adding yet another 87,300 jobs to it—as in the last 76 months. A graphic shows this change.



Good news, by and large.

Friday, May 2, 2014

Employment Update: April 2014

The jobs numbers for April, published today by the Bureau of Labor Statistics (link), should cheer people on this rainy, overcast day here in the Detroit region. Job gains in April came in at 288,000. In addition, numbers for March were also revised, upward, by 36,000 jobs.  Here is the picture to date:


We are finally out-pacing job growth in 2013. In that year the economy gained  821,000 jobs January through April. In 2014 the equivalent job gains are 866,000. This in turn lifts the annualized projection for 2014 above any year of the recovery (2010-2014). That chart follows:



The projection for 2014 is made by adding all job gains, dividing the sum by 4 (for four months) and then multiplying that result by 12.

One result of this modest surging in jobs creation is that we have almost recovered all the jobs lost in the 2008-2009 Great Recession. We’ve recovered 98.9 percent; still 1.1 percent to go. The pie that follows shows the situation graphically.


Last, a look at how the sectors participated in this employment gain.


Of fourteen major sectors, two showed loss of employment (Utilities and Information). The last column of the table compares shares, namely share of total employment and share of total gains. Using that technique, we see that eight of fourteen major sectors performed worse, i.e., they gained less than their share of total employment. The worst performer was—again this month—the Government.  The best performers were Professional and Business Services and Construction.  On to next month…

Saturday, April 5, 2014

Employment Update: March 2014

The Bureau of Labor Statistics issued its employment report yesterday (link). BLS reported a gain of 192,000 jobs in March and also revised its February results, lifting February gains from 175,000 to 197,000, an additional gain of 22,000.

The Media reported these gains with an air of great optimism. The numbers were decent in my eyes too, but not enough to become enthusiastic. In effect, after acknowledging the February upward correction, job gains in March fell below February as shown in the month-by-month chart going back to December of 2007:


As of March we had gained 682,000 jobs in 2013 and 542,000 in 2014. So we are lagging 2013. Indeed, if we go back to 2012, we’d gained 829,000 that year. The patterns, therefore, suggest sober reflection more than banging of kettles and hopeful stares at the Dow.

Not surprisingly, translating the current result into the annual projection for 2014, shown in the next graphic, we see that, looking ahead, 2014 looks like it might underperform both 2012 and 2013. I don’t think this gloomy picture will hold. We are improving. Last month the projection was for a total gain of 1.9 million jobs; this month we project 2.2 million. If we have gains like that every month, we’ll be looking fine by December 2014.


Now a look at changes by sector. The following table shows the details:


Of fourteen major sectors, one showed loss of employment (Manufacturing) and one zero growth (Government). The last column of the table compares shares, namely share of total employment and share of total gains. Using that technique, we see that six of fourteen major sectors performed worse, i.e., they gained less than their share of total employment. The worst performer was Government (again).  The best performers were Professional and Business Services and Construction. The Housing sector seems to be recovering—and that is a good sign indeed. Where Housing goes, there the economy tends to follow.

Based on the most recently published and updated BLS statistics, we are still shy of recovering the total of jobs lost in 2008 and 2009. We’ve recovered 95.1 percent of jobs lost but still have 4.9 percent to go. That percentage translates to 422,000 jobs. If we keep growing at 192,000 a month, we’ll have caught up in three months.

Monday, March 17, 2014

Employment Update: February 2012

The employment numbers for February appeared March 7, i.e., as always, on the first Friday of the month, but this time I failed to put them up. The gain in jobs, as reported by the Bureau of Labor Statistics (here), of 175,000 was welcome news after a rather dreary jobs report the month before. Less loudly noted was the fact that the January figure of 113,000 was also revised upward this month by 25,000. Therefore the net gain, since the last report has been 200,000 jobs. The picture looks like this:


The projected jobs performance for the year 2014, presented in the next graphic, is lower than in any earlier year of the recovery with the exception of 2010. The current pattern, based on two months of data, may change if the economy is bursting with hidden energy that a simple run of bad weather has kept indoors for the time being. We shall see. What I keep wondering about, now that we’ve entered the fifth year of recovery and still haven’t caught up with the 2008-2009 job losses (see below), is whether the old days of soaring consumption will return or not. The One Percent, after all, may have all the money, but they cannot carry the economy entirely on their own shoulders. How many $1,200 handbags can you purchase, after all? Eventually it gets a little boring. We shall see, of course, but in my life, anyway, I’ve never before seen such a doldrums as this one. Facebook and Twitter, we pray that you rush to our rescue.



A look at the performance of the economy’s broadest sectors is provided by the following tabulation:

As in much of the period of the recovery so also in February, the Goods-producing sector gained, in proportion of its total share of employment, fewer jobs than the Services-providing sector. And Government has done worse than either of the others. These days that’s par for the course. The current loathing of anything “public” or “public sector” is certainly not helping keep the nation employed.

Last I present the chart showing how many of the total jobs lost in 2008-2009 we have regained in the four-years-and-counting period since the Great Recession, sort of, faded. The total of jobs lost was 8.663 million; jobs recovered to date are 8.012 million. Almost there but not quite yet. We still have a sliver more to go. Then we can start creating the jobs that simple population increase dictates that we should have created in this same recovery period. Clicking on the image will enlarge it.

I posted some estimates in the summer of 2012 (link) on the jobs that need to be added just to keep up with population growth. For the period 2010-2020 that number turned out to be 87,300 per month—lower, thanks to structural changes in the demographics, especially an aging population, than in 1982-1992, when it was 149,200. Applying that number to the 50-month period since the Great Recession, we see that, as of this month, we should have recovered the 8.7 million jobs lost in 2008-2009 plus 4.365 million due to population growth alone. When my pie finally shows us having regained all of the lost jobs, I’ll start a new one to show how long we have yet to go to recover the number that demand for new jobs that has created since.

Friday, February 7, 2014

Employment Update: January 2014

All right, let’s kick off reporting on the employment situation in 2014. We’ve added 113,000 new jobs. At the same time, however, the Bureau of Labor Statistics also published major revisions to its employment series going all the way back to the year 2000. Such changes take place from time to time. The nature of these changes is summarized by BLS thus:

Establishment survey data have been revised as a result of the annual benchmarking process and the updating of seasonal adjustment factors. Also, household survey data for January 2014 reflect updated population estimates.

The consequence of these changes is that all the numbers I use here (going back to November of 2007) also change. Therefore all the charts you see here have been updated to reflect benchmark adjustments and population estimates. The net effect of these changes, as measured from November of 2007, is to add 110,000 jobs to the labor force. According to the changes, the job losses were greater in the 2008-2009 period (worse by 85,000 jobs) but the recovery has been stronger than reported earlier (better by 195,000 jobs). The net effect is that 110,000 gain over previous reports.

Looking at the charts, however, the basic pattern has not changed. But as of January 2014, we have now recovered 90.2 percent of jobs lost in 2008-2009—and have 9.8 percent to go.

The job gains in January, however, are rather anemic at 113,000. If that pattern continues, job gains in 2014 will only be 58 percent of 2013. Such an outcome, however, is highly unlikely. Job gains in January had much to do with wretched weather conditions, a “too much” or “too little” of everything: too many storms, too cold, and too much snow on the one hand and too little water on the other. Everything’s connected—and climate change has its influence on this series too…

Herewith the revised chart showing monthly change since the end of 2007. Comparing this chart with last month’s shows that the pattern has not been changed by the BLS revisions. The BLS press release on which these data are based is here.


As I did last year, so again this year, I am showing, in the following graphic, projected performance in 2014. The projection simply assumes that actual data, as of the time of publication, will be the same for the rest of the year. The formula is total job gains in the year, divided by the number of months covered, times 12. Today’s result is not encouraging but will undoubtedly lift as we plod on.


The unemployment rate remains at 6.6 percent. This is a figure I rarely mention because it is based on estimates of the work-force, those actually working and those actively seeking employment. Those who’ve given up are excluded from the work force although, if jobs were available, they would gladly work.

A positive note for January: employment grew in construction, manufacturing, wholesale trade, and mining. Three of those four growing sectors are basic industry.

Friday, January 24, 2014

Smartphone Sales Declining?

Two side-by-side stories in the Wall Street Journal this morning might be a straw in the wind. In one Nokia’s smartphone sales are showing a down-turn; in the other, similar results are reported for Samsung. Is this market finally maturing? I note that new technologies have their own well-known cyclicality. When they are in their growth phases, they resemble bubbles. When they mature, the media always sound as if some kind of End Time has arrived. See for instance this article in the Wall Street Journal, dated April 11, 2013, “Computer Sales in Free Fall” (link). The chart shown does have an alarming aspect—until you realize that the down-ward trend is that of growth. When a market is mature, growth will tend to match that of an economy, not that of a bubble. And then the great leaders of an industry begin gradually divesting of the product to those who will keep selling them for many, many, many years to come. At a profit—but not at the kind of profit that lifts stocks. A recent example is IBM selling its network server unit to Lenovo of China (link).

Friday, January 10, 2014

Employment Update: December 2013

Well, employment data for 2013 are now all in, and the results bring echoes of that well-known saying: “Not with a bang but a whimper.” The economy gained 74,000 jobs in December. Revised November estimates added an extra 38,000 to the total jobs gained. Those two figures added produce a gain of 112,000. As a consequence of this, the economy’s total performance in 2013 fell 7,000 jobs below the 2012 performance: 2012: 2.193 million; 2013: 2.186 million. These data come from the Bureau of Labor Statistics (the press release is here).

To sum up the annual performance, herewith a graphic showing job growth (or loss) from 2007 through and including 2013.


The monthly performance is shown in the next visual. It looks there as if, in December, the economy sort of gave up—just as the year ended.


Finally, herewith the pie chart showing how much of the 2008-2009 job loss has been recovered so far. The answer is 87.2 percent—after four years of trying.


As 2013 ended, great exuberance filled the business media because the Stock Market had performed well through 2013. Those of us who look at job generation as the real measure of economic recovery are entitled to answer that exuberance by saying: “Hold the Hallelujahs, please!” We’re not there yet. First let us recover all the jobs lost. Then let us reflect, in employment, the actual growth in population. And then, finally, we shall have reached the status quo ante, the 2007 levels.

Saturday, December 7, 2013

Employment Update: November 2013

November’s job gains at 203,000 are slightly lower than they were in October. October’s results, as reported last month, were adjusted upward by 8,000 jobs to result in 212,000 jobs. So, you might say, we are on an even keel approaching the final month of the year. These data were published by the Bureau of Labor Statistics (the press release is here). The new chart graphic the jobs situation follows:


With November’s result reflected in the projections for the year 2013 (based on year-to-date data), 2013 is shown to have performed better than the last three years. The current projection is that the annual growth in jobs will be 2.263 million (last month it was 2.236 million). In 2013, thus far, the economy has created, on average, 5,700 more jobs per month than in 2012. The chart showing the projection comes next.


The data published yesterday also got us closer, in percent measurement, to the recovery of all jobs lost in the disastrous years 2008 and 2009. At present, we have recovered 85.9 percent of lost jobs (last month we’d recovered 83.4%).

Friday, November 29, 2013

Sluggish Retail

Last year, at this time, I published a graphic showing the monthly retail sales of General Merchandise Stores—by way of illustrating the problems faced by retail trade—yes, even in this, the biggest, selling season of the year (link).

I thought that I would show an updated version of that chart. Here it is:


Last year I only had a few early months of 2012 to show. This time I show all of 2012 as well as results for 2013 through September.

Note particularly that these stores did better than in the earlier year in 2010, 2011, and in 2012. But when we look at 2013, the values achieved in that year fall right at, below, or slightly above the sales performance in 2012 all depending on the month. You might say that no real growth is showing at all. This explains the hysteria behind the Black Friday sales campaigns that I noted in the last post.

To illustrate 2012 and 2013 performance more sharply, herewith a bar graph, by month, of sales up to September. I have include two trend lines. The top line represents 2012, the lower line 2013. Note that trends in 2013 are lower—suggesting, if things continue in the same way for the rest of 2013, that this year will come in worse than last. Not the time to be in the retail business nowadays, as I heard a fellow analyst (and family member) say just yesterday. No. And these days the reliable alternative occupation, somewhere in Health Care, also looks rather dicey…


The data used in this analysis come from the U.S. Bureau of the Census, here, showing various sources of retail data.