Friday, July 8, 2011

Employment: Update June 2011

We are now a year-and-a-half into the recovery from the 2008-2009 recession. In that recession we lost 8.66 million jobs. In the 2010-2011 period, we’ve regained 1.7 million jobs, 19.6 percent, thus less than a fifth. At the end of May we had recovered 19.9 percent of the jobs. Revisions in May estimates caused actual gains to be revised downward. The situation is summed up in the following graphic:

Now for the by now familiar chart of month-to-month changes. Here it is:

According to the Bureau of Labor Statistics press release, we gained 18,000 jobs in June. What that number hides is the following. Last month BLS reported a gain of 54,000 for May, but as is clearly visible from the graphic, this month BLS has revised that number downward to a gain of only 10,000 jobs. The net result of this change is that we actually lost 26,000 jobs since the last report, thus the 44,000 jobs that disappeared in the revision less the 18,000 jobs gained.

Now in all fairness to the BLS, there are always changes of this sort, month to month, sometimes increases, sometimes decreases. If the changes have an energetic thrust—thus if we’re losing jobs hand over fist as we did in 2008-2009, or gaining jobs rapidly as in March, April and May of 2010, the adjustments, as preliminary data are refined, don’t produce reversals. But right now our economy is barely moving. We should be gaining upward of 200,000 to 300,000 jobs a month if we were “back to normal.” We’re not. Whether this signals some basic change in our economic arrangements—or whether it’s caused by a wait-and-see attitude on the part both of industry and the consumer—remains to be seen. As a minimum, the wait-and-see applies. Public confidence was genuinely shaken in the last recession—much more so than is usual in reaction to the recurring slow-downs of an ever-cyclic economy. A basic change would mean the institutionalization of new behavior, both in production and in consumption—a movement in the direction of minimalism. They minimize employment—and we minimize consumption. If that is what we’re really seeing, these results may be good news, not bad.

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