Saturday, April 6, 2013

Employment Update: March 2013

The unexpected news of very weak gains in employment in March, as reported by the Bureau of Labor Statistics yesterday (link), were actually not quite so dismal. In effect, the BLS revised both January and February result upwards, showing gains of 90,000 jobs (29,000 more in January, 61,000 more in February). This total added to the 88,000 jobs gained in March brings total jobs added, since the last report, to 178,000. Okay. That number also produces a mood a little shy of exuberance but sounds a lot better. Here is the graphic, with January and February shaded in light blue, to indicate revisions, and red showing the weak gain.

The gloom and doom arises because of expectation. The expectations are that the economy will, finally, come roaring back. Finally we shall return to the old Sky’s the Limit, Growth Galore, Don’t Look Back, Spend-Spend-Spend. Well, that certainly isn’t happening. Indeed, as the next graphic shows, right now, projecting three months’ of numbers out to the entire year, we are on a pattern which will make job-growth in 2013 worse than either 2011 or 2012—unless something happens in the next three quarters.

The biggest decline (a loss of 24,100 jobs) came in the Retail sector, indicating that shopping is certainly no longer Job 1. Wholesale Trade, and, yes, Transportation and Warehousing, also came in with job erosions of 1,000 and 2,800 jobs respectively. Manufacturing also lost 3,000 jobs in March. Now, of course, these numbers may well be revised upward next month again, but the overall pattern is not one of the Return of the Good Old days.

There are really three problems here. One is Automation/ Mechanization, which is eating jobs, and we are finally seeing the consequences. The Second is income disparity whereby all of the economy’s gains are being absorbed by the top fifth of the top fifth income quintile. The Third is that our government is no longer willing and able to redistribute income from the 1 percent to the 99 percent. Alas, a strong economy needs masses of confident buyers.

Almost overlooked in yesterdays news coverage was that the unemployment rate remained at 7.6 percent—and that because, once more, people were voting themselves out of the labor pool by stopping to look for work. People who give up—because they cannot see any jobs—will make the unemployment number look good, sort of, but they are not shopping either.

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