06 August 2013

Groovy Jobs Update




There’s only about 800 important things going on this past year, but let’s just focus today on a cornerstone of our society – its economic sustainability… aka Jobs.

To review, in the Great Recession (circa 2008-09) we lost 8.7 million jobs.  About 3½ years after the end of job loss, we have now recovered 6.7 million of those jobs.  So 2 million to go.  Last Friday, we reported adding 162 thousand jobs in July.  The average monthly for the last three months was 175 thousand; for the last six months was 200 thousand; for the last twelve months was 190 thousand.

Going forward, let’s use 175 thousand per month (because I said so).  That means we will make up the remaining 2 million jobs lost in a little under a year from now… Call it June 2014.  Given that, it will have taken almost 4½ years (from the end of job loss) to recover all jobs lost in the Great Recession.  The average recovery time from end of job loss of the nine preceding recessions of the post-WW II era, I calculate, was one year (ranging 9 to 21 months).  So this recovery appears on track to be 4½ times longer than your run-of-the-mill recession.

And that’s just to get back to a point we already got to in what will have been almost 6½ years earlier, come June 2014.  Aside from recouping the jobs lost, we will also have needed to create jobs for natural growth of the labor force in that time.  Before the fall (end of 2007), the employed civilian labor force numbered 146 million (let’s forget about the then unemployed, because the rate was ~4½%, about as close to full employment as we’ll ever get).  The overall civilian labor force had been growing about 1¼% annually in the two decades before 2007 (roughly at population growth).  But going forward, let’s slow that down to 1% to be a bit conservative, yet still accounting a little for a slower-growing, older America.

That’s about another 9.8 million jobs we should have created from 2007 to mid-2014, on top of the 8.7 million we finally will have made back from February 2010 (the recession’s bottom in terms of job loss) to mid-2014.  So in other words, in order to ever affect a real recovery from the recession, we need to have created a grand total of 18.5 million jobs through mid-2014.  11.8 million to go.  In less than one year from now.

That should have been about 356 thousand jobs each month since early 2010 through mid-2014.  Again, last month we banged out 162 thousand and have been recently running around 175 thousand.  The average for the recovery-to-date has been 164 thousand.  Basically any way you cut it, this recovery-to-date is running at or below half of what is really required to ever truly recover.

Playing with the numbers some more, to achieve a pre-recession economic environment of almost full employment (4-5% unemployment) - which I admit is a lofty goal - you need to run from here at about 300 thousand jobs a month, every month, for the next five years.  We would have to suddenly double what we’ve been doing, and hold at that rate for another half decade, making any true recovery take 11½ years from initial decline.

The Great Depression took 13 years (4 down 1929-33; 9 up 1933-42) to get back to an unemployment rate that resembled pre-1929 stock market crash.  With most of that recovery occurring in the last few years due to war-time production and draft (e.g. 1939 was 17-19% unemployment, 1941 was 10-14%, by the end of 1942 it was below 5%).  But they lost ~25-30% of jobs at the worst point, where we lost 6.3% of jobs in our current Great Recession.  Nowhere near the 1930s, but still over twice the average of all post-WW II recessions.

So we’re at 7.4% unemployment presently, down from 10.0% peak.  If we keep running at the rate we have been, it is unrealistic to believe that we are going to see anything that looks pre-recession “normal” for several years more.  This would be a world of something more like 6.5% unemployment at best for the foreseeable mid-term (which means you can take your finger off the "sell treasuries" button now).  Unless we get job growth more like 200-250 thousand per month, consistently.

Which I believe is now actually around the corner.  But let me just stay glum, because it's often comfortable to wallow on the soft pillow of misery - if for no other reason than it's familiar.  The last time we drifted chronically at 6.5-7.5% unemployment was in the 1970s.

Ahhh… The ‘70s.  Really good music (mostly).  Really bad fashion statements.  Totally un-PC sitcoms.  Other than this chronic economic malaise, today looks nothing like the ‘70s.

  • Other than persistent energy issues: Gas shortages v. $3-5/gallon at the pump…
  • Ugly protracted war: Vietnam v. Iraq/Afghanistan…
  • A government that’s getting outted for poking around where they maybe shouldn’t be: Watergate v. NSA surveillance overreach, FBI secret wiretapping of the press, DEA overreach, IRS political party targeting…
  • And fibbing to the public: Pentagon Papers v. highly likely something in what I just mentioned already in the last point…
  • Government leaks: Ellsberg v. Snowden…
  • Drug epidemics: Heroin, coke, pot v. prescription drugs, and, well, pot…
  • Protest in the streets: May Day riots v. Occupy Wall Street…
  • Armed, dangerous creeps: Son of Sam, Manson v. Newtown et al, Ariel Castro…
  • Terrorism: IRA, Palestinians, The Weather Underground, RAF, PFLP, hijackings, bombs in US airports and DC government buildings v. Boston Marathon, Benghazi, shutting down ~20 embassies…
  • Iran: Revolution v. nukes…
  • Dirty wars: Operation Condor v. drone strikes…
  • Whitey Bulger: Not really working for the Feds v. definitely not working for the Feds…
Aside from that, SO NOT the ‘70s.  Peace.

No comments:

Post a Comment