August jobs report: We're 'dead in the water'
One of the first economists I read after the monthly, "official" jobs report comes out is James Pethokoukis of AEI's public policy blog.
Pethokoukis has a nice way of breaking through all the spin and revealing an employment picture that goes inside the numbers to tell us the true nature of the jobs market.
After August's horrible numbers, Pethokousis doesn't seem optimistic.
How do you know the August jobs report was pretty bad? When the best thing you can say is that it might have met Wall Street expectations if not for a temporary shutdown in the porn industry last month. (The motion picture and sound recording industry lost 22,000 jobs in August, according to the BLS.) Sure, the White House can argue, as economic adviser Jason Furman did right after the report's release, that the "incoming economic data broadly suggest that the recovery continues to make progress." But consider the following:
1. This was the jobs report that was supposed to reflect an economy kicking into higher gear. Goldman Sachs, for instance, was looking for 200,000 net new jobs. And whisper estimates were even higher. Instead, the economy added just 169,000 jobs vs. the 180,000 consensus forecast.
2. What's more, June and July were revised down by 74,000 jobs, putting the three-month average at a paltry 148,000.
3. Even at 169,000 jobs a month, it would take an unbelievable 9 years and 10 months to return to pre-Great Recession employment levels, according to Brookings. See you in 2023 -- assuming no recessions between now and then.
4. Sure, the unemployment rate fell to 7.3%. But that's only because the labor force participation rate fell to a 35-year low. If it were still at January 2009 levels, the unemployment rate would be 10.8%. As RDQ Economics cautions, "This continued fall in participation should give pause to those who argue that the decline is cyclical and will be reversed." In other words, the US faces a permanently larger pool of jobless Americans.
5. The employment rate -- the share of the non-incarcerated, non-military working-age population with any job -- also fell and remains dead, dead in the water. (See above chart).
One reason for that, notes the Economic Policy Institute is "our 3.8 million "missing workers ... workers who have dropped out of, or never entered, the labor force due to weak job opportunities in the Great Recession and its aftermath." If they were in the labor force looking for work, the unemployment rate would be 9.5% instead of 7.3%.
6. Recall that according to the Obama White House's 2009 stimulus forecast, August 2013 should have been the 2nd straight month at 5% unemployment:
Look! Squirrel! says the White House. The good news is that teenage girls have plenty of opportunities to work at retal clothing outlets. And recent immigrants (or illegals) apparently have excellent opportunities for maid and bell hop jobs at swanky vacation hotels.
For the rest of us, not so much.
With Obamacare playing havoc with full time employment, it seems likely that this kind of employment picture is America's new normal. If I were you, I'd brush up on my people skills and apply at TJ Maxx.