Employment Situation
The September employment report was among the strongest this cycle. Private payroll employment rose 137,000 and despite the 34,000 drop in government employment total
payroll employment rose 103,000. Moreover, the household survey showed a gain of 398,000.
Even so, by historic norms employment continues to be weak. But compared to the other jobless recoveries this cycle continues to show growth somewhere between the 1990s and 2000s cycles.
Because the household survey tends to lead the payroll numbers the large gains in the household survey was encouraging.
Wage growth continues to show weak gains.
I have a wage equations that I’ve used for may years and it is no longer calling for falling wage. Earnings did not fall as the equation suggested immediately after the recession. Because of sticky wages I was not surprised by this . But now I expect wage growth to remain weak to offset the period when average hourly earnings were stronger than the wage equation called for. The equation makes wages gains a function of the unemployment rate, capacity utilization and inflation expectations using the three year trailing CPI as a measure of inflation expectations.
The average work week lengthened and together with the weak wage gains average weekly earnings rose 0.6%, one of the largest gains this cycle. I had been particularly worried about the lack of income growth and saw it as a major threat to economic growth. As of last month real weekly earnings were down some 2.27% over the past years. With weak oil prices real weekly wages should show a nice gain in September.
Your chart comparing this recovery with the past 2 is indexed to the trough, and tells one story. Bill and Calculated Risk indexes his chart to the prior peak, and it tells a drastically different story. Both are corrent, but focus on different issues. Either, offered in isolation, can be misconstrued.
The old story about V-shaped recoveries as unused resources are quickly put back to work is wrong now. Far more people were put out of work this time, and so the old story about putting resources back to work would suggest a period of rapid growth. Bill’s picture makes clear that this one is different, and that the old story is one-dimensional.
Your chart shows that the US has changed its behavior relative to the “unit root” issue during recoveries. Rather than the post-recession growth trend being the old trend, it is now a step down from the old trend. Right now, we aren’t even growing at trend, which makes things worse.
Note that your jobs chart also isn’t ammended for natural population workforce growth. You can see such a chart by the perma-bears over at ZH (not that I neccesarily think they’re *outlook* is better, but their *chart* certainly is.)
Spencer,
9.1% unemployment and the rest of teh bad news. Thanks for posting the information.
Islam will change
what is ZH? and do you have a link?
Spencer,
ZH = Zerohedge
http://www.zerohedge.com
http://www.zerohedge.com/news/us-needs-generate-261200-jobs-month-return-pre-depression-employment-end-obama-second-term
I believe it is this one Spencer.
Also see this one on charts and information demonstration based on your post
http://notaneconomist.wordpress.com/2011/10/06/health-care-costs-down-the-up-escalator/ by Jim Swan