You Need To Know 2 Things About The June Jobs Report
Fabius Maximus | Jul 10, 2016 04:24AM ET
Summary: The jobs report is a monthly gift for journalists and economists. Packed with numbers — mostly noise, with large error bars, subject to big revisions — it generates a flood of clickbait headlines and confident analysis. Lost in this are the important trends we need to know (aka “old news”, because they change slowly). Here are two of the big ones.h3 The experts will explain that this news is life-changingly significant, every month./h3
“June’s job growth was big and important!“
No, the June strong headline number is not important. Like May’s horrific slow growth, it’s probably just noise. More important are the 16 months of slowing job growth (i.e., job growth decelerating from the slow grow characteristic of this recovery). In February 2015 YoY growth in non-farm payrolls was 2.3%. In June it was 1.8%. This drop erased the acceleration of Feb 2014 – Feb 2015 that got economists excited about the big Fed rate increases coming really soon. Normal days were coming again! But they’ve been delayed, again.
The number of jobs is not the best metric in the New America, with its growth in part-time, un-unionizable, no benefits, no training, disposable employees. A better (albeit, like all economic data, imperfect) measure is the total number of hours worked per month. For the full recovery it tells the same story as jobs: slow growth since the crash (jobs are up a total of only 4.4% over nine years, hours are up 5.3%).
But total hours have been flat for the past six months. (total hours for production and non-supervisory workers has been flat for seven months). That’s a red flag. Gaps like this between similar metrics deserve attention, since they signal that something is happening.
Get The News You Want
This report shows two traits characteristic of this recovery: slow, with remarkable resilience. So far the economy has taken some hits, but shrugged them off and bounced back. Since there is no such thing as a “stall speed” , and the economy grows too slowly to overheat or develop serious imbalances, it’s not clear what will cause the next recession. This recovery might astonish everybody in 2016. Disappointing the optimists by never zooming to “normal” speed; disappointing the bears by not falling into a recession.
As I have said for almost a decade (since starting the FM website in 2007), we have entered the transition to a new age. What were wonders, like negative nominal interest rates and steady slow growth, have become commonplace. What further wonders await us in the next few years? So far the economic surprises since the crash have been mostly good for America. That lucky streak might not continue.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.