No New Jobs Is The New Normal

02/10/2011
Comments 9
3 charts that will not transfer and many links on this post

Our statistical recovery is truly a wonder to behold. Gross Domestic Product (GDP) has now reached its pre-recession (2007:Q4) level, but has done so without restoring about 7.5 million of the jobs lost since then. Job gains are supposed to come later we are told. This is the famous "lagging indicator" you've heard about. This hopeful expectation, along with $1.49 (+ tax), will get you a cup of coffee at Starbucks.

In Why the January Jobs Report Is Alarming, David Stockman looks at our job creation prospects based on the historical data. His view basically says that there may not be many new jobs created in the next decade—this is the "new normal" for jobs.

The January nonfarm payroll number was 130.27 million — a figure first reached in October 1999. That’s right! The fabled American job machine has come to resemble nothing so much as Cisco's stock price. For the last 12 years, the nonfarm job count has been revisiting the same point over and over again, and each time it crosses from below Wall Street economists put on their best [Cisco CEO] John T. Chambers imitation and whoop it up for job growth...

... no amount of weather-spinning can obfuscate the dismal facts about the medium-term jobs trend — to say nothing of any net job gains since the last century! Specifically, during the December 2007-June 2009 official recession period, we lost 7.3 million nonfarm payroll jobs, bringing the nonfarm payroll count to 130.64 million at the point the National Bureau of Economic Research (NBER) said recovery officially commenced. But after 19 months of green shoots, we now actually have 400,000 fewer jobs.

And, yes, employment is purportedly a lagging indicator, but it is simply off the historical charts to have the job count down 5.5% at a point that is currently 37 months after the cyclical peak.

Regardless of what the precise numbers are, no amount of spin can hide the fact that 19 months after the NBER said the recession was over, job creation has stopped, as in halted, ceased, not moving forward, standing still. Stockman's reading of the BLS data is consistent with the Gallup polling results.

Still, Gallup's measures paint a real-time picture of the current job realities on the ground: nearly 1 in 10 Americans in the U.S. workforce are unemployed, nearly one out of five are underemployed, and the nation's overall hiring situation has not improved over the past four to six months.

Stockman includes three historical graphs describing the current jobs situation. I am going to duplicate those graphs along with his comments in the hope that this depressing data will garner wider attention.

"... the Breadwinner Jobs graph tells the real story. It goes back to January 2000 and covers the long “Greenspan Boomâ€