US jobs: September’s jobs data makes it clear that the US economy is still in a record-breaking hole. The headline number – a 263,000 drop in nonfarm payrolls when analysts expected a 180,000 fall – was just the centrepiece of a depressing labour market landscape.
The rate of job losses had been slowing fairly dramatically from 741,000 in January, implying the end of the recession might be at hand. But the increase from the 201,000 drop in August suggests the improvements may be at an end.There is more bad news.
It is easier to cut or add hours than headcount. The average workweek had ticked up to 33.1 hours in August; it dropped back to 33.0 in September.
That isn’t what should be happening this far into the longest US recession since the Second World War.
Statistical mavens will be depressed by the preliminary annual benchmark revision of the size of the workforce. It showed 824,000, or 0.6%, fewer nonfarm employees than in the previous year’s count.
If the new estimate were put into the current calculation, the unemployment rate would be well above 10%.
An economy losing 263,000 jobs monthly – 2.4% of the workforce annually – simply is not in recovery. Indeed, the lost income and increased insecurity are creating a steep barrier to growth in consumption.
The labour market deterioration seems to fit badly with recent indications of strength, or less weakness, in manufacturing and housing – enough to create something like an annualised 3% increase of US GDP in the third quarter. But many of the positive developments look like artificially stimulated blips.
Think the “cash for clunkers” boost to automobile sales in July-August, or the effect on housing of ultra-low interest rates and a projected $627bn of home loans on concessionary terms from the Federal Housing Agency.
Increased exports and government spending can only temporarily mask the economy’s ill-health.
In the long run, such high levels of unemployment matter more. They can only depress living standards and reduce the country’s wealth. Neither monetary nor fiscal stimulus is a source of long-term prosperity. The US economy is now discovering their downside.
