July jobs report – Same old story, same old song and dance

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July jobs report - Same old story, same old song and dance

By Steve Eggleston

Yes­ter­day, the Bureau of Labor Sta­tis­tics released the July jobs report, which says that on a seasonally-​adjusted basis, the econ­omy added 209,000 jobs with the unem­ploy­ment rate tick­ing up 0.1 per­cent­age point to 6.2%. That marks the 6th month in a row that there were at least 200,000 jobs added, the first time that has hap­pened since 1997.

Regard­ing the unem­ploy­ment tick-​up, it is as much a fac­tor of peo­ple look­ing for work again as it was peo­ple los­ing jobs. While 131,000 more peo­ple were work­ing on a seasonally-​adjusted basis in July than in June, and 209,000 peo­ple were added to the 16-​and-​older civil­ian non­in­sti­tu­tional pop­u­la­tion (not seasonally-​adjusted), 191,000 more peo­ple were offi­cially listed as unemployed.

The bad news — that 6-​month surge appears to be as good as it gets. From Amer­i­can Enter­prise Institute’s James Pethokoukis:

Over­all, it was a bad report for the job met­rics “dash­board” of Fed­eral Reserve Chair Janet Yellen. As econ­o­mist Robert Brusca points out, ” … we see that the unem­ploy­ment rate has risen, the U-​6 rate is up. The long-​term unem­ployed share of total unem­ploy­ment is up. Part-​time work­ers are up, part-​time work­ers look­ing for full-​time work is a higher ratio. Mar­gin­ally attached work­ers are greater in num­ber. There are more dis­cour­aged workers.”

Then again, what can you really expect from an econ­omy that has expanded by just 2.4% over the past four quar­ters, and a mere 2.2% over the five years of the expan­sion? Now there are signs wage growth could be ready to accel­er­ate. And maybe the 4% GDP growth in the second-​quarter means above-​trend growth for the rest of the year. But as Bar­clays puts it, “Over­all, we view this report as con­sis­tent with a return to more mod­er­ate job growth in Q3 14 after the Q2 14 surge.”

Indeed, this is the 63rd con­sec­u­tive month, going back to May 2009, that the seasonally-​unadjusted employment-​population ratio (59.4% in July) has been below the same month in 1979. It also is, other than July 1982 and July 1983, the worst July between 1977 and 2010. Mean­while, the labor force par­tic­i­pa­tion rate, at a seasonally-​unadjusted 63.5%, is lower than every July since 1977.

On a related tan­gent, the first read of 2nd-​quarter GDP, released on Wednes­day, was that real (inflation-​adjusted) GDP growth grew at an annu­al­ized 4.0% rate, with a com­pre­hen­sive revi­sion of GDP data going back to 1999 knock­ing up 1st-​quarter GDP change from –2.9% to –2.1%. That growth is not sup­ported by the monthly releases of data of var­i­ous com­po­nents of GDP, though those montly releases are not comprehensive.

That revi­sion con­tains a hid­den admis­sion — the first 4 years/​16 quar­ters of recov­ery from the Great Reces­sion, cov­er­ing the 3rd quar­ter of 2009 through the 2nd quar­ter of 2013, was not only worse than any post-​World War II recov­ery, but also worse than the recov­ery from the 4-​year-​long reces­sion that started the Great Depres­sion. Tom Blumer’s analy­sis shows that the both the peak-​to-​peak real GDP change of 4.1% (from the 4th quar­ter of 2007) and the trough-​to-​peak real GDP change of 8.7% (from the 2nd quar­ter of 2009) are the worst per­for­mances on record.

The last year didn’t help the com­par­isons much. While the 2.4% growth since the 2nd quar­ter of 2013 allowed the 5-​year peak-​to-​peak real GDP to grow by 6.6% since the Great Reces­sion, which does beat the post Great Depression’s 4-​year peak-​to-​peak esti­mated 4.3% real GDP growth, it is still sig­nif­cantly worse than the worst post-​WWII peak-​to-​peak recov­ery, 10.9% in the 14 quar­ters after the 19531954 reces­sion. Notably, the 16-​quarter mark fol­low­ing the 19531954 reces­sion had a GDP level that was 6.9% bet­ter than the pre-​recession high-​water mark, and that was the low-​water mark of the 19571958 recession.

The 5-​year post-​Great Reces­sion trough-​to-​peak real GDP growth of 11.4% is still short of the pre­vi­ous 2ndweak­est 4-​year trough-​to-​peak trough-​to-​16th-​quarter recov­ery, 12.8% GDP growth fol­low­ing the 2001 reces­sion, and well off the 15.3% 5-​year growth fol­low­ing the 2001 recession.

Revisions/​extensions — While the trough-​to-​peak recov­ery fol­low­ing the 195354 reces­sion was +13.8% at the 14-​quarter mark, the 195758 reces­sion knocked the trough-​to-​16th-​quarter growth to +9.7%, lower than the 5-​year trough-​to-​peak recov­ery from the Great Reces­sion and higher than the 4-​year trough-​to-​peak recov­ery from the Great Reces­sion. How­ever, the trough-​to-​20th-​quarter growth fol­low­ing the 195354 reces­sion was 17.8%.

By Steve Eggleston

Yesterday, the Bureau of Labor Statistics released the July jobs report, which says that on a seasonally-adjusted basis, the economy added 209,000 jobs with the unemployment rate ticking up 0.1 percentage point to 6.2%. That marks the 6th month in a row that there were at least 200,000 jobs added, the first time that has happened since 1997.

Regarding the unemployment tick-up, it is as much a factor of people looking for work again as it was people losing jobs. While 131,000 more people were working on a seasonally-adjusted basis in July than in June, and 209,000 people were added to the 16-and-older civilian noninstitutional population (not seasonally-adjusted), 191,000 more people were officially listed as unemployed.

The bad news – that 6-month surge appears to be as good as it gets. From American Enterprise Institute’s James Pethokoukis:

Overall, it was a bad report for the job metrics “dashboard” of Federal Reserve Chair Janet Yellen. As economist Robert Brusca points out, ” … we see that the unemployment rate has risen, the U-6 rate is up. The long-term unemployed share of total unemployment is up. Part-time workers are up, part-time workers looking for full-time work is a higher ratio. Marginally attached workers are greater in number. There are more discouraged workers.”

Then again, what can you really expect from an economy that has expanded by just 2.4% over the past four quarters, and a mere 2.2% over the five years of the expansion? Now there are signs wage growth could be ready to accelerate. And maybe the 4% GDP growth in the second-quarter means above-trend growth for the rest of the year. But as Barclays puts it, “Overall, we view this report as consistent with a return to more moderate job growth in Q3 14 after the Q2 14 surge.”

Indeed, this is the 63rd consecutive month, going back to May 2009, that the seasonally-unadjusted employment-population ratio (59.4% in July) has been below the same month in 1979. It also is, other than July 1982 and July 1983, the worst July between 1977 and 2010. Meanwhile, the labor force participation rate, at a seasonally-unadjusted 63.5%, is lower than every July since 1977.

On a related tangent, the first read of 2nd-quarter GDP, released on Wednesday, was that real (inflation-adjusted) GDP growth grew at an annualized 4.0% rate, with a comprehensive revision of GDP data going back to 1999 knocking up 1st-quarter GDP change from -2.9% to -2.1%. That growth is not supported by the monthly releases of data of various components of GDP, though those montly releases are not comprehensive.

That revision contains a hidden admission – the first 4 years/16 quarters of recovery from the Great Recession, covering the 3rd quarter of 2009 through the 2nd quarter of 2013, was not only worse than any post-World War II recovery, but also worse than the recovery from the 4-year-long recession that started the Great Depression. Tom Blumer’s analysis shows that the both the peak-to-peak real GDP change of 4.1% (from the 4th quarter of 2007) and the trough-to-peak real GDP change of 8.7% (from the 2nd quarter of 2009) are the worst performances on record.

The last year didn’t help the comparisons much. While the 2.4% growth since the 2nd quarter of 2013 allowed the 5-year peak-to-peak real GDP to grow by 6.6% since the Great Recession, which does beat the post Great Depression’s 4-year peak-to-peak estimated 4.3% real GDP growth, it is still signifcantly worse than the worst post-WWII peak-to-peak recovery, 10.9% in the 14 quarters after the 1953-1954 recession. Notably, the 16-quarter mark following the 1953-1954 recession had a GDP level that was 6.9% better than the pre-recession high-water mark, and that was the low-water mark of the 1957-1958 recession.

The 5-year post-Great Recession trough-to-peak real GDP growth of 11.4% is still short of the previous 2nd-weakest 4-year trough-to-peak trough-to-16th-quarter recovery, 12.8% GDP growth following the 2001 recession, and well off the 15.3% 5-year growth following the 2001 recession.

Revisions/extensions – While the trough-to-peak recovery following the 1953-54 recession was +13.8% at the 14-quarter mark, the 1957-58 recession knocked the trough-to-16th-quarter growth to +9.7%, lower than the 5-year trough-to-peak recovery from the Great Recession and higher than the 4-year trough-to-peak recovery from the Great Recession. However, the trough-to-20th-quarter growth following the 1953-54 recession was 17.8%.