The headlines in today’s job report were gloomy:
- Nonfarm payrolls fell by 467,000 in June, more than expected and more than in May.
- The unemployment rate increased to 9.5%.
That gloominess is confirmed if you look deeper into the numbers. Most striking is the continued decline in the number of hours logged by private sector workers. The average workweek fell to 33.0 hours in June, the lowest since BLS began tracking the data in 1964.
The economy is thus losing jobs and, for the jobs that remain, is losing hours worked. That double whammy is bad news for the economy.
The following chart shows year-over-year changes in BLS’s index of total private sector hours worked (by production and nonsupervisory workers, who make up the bulk of the workforce). This index is useful because it captures both the number of jobs and the number of hours worked:
As you can see, the recent decline in private hours worked is sharper than any in the past forty years. Over the past twelve months, total private hours have declined by 7%.
A closely related issue is the rise in part-time employment for economic reasons. Continue reading “A Grim Jobs Report”
A few weeks ago, I posted some charts showing that Americans are increasingly reliant on government transfers as a source of income. Friday’s data on personal income for May confirmed that the trend is continuing. Government transfers made up a record 18% of personal income in May:
In interpreting this increase, it’s important to keep several points in mind:
- May’s increase was driven entirely by the recent stimulus act. The act provided for one-time payments of $250 to a range of Americans who are beneficiaries of various other programs, including Social Security, SSI, and veterans’ benefits. Those payments more than account for the increase in transfers from 16.9% of personal income in April to 18.0% in May. Continue reading “Stimulus Lifts Government Transfers”
It’s no surprise that Americans have been cutting back in the face of job losses, pay reductions, and shrunken retirement accounts. One result has been a sharp increase in the saving rate, which has averaged more than 4.5% this year after flirting with 0% in recent years.
A second result is a rebound in doing-it-yourself. Home-cooking has replaced some restaurant visits, for example, and more Americans are picking up a hammer rather than calling a handyman.
This morning’s Washington Post provides another example of such rising home production — a boom in vegetable gardening:
Seed producers and merchants across the United States are reporting the same phenomenon of crazy demand and even some shortages, especially of staples like beans, potatoes and lettuces. Sales of seed packets picked up last year and have grown significantly again this season, which runs from January to June.
Industry observers attribute the boost in sales to a concern for food safety following outbreaks of E. coli and salmonella poisonings and a desire by consumers to be a part of the local food movement. Michelle Obama’s new vegetable garden at the White House may also be inspiring people, they said.
But the primary reasons, they speculate, are the recession, income loss and the need for people to lower their grocery bills by growing their own. (my emphasis)
Anecdotes like this have a number of larger implications:
Continue reading “DIY on the Rise”
Markets greeted this morning’s jobs reports with enthusiasm, as the headline measure of job losses in May — 345,000 — came in significantly lower than expected. Under normal circumstances, losing more than 300,000 jobs would be bad news. Of course, these aren’t normal circumstances.
The unemployment rate in May was much less welcome, rising to 9.4% from 8.9% in April. Part of the increase was due to the labor force expanding — a positive sign — but most was due to an increased number of people being unemployed.
These figures all refer to the headline measure of unemployment (U-3, in the lingo), which focuses on workers who have lost a job and are looking for a new one. The government also publishes several broader measures of unemployment that account for other ways in which workers may be less employed than they desire. The broadest of these, known as U-6, adds two groups to the regular measure: those who are marginally attached to the labor force (people who are willing to work and have worked in the past, but aren’t actively looking; this includes discouraged workers) and those who are working part-time even though they want to work full-time.
As shown in the following chart, the U-6 paints a grimmer picture of the U.S. labor market:
Continue reading “Cloudy Jobs Data”