"Jobless Recoveries" and Unemployment Fudging...

[melon]

http://www.fortune.com/fortune/articles/0,15114,1068857,00.html

Curb Our Enthusiasm: May Job Growth is a Downer

The U.S. added only 78,000 new jobs last month, and many were in the housing sector, which some economists think is ripe for a correction.

By Peronet Despeignes

We now return to our regularly scheduled job bust. The Labor Department on Friday reported that the total number of nonfarm payroll jobs grew in May by only 78,000 last month, half of what many economists were predicting, and less than a third of April's surprisingly robust 274,000 gain. This dashes—at least temporarily—investors' cautious optimism of late about the economy's strength.

Preliminary month-to-month figures, which can be revised substantially, have to be looked at with a jaundiced eye. Job growth in May could turn out to have been much stronger and smoother in future updates. But any revision is unlikely to change a basic fact: This is the most anemic job expansion since World War II. By the standard of past booms, job growth since the end of the 2001 recession should have been double to six times better than what we've seen so far. (For more details, see graph Job Growth: The Phantom Economic Expansion.)

Adding to the uncertainty about the soundness and the stamina of the country's economic recovery is the fact that much of the job growth is in the housing and health-care sectors. A whopping 48% of private-sector jobs created since the end of the recession in November 2001—almost one out of every two—was housing related, according to Labor Department data culled by analyst Sophia Koropeckyj at Economy.com, a research firm. And in recent weeks, Federal Reserve Chairman Alan Greenspan has described the housing market as "frothy."

And while the unemployment rate in May dipped to 5.1%, its lowest level in more than three years, much of that decline over the past year reflects an exodus of Americans who've officially stopped looking for work and are therefore not defined as unemployed. The number of factory jobs, and even the number of consulting, temporary, and other business-service jobs shrank last month. Not good.

While the payroll survey of businesses show weak job growth, the survey of households suggested stronger growth. That is possible evidence that harder-to-track small businesses are doing a lot better than easier-to-track corporations. But financial markets, at the moment, are interpreting the report overall, which includes both surveys, as a dud. The dollar and Treasury bond yields are down, and investors in the futures markets are betting the Federal Reserve won't be raising short-term interest rates as much as many had expected.

The figures continue an off-and-on-again pattern of pokey, haphazard, and lackadaisical growth in payroll jobs that has frustrated economists for more than three years. It suggests many companies—more than 40 months into this expansion—remain either too shell-shocked, fearful of risk, or leery of rising energy and health-care costs to ramp up hiring in any consistent way. Payroll numbers have yet to show robust, uninterrupted month-to-month gain in the 200,000-plus range of old.

And what job growth there is appears increasingly dependent on the booming housing and health-care sectors. They've shown the sharpest growth over the past year and, with a few exceptions, were the only major sectors to show significant growth in May.

Many Americans have sought to cash in on this real estate boom by becoming part-time or full-time investors, mortgage brokers, real-estate agents—you name it. But even the estimate that almost one out of every two new private-sector jobs is being created in the housing sector may be conservative. Economy.com's Koropeckyj said she excluded from her data several groups that clearly enjoy spillover effects, such as repair and maintenance crews, and real estate lawyers.

In the last expansion, the housing market's contribution to private-sector job growth averaged about 14%. It carries more than three times as much weight now. Whether, when and how the real estate boom will end is anyone's guess—predictions of its demise have been wrong for years, and continuing low interest rates (hardly likely to be changed by today's weak job figures) promises to keep the sector afloat for some time to come.

But housing help us, if real estate's foundations ever start to sag, look out below.

Melon

 

[STING2]

You can spin it any way you want to, but an unemployment rate of 5.1% is a rate any leader on the planet would kill for. How many countries can you name have a lower unemployment rate than the United States? How many countries can you name have a higher standard of living than the United States according to the latest UNDP figures?

George Bush wiped out the Democrats one campaign slogan that he lost jobs rather than creating them before the end of his first term in January.

As far as the numbers of Americans not looking for work or defined as being long term unemployment, the latest UNDP figures show that it is no higher now than it has been in past years at about 1.2%, well below that for most Western European countries.

What is new, is the number of private home run business's that are still not included in the labor department statistics and is a new factor because of the rise of the internet in recent years.

 

[deep]

You can spin it any way you want to,
but an unemployment rate of 5.1% is a rate any leader on the planet would kill for.

not any leader

but I can think of one

 

[financeguy]

not any leader

but I can think of one

Subtle, deep, very subtle.

 

[theblazer]

We now return to our regularly scheduled job bust. The Labor Department on Friday reported that the total number of nonfarm payroll jobs grew in May by only 78,000 last month, half of what many economists were predicting, and less than a third of April's surprisingly robust 274,000 gain. This dashes—at least temporarily—investors' cautious optimism of late about the economy's strength.

As an economist, it is very sad to ever base a story on "what MANY economists were predicting." Economists predicting, that makes me laugh. How many are many? Who are the many or the few? What stats did they use, what research did they use....there is an infinite supply.

I don't expect many here to understand economics, economics models, or even how the tax system works in the USA. It is SO much easy to listen to a few talking points and go from there. If, Melon, you were truly interested in the subject, learn about economics, do the research, and post your own claims.

People just can't think for themselves anymore it seems. Take that to both sides if you wish..it's true.

 

[Do Miss America]

As an economist...

I don't expect many here to understand economics, economics models, or even how the tax system works in the USA. It is SO much easy to listen to a few talking points and go from there. If, Melon, you were truly interested in the subject, learn about economics, do the research, and post your own claims.

Oh let us bow down to thee and your superier intellect.

Well your the economist, what are your claims. It's easy to say many of you don't understand and try to paint the article as biased. Yet you don't dispute or give us anything else to work with, interesting.

People just can't think for themselves anymore it seems. Take that to both sides if you wish..it's true.

I've seen your few one liners in here and you're not exactly what I'd call the free thinker.

 

[Flying FuManchu]

I don't know... the numbers don't lie! We are experiencing ECONOMIC PROSPERITY!

 

[melon]

If, Melon, you were truly interested in the subject, learn about economics, do the research, and post your own claims.

People just can't think for themselves anymore it seems. Take that to both sides if you wish..it's true.

You don't seem to know me very well in here, now do you?

Here's my comments on economics in another forum:

http://forum.osnn.net/showthread.php?t=76432

Same username, different place. You'll have to forgive me for being a bit lazy here in FYM, but I had spent too much of my day writing my economic comments in the aforementioned thread in the other forum.

Melon

 

[Rono]

You can spin it any way you want to, but an unemployment rate of 5.1% is a rate any leader on the planet would kill for. How many countries can you name have a lower unemployment rate than the United States? How many countries can you name have a higher standard of living than the United States according to the latest UNDP figures?

When do you have oficial a job ? 1 hour a week, 12 hours a week ?

 

[Liesje]

You don't seem to know me very well in here, now do you?

I'm done my fair share of econ courses, but melon's posts (on pretty much ANY subject) trump anything I've ever thought or said.

 

[nbcrusader]

The method of calculating unemploymehnt has been consistent for 20 some years.

The current rate is good. You will never achieve 100% employment.

 

[melon]

The method of calculating unemployment has been consistent for 20 some years.

The current rate is good. You will never achieve 100% employment.

Granted, we'll never achieve 100% employment, but why did we have to manipulate the definition of "unemployment" to begin with? Was the previous definition prior to the Reagan Administration not good enough? I'm interested in hard, honest numbers; not figures that make the government pat itself on the back for no reason.

Melon

 

[nbcrusader]

It was changed in the early 80's as a way to get over the recession fatigue of the 70's. Changing the national outlook over employment figures helped the economy turn around.

Besides, prior to changing the method of calculation, if people leave employment and work on a consulting basis, they would not be counted as "employed".

 

[MissMoo]

Yes, but part of the problem is people get unemployment for less time now than they used to, so the way of counting may be the same, but the numbers are not correct because more people are not being counted. That's my understanding anyway.