The Slow Emergence


The U.S. labor market continues to make progress and once again shows, without a shadow of a doubt, that the U.S. economy is not in recession. Including upward revisions for August and September, nonfarm payrolls increased 182,000, almost doubling the consensus expected gain of 95,000. Civilian employment, an alternative measure of jobs that factors in small business start-ups, increased 277,000. This gain helped push down the unemployment rate to 9 percent.

A year ago the unemployment rate was 9.7 percent. During this time, nonfarm jobs have grown at an average monthly rate of 152,000 while civilian employment has grown at a rate of 140,000 per month. In other words, we don’t need 150,000 jobs per month just to keep the unemployment rate steady. Because of the aging of the labor force, 150,000 jobs per month is more than enough to push down the jobless rate.

Very quietly, without fanfare, private-sector payrolls have grown by 1.8 million in the past year, while the work week has lengthened and hourly cash wages are up 1.8 percent. Total hours worked are up 1.7 percent in the past year.

9% is not good by any means, but it is about as good as I expected a year ago. What’s really interesting is that this rise in civilian employment has matched and slightly exceeded a supposedly catastrophic decline in government employment. We’re supposed to believe that this “austerity” — which is austerity in these sense that ordering a diet coke with your triple bacon cheeseburger is a diet — hurts employment. According to standard economic multipliers, civilian jobs should grow far less than government jobs decline. Not happening. All the big spenders have left is a frail argument that if we had only maintained our high levels of spending, unemployment would be even lower. It’s this year’s “jobs created or saved”.

What I think is spurring this … well, we can hardly call it growth yet … is partially the gridlock in Washington. It would probably be better if we had serious efforts on tax reform and deficit reduction. But even the extremely modest step of taking out foot off the gas has helped. But a bigger part is that we are deleveraging in the private sector, reducing our credit card and mortgage debt and increasing our savings rate. It may not make for nice numbers in the short run, but it’s a better long-term strategy.

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  1. Kimpost

    I think 9% is quite good actually, all things considered. If 2012 ends at 7.5 – 8%, than that would be fantastic. Now, if we Europeans could only get our house in order, then we might just be on to something here.

    A small European victory tonight, with Papandreou surviving – barely. I really didn’t think that he would. If they can only get a new coalition going there quickly, then who knows? Greece might actually survive. And then there’s Italy, and I don’t think that Spain has done enough, to name a couple of giants…

    …gah, fuck it, we’re probably screwed. The shit just seems to be never ending. All we can do really is to take things step by step. But I’m telling you, the “folks” in the north aren’t happy about bailing the south out. Scandinavians will probably do it, but we’ll be cursing at our coffee tables. And the Germans probably will come through, because “ordnung muss sein”, but who knows? They are tired of it too, and in the view of the populace they have just bailed East Germany out.

    And if the Euro is salvageable, then we need to answer where the Euro should go next? After all, this crisis certainly is not just about countries living beyond their means. Do we really have the political will to reform the EU in ways necessary to make the Euro valid in all countries, regardless of their financial status? Are the individual countries really willing to hand over more power to the EU? Especially after this mess? I doubt it, and if that doesn’t happen, then what?

    With the luxury of hindsight, I think that we probably let the Euro spread too fast.

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  2. AlexInCT

    Ain’t it convenient that the LSM is trying its best to put a positive spin on what every economic publication keeps telling us are at best shitty numbers? I am surprised National Review is carrying that water, unless it is to point out that despite the morons in chagre Americans continue to defy odds and do the impossible. Must be an election soon or something….

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  3. Seattle Outcast

    Great, it’s 8:05 in the morning and now I want a triple bacon cheeseburger….

    Not happening. All the big spenders have left is a frail argument that if we had only maintained our high levels of spending, unemployment would be even lower. It’s this year’s “jobs created or saved”.

    Nutjob Pelosi is claiming 15% with data she just pulled out of her ass…

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  4. Screamin

    Read the article and something stuck in my craw, but I couldn’t put my finger on it until I re-read Hal’s block quote: “The U.S. labor market continues to make progress and once again shows, without a shadow of a doubt, that the U.S. economy is not in recession. ”

    Now I get the whole “LSM, protect the current administration, etc” line, but where does some reporter sitting behind a news desk get off saying that this particular economic indicator viewed (for all intents and purposes) with no real context somehow indicates a healthy economy? I have no quibble with the statistics per se, and I’m as happy as the next guy to see that we might actually be on our way to stopping the bleeding…but to say that anything having to do with out current economic situation is “without a shadow of a doubt” is a pretty severe case of intellectual dishonesty.

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  5. richtaylor365

    …gah, fuck it, we’re probably screwed.

    Greece is only the first shoe to drop.

    Europe is at the brink and we are right behind you, and the culprit is simple, out of control cradle to grave entitlements. You guys retire at 52 and expect the system to take care of you for the next 30 plus years, 30 hour work weeks, 10 weeks paid vacation a year, guaranteed work (can’t fire the incompetent), strikes every other Tuesday, free medical (free to you, expensive for the government) and every time the adults in the room voice some concern that the gravy train can’t go on indefinitely, the spoiled youth go on a burning and vandalism rampage. Yeah, that’s some system you got there.

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  6. Nexus

    We are 6 to 9 months from another recession according to ECRI. They have a pretty decent track record when it comes to recession calls. So what happens when we hit recession with 16% real unemployment and a $15 trillion debt?

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  7. Kimpost

    Entitlements aren’t the problem. Underfunded or even unfunded entitlements are. At least when talking about budgetary matters. I’m a welfare state proponent. But I also believe in fiscal responsibility.

    Very few of us retire at 52 or even at 62. I realize that you are exaggerating tongue in cheek, but I still think that it deserves to point that out. :) 52 is not even common in Greece, where the number is coming from.

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  8. richtaylor365

    Entitlements aren’t the problem. Underfunded or even unfunded entitlements are.

    Gee, that boiled it down, like saying ,”too many people on the public dole is not the problem, the simple fact the government can’t pay for it, now that’s the problem”.

    And my numbers were a bit exaggerated (a bit) but the sentiment was not tongue in cheek. European nations are going down like dominoes (Italy, Portugal, Spain, France) because their generous entitlement programs were underfunded, but properly funding them in the first place was cart before horse, they should have been reasonable to begin with.

    Look at how much grief Sarkozy got for even suggesting that France’s retirement age be raised from 60 to 62, all hell broke out. Yes, most Europeans don’t retire at 52, but they do generally retire at an earlier age then over here, and when they do their government takes care of them from that day until they die. Those in the states that retire before 65 are on their own until S.S. kicks in. Sure, we have our own entitlement problems to get past, the thinking should not be to raise taxes and saddle the productive workers to fund something that is out of control, the sane approach to cut back on the entitlement spending to a more healthy level.

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  9. Kimpost

    What’s a “healthy level”, though? Sounds awfully subjective to me. Sweden has a debt but our annual numbers are in the black, even during this crisis.

    Our welfare state is larger than yours*. Surely it’s not wrong for a society to decide to pay for education, health care and then some, as long as its populace thinks it’s worthy. And if the numbers still add up…

    *) Tax revenue as percentage of GDP
    Sweden 46%
    US 27%

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  10. richtaylor365

    What’s a “healthy level”, though?

    I’ll tell you what it’s not, the level that is practiced by the majority of the EU, respectively PIIGS, and a few others. Why do you think the unanimous approach has been austerity measures? Regardless of their popularity, nobody has said ,”Gee, although our entitlement programs are not the pinnacle of efficiency, we all think that everyone one of them is necessary, including magnitude of spending, so in order to keep them going, let’s just raise taxes. Let’s tax all rich people at 80%, then we can keep our precious social programs”. They have all agreed with me, it’s not the lack of revenue to fund them, it’s that they were not realistic in the first place.

    And besides, comparing Sweden to the US is not only apples/oranges, its raisins/cantaloupes. the US citizens have never agreed to the type of sweeping socialized democracy you guys practice. The expectations between citizens are different, promises the government has made in cradle to grave entitlements are different, our very sense of what the purpose of government is different. Our obligations around the world, military spending, the nuclear umbrella we provide, our international commitments, it really is a stretch to even include them in the same sentence.

    *) Tax revenue as percentage of GDP
    Sweden 46%
    US 27%

    And what sweeping generalizations are we to glean from this? Zimbabwe’s is 49.3%, are you saying we should be more like them? Of course tax revenues are higher in nanny state countries, that is why they are nanny states, but they are not to be emulated.

    I congratulate the Swedes in keeping their affairs in better order and not adhering to the deficit spending mantra, but you guys are the minority. Personally, I prefer more control over my own ship of destiny, where I can keep more of my money because my abilities earned it, that whole risk/reward thing. Nanny states don’t let the toddlers stray too far from their care and protection, they might hurt themselves (or get rich and want to keep that money they earned).

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  11. Kimpost

    I wasn’t comparing Sweden to US. I know that it’s difficult to compare countries with different systems and different cultures. I was just trying to point out that I don’t agree that entitlements are what’s bringing us down. The Swedish number was to illustrate that even a large welfare state can be sustainable.

    We “just” need to fund whatever entitlements our respective societies decide to implement. If the numbers don’t add up, we need to adjust.

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  12. AlexInCT

    No, we will be told the exact same bullshit we are now: things are on the way up and that whatever bad news we have is just “unexpected”. Fuck them all.

    The way the LSM has been behaving puts the Pravda days to shame. Even the fuckign propaganda arm of the USSR’s dictatorship didn’t have to lie as frequently and with the truth being so obvious as the LSM has to keep doing for these leftists know-nothings.

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