Total nonfarm payroll employment grew by 431,000 in May, reflecting the hiring of 411,000 temporary employees to work on Census 2010, the U.S. Bureau of Labor Statistics reported today. Private-sector employment changed little (+41,000). Manufacturing, temporary help services, and mining added jobs, while construction employment declined. The unemployment rate edged down to 9.7 percent.
This report stinks. The majority of job creation came from Census hiring — the private sector was non-existent. Let’s look at the data: The civilian labor force decreased by 322,000 and the number of unemployed decreased by 287,000. This lowered the unemployment rate to 9.7%. The labor force participation rate decreased .2% because of a drop in the number in the civilian labor force. The employment to population ratio decreased .1%. This means that fewer people participated in the labor force last month and the percentage of people employed as a percentage of the civilian labor force decreased.Total private jobs created were 41,000. Goods producing industries increased 4,000, with an increase in manufacturing and mining offset by a drop in construction. Service employment increased by 37,000. With the exception of financial services [which decreased 12,000], all sectors saw growth. Just not much growth. Simply put, the private sector dropped out of the equation last month. Period. Unfortunately, this report comes at the worst time possible – when the markets are already shaky. In addition, the initial unemployment claims numbers – which have dropped the last two weeks – are still high. This is not a good combination.
Several weeks ago, I wrote an article titled Storm Clouds on the Economic Horizon In that article I wrote the following:[Going forward] the economy needs to keep up its current pace of job creation. Last month we had a great employment report. That needs to be repeated in the next report.
This is the worst possible jobs report we could have in the current environment. Now – this is just one report. The record indicates things are moving in the right direction; this could be nothing more than a speed bump. But, this is a most ill-timed speed bump.
I don’t know what makes an economy work, myself. I am beginning to learn what others seem to already know, that group psychology has a lot to do with things. I guess I naively thought that it had something to do with money, and numbers, and value [a concept that is much more volatile than I knew]. So Hale Stewart who is usually fairly optimistic being gloomy here is meaningful.
Looking at the recessions since the end of WWII, there isn’t any "typical" recovery profile. Generally, once unemployment begins to fall, it falls fairly rapidly [much as it goes on the upswing]. The detail graph below compares the recession that began in Reagan’s first year to the one that came in Bush’s last year [scales adjusted to be equivalent]:
While such comparisons are rough, this one is certainly hanging around. I suppose that should be expected even if it is unwelcome. Things are very different in 2010 than they were in 1980. In my estimation, one of the main reasons for the difference is, in fact, the almost 30 years of whatever-Reaganomics-meant that have colored those years: deregulation, irresponsible tax cuts, irresponsible pugilism, bankism, debtism, wall-street-ism. There are other changes: the move to a world economy, outsourcing of jobs, the fall of communism, global warming, and dwindling resources.
REALITY is the key word of the 21st century. Living big, buying now and paying later mentality has to stop and stop soon. President Obama needs to set the new standard before the really big collapse of our country.