Economic Notes: Pick Up in the Pickup
11/10/2010
By Patrick O'Keefe, Director of Economic Research, J.H. Cohn
Gross Domestic Product (GDP)
grew for the fifth consecutive quarter since the contraction ended in mid-2009 according to the advance estimate of the Bureau of Economic Analysis (BEA). (The BEA will revise its estimate twice as more complete data become available.)
Although real (i.e., inflation adjusted) GDP remains marginally (0.8%) below its 2007 peak, growth accelerated somewhat in the quarter that ended in September (Q-3) as consumer spending made its largest quarterly contribution since its nadir in Q-2 2007.
The increase in consumer spending reflected continuing gains in private sector employment, which has increased for 10 consecutive months. Since the beginning of the year, private employers have added 1.1 million jobs – and the pace of growth appears to be accelerating.
Although the private sector jobs picture continues to improve, temporary help comprised a disproportionate share of new hires year-to-date and underemployment (i.e., involuntary part-time workers) remains near record levels.
Despite the rise in private payrolls, total employment was lower in October than when the recession ended because of cutbacks by cash-strapped localities.
While October’s jobs report – most especially the acceleration in private sector hiring – was the most positive since the recovery began, the pace of improvement remains well below that needed to make a meaningful reduction in the number of unemployed adults.
Indeed, the employment-to-population ratio – the proportion of working age adults with jobs – dipped again in October and is near the downturn’s low.
In sum, the most recent data on GDP and employment suggest that the economy’s expansion remains intact. Indeed, there is some evidence that the pickup is picking up, if only gradually.
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The statements, opinions, and conclusions contained herein are based solely upon the author’s own studies, research, and personal experience. Neither J.H. Cohn LLP nor the author makes any representation or warranty as to the accuracy or completeness of this information. J.H. Cohn LLP and the author expressly disclaim any liability for any loss or damage which may be incurred, of any kind whatsoever, as a result of or arising from the use of any of the information contained herein or reliance on the accuracy or completeness of it.
Patrick J. O’Keefe is director of economic research at J.H. Cohn LLP. He can be reached at pokeefe@jhcohn.com or 877-704-3500.