Economic Notes: September Jobs Report - Even Weaker Than It Looks...
10/11/2010
By Patrick O'Keefe, Director of Economic Research, J.H. Cohn
Employment
was virtually flat (-0.1%) nationwide in September. The ninth consecutive monthly gain in private-sector payrolls was offset by local government retrenchment and the phase out of temporary Census jobs.
The broader data suggest an even weaker performance, however.
Longer term: The U.S. has 580,000 fewer jobs now than at the beginning of the century (January 2000). Over that period, private jobs fell 2.2 million (2.0%) while public sector employment rose 1.7 million (8.1%).
More recently: September saw 439,000 fewer jobs than when the recession ended 15 months ago. Cutbacks by budget-constrained localities account for three-fourths of the loss; private jobs most of the rest.
While private sector employment has increased throughout 2010, the gains have been uneven. Since June 2009, service providers added 379,000 jobs (0.4%), but goods producers (manufacturing and construction) shed 484,000 (-2.6%).
Further, the service sector’s growth was concentrated in temporary help, where employment is up more than one-fifth since recession’s end, and healthcare, which grew throughout the downturn.
Together, those two sectors added 678,000 jobs from the time recovery began in mid-2009. Absent their gains, the U.S. would have 1.1 million fewer jobs than when the rebound started.
Even among jobholders, a record number are under-employed (i.e., want but cannot obtain full-time work) as employers remain uncertain about the recovery’s durability and duration.
As a consequence, unemployment remains stubbornly high and spells of joblessness long, which has resulted in a record number of discouraged jobseekers (i.e., individuals so frustrated that they have stopped looking).
With consumer spending accounting for 70% of Gross Domestic Product, these data explain why the recovery from the 2007-2009 downturn started slower and decelerated sooner than the two earlier prolonged recessions since the 1930s.
And it indicates that the consumer’s contribution to growth will remain subdued – until there is a sustained robust growth in full-time, permanent jobs.
That was certainly not the case in September, when the jobs data were weaker than they looked.
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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.