First the facts and then my comments. Calculated Risk Blog reports from the BLS:
From the BLS:
Nonfarm payroll employment changed little (+54,000) in May, and the unemployment rate was essentially unchanged at 9.1 percent, the U.S. Bureau of Labor Statistics reported today. Job gains continued in professional and business services, health care, and mining. Employment levels in other major private-sector industries were little changed, and local government employment continued to decline.
The change in total nonfarm payroll employmentfor March was revised from +221,000 to +194,000, and the change for April was revised from +244,000 to +232,000.
The distressing news here isn’t so much the rise in unemployment rate from 8.9% to 9.1%. Given the margin of error in measurement*, the unemployment rate has essentially been 9% for the last few months. The distressing part is three fold. First, the number of net new jobs created was only 54,000. We need at least 150,000 and closer to 180,000 net new jobs each month to keep pace with population growth. 54,000 is simply not enough. What’s worse, it’s a very significant drop from the March and April levels with no obvious explanation other than the economy overall is seriously slowing down.
The second distressing item is the revisions to the April and March numbers. Normally previous months’ numbers are revised as the Bureau gets more and better data. But revisions typically aren’t very large and may be either up or down. But to have 12% and 4% downward revisions to the previous two months means the mild optimism folks were expressing two months ago was misplaced.
Finally, the most distressing part news, but totally unsurprising, is that local government employment (think teachers and police) continues to decline and be a significant drag on the economy as state, local, and the national government continue to think they can cut their way to prosperity. They can’t. There’s no history or empirical evidence that shows drastically cutting government spending in the middle of a significant slump will bring prosperity. Quite the contrary, we have extensive theory and evidence that says cutting government spending in the middle of a slump will make the slump worse, make unemployment higher, and actually increase the government’s deficit.
So just how bad is this continuing failure to recover from the Great Recession of 2007-09? Again Calculated Risk obliges with a great graphic. This graph compares each official recession since the end of World War II. It plots the percentage decline in total employment (the loss of jobs!) by month and then shows how long it took to recover employment. At the rate we are “recovering” (it’s not really a recovery!), it will be many years before we again get back to the employment levels we had when this disaster began to unfold in 2007. Without major changes in policy direction, we are definitely facing a lost decade for the U.S.
There are a total of 13.9 million Americans unemployed and 6.2 million have been unemployed for more than 6 months. Very grim numbers.
Overall this was a weak report and reminds us that unemployment and underemployment are critical problems in the U.S.
Percent Job Losses During Recessions
This graph shows the job losses from the start of the employment recession, in percentage terms – this time aligned at the start of the recession. …
In terms of lost payroll jobs, the 2007 recession is by far the worst since WWII.