Bad to bad-but-not-terrible
There were two ways of seeing July’s jobs report: it was either bad or bad-but-not-terrible. The US economy added 162,000 jobs in July; the consensus expected more like 184,000. May and June’s job totals were also revised down by a total of 26,000 jobs, and the unemployment rate edged down to 7.4%. Here’s a breakdown of the reactions, with the caveat that the distinction between weak and not-particularly strong is in the eye of the beholder.
Unemployment may be ticking down ever so slightly, but employment isn’t rising. At the current three-month average of 175,000 new jobs a month, we won’t get back to a pre-recession number of jobs for 11 months, more than five years after the recession began. Even worse, if you take into account new people coming into the workforce (and you should), we won’t close the jobs gap for another 9 years. Another estimate by the Chicago Federal Reserve puts that number at five years, which puts the over-under on the return to full employment at between a decade and a decade and a half.
And the jobs that the economy is adding aren’t high-wage, or particularly stable: the relatively low-paying retail and food sectors accounted for about half of the jobs added this month. Matthew Klein points out that the growth in low-quality jobs shows up in metrics like real after-tax income, which fell, and purchasing power, which is lower than it was in November 2012.
Things don’t look good for federal workers, either. Furloughs — forced, unpaid leave — are surging. 200,000 federal workers reported not being able to work full-time hours, up from just 50,000 last year and the year before. — Ben Walsh
It’s not easy to find mildly bright spots in this report, but here goes. Most of the unemployment rate drop came from actual job growth in the employment survey, rather than fewer workers in the labor force.
This, Bill McBride writes, is more of the same: slow and steady improvement. While the labor force participation rate fell for all workers, for the key working ages (24-54), the rate held steady. David Leonhardt looks at the the employment-to-population ratio in that demographic and finds that Americans in their prime aren’t leaving the workforce en masse, but we’re not reversing post-crises losses either.
Jared Bernstein says our economy is moving, albeit in second gear: “ We’re adding jobs at a reliable rate in most industries, supporting moderate wage growth that’s keeping pace with prices”. Healthcare jobs, meanwhile, are slumping, Sarah Kliff writes, but that actually might be a good thing. For one, this could suggest that lower healthcare spending may be hear to stay. And local governments also added 1000 jobs, the WSJ writes, which reverses a long-running trend of municipal cuts. — Ryan McCarthy
On to today’s links:
The field for Fed chair narrows to three – Annie Lowrey
Why is inflation so low – James Hamilton
“The whole point of asset purchases is that the Fed is taking duration risk so that the private sector doesn’t have to” – Izabella Kaminska