Wednesday, June 06, 2007
B.E.D. In Pictures
BED is the Business Employment Dynamics survey. It is published with a long lag time, because this employment survey uses the quarterly state unemployment tax receipts. These generally are charged for all employees, even if the employees are temporary and will not be covered for unemployment benefits, so the only jobs not captured are the true underground economy.
It is the broadest and most accurate employment survey possible. The current release gives employment changes from 2nd quarter 1992 through the third quarter of 2006.
Here are some other charts created by BLS using this data.
The reason why the regular employment series is off is because it is generated using adjustments from the past. There was a sharp downward turn in later 2006 which caused a double problem with the 2007 adjustments. It is not a conspiracy or a willful attempt to mislead; it is an artifact of a sudden change combined with regular sampling techniques. Because businesses are formed constantly, the establishment survey results are adjusted to account for new, unknown and unsampled businesses. The adjustment is done on a lagging basis using these late corrections. This time, the adjustment coincided with a down cycle which produces really odd numbers.
Still, the jobs aren't there. We are seeing declining domestic private investment, high consumer needs inflation, and lowered consumption. We have entered into a self-reinforcing cycle of lower consumer consumption in real terms (less gas, cheaper food, less clothing purchases, etc). Meaningful economic statistics lag, but the statistics we have since the first of the year do not show a meaningful upturn, but rather a continuation of the same trend.
In the next few quarters, you will begin to see the drops in income, etc, that reflect what is really happening. April Personal Income did show a drop.
In the meantime, trucking and rail statistics also confirm a continued drop in economic activity (this graph is from www. truckline.com, but I have modified it to show trendlines):
Everything seems to show that domestic economic private activity is decreasing, and federal orders will not bail us out. There was a slight uptick earlier, and now inventories are building again. The data from the railroads is very closely aligned. See AAR's latest:
Cumulative volume for the first 21 weeks of 2007 totaled 6,767,487 carloads, down 4.5 percent from 2006; 4,785,303 trailers or containers, off 1.2 percent; and total volume of an estimated 688.7 billion ton-miles, down 3.1 percent from last year.Add to that the statistic from Factory orders about YTD shipments of petroleum and coal products being down 8.7% compared to the same period in 2006, and I believe you can see a rather consistent pattern emerging. Unless, that is, you are a NAR statistician.
Recessions do not happen quickly; we have a very diverse and vibrant economy. They are the result of accumulated synergistic effects, and this is one time the synergy is working negatively.
The end results will eventually be positive; we should manage to stumble to some societal agreement that more domestic energy production is needed, we will stop building houses that no one can afford to live in, and we will stop lending money stupidly. Once we stop all that, we will start to invest in our own domestic economy again. We have not yet reached that point, however, and we have much further to go in the adjustment cycle.
Recent polls have shown Dem & Rep identification dropping and Ind identification rising.