Gaily through the economic wilderness, that is. The employment report
confirms that retail is in a mild recession. Manufacturing is not yet.
If you look at the Household survey
, the numbers aren't that bad, although certainly they are not strong. The participation rate and emp/pop ratios are holding, and since April the Household survey reports a gain of 550K jobs. This is not enough to hold the unemployment rate steady because not enough people are leaving the workforce to offset all the new entries. Over these months, the civilian labor force has increased by about 800K. But it is also not the doom-filled picture presented by the Establishment survey.
However even in the Household survey the underlying details are somewhat weaker. The less than five weeks unemployed number has increased by 10% since April, which is my usual concern level. Not good, but not surprising given the rise in initial claims. 27 weeks and over has increased by 269K. Those employed part-time for economic reasons (unwillingly part-time) have increased by more than 350K, which really cuts into any income expectations created by the gain of 550K jobs over these months.
One striking failure of this expansion has been in the creation of living-wage jobs. See Table A-9
. Since April, full-time jobs have increased by less than 100K, whereas part-time workers have increased by over 450K. These ratios I do not like. They indicate trouble, especially since the involuntary part-time employment measure accounts for most of it.
Not surprisingly, since April the unemployment rate for full-time workers has risen from 8.5% to 8.7%. See Table 10
. The unemployment rate for women who maintain families has surged. I have some questions about this number, but this is worrisome.
In April their unemployment rate was 10.2%, and in June 11.8%. This tally is small, and so the month-to-month variability can be high, but there is a consistency in the reported number I don't like (May had risen to 10.9%) and it is confirmed somewhat by retail numbers in the Establishment report.
I don't believe I have ever mentioned this particular measure on this blog specifically. It is one that I watch for a first indication/confirmation that a downturn has begun. I believe it is a very sensitive indicator for several reasons. The first is that female head of households generally have the least flexibility to move for employment, so marginal degradation in job conditions show up immediately in this worker pool. In other words, when the hiring stops or slows signficantly, they tend to show it immediately. This pool of women usually hunt for jobs with determination and vigor, so this measure is somewhat isolated from other effects. They also may be concentrated in retail. Some history:
This number tends to jackknife at the beginning of a recession. It is also well-correlated with consumer credit degradation at banks, so I do watch it. I am not quite hitting the panic button yet, because this isn't SA and some of this comes from school closures, but I will be waiting for July's number with some anxiety.
Turning to the Establishment survey
, their headline is plus 80K, or 177K since April. This month government reported only a net loss of 4K jobs, so our dear president's recent buffoonery is accentuated. Household survey reports that government jobs, SA, have actually increased since April (see Table A-8
). One reason for the up-down effect in this measure is that government workers usually retire earlier, and the wave of retirements is ratcheting up the seeming job losses. But many workers are being hired to replace the retirees.
In fact, state and local governments added 3.1K jobs in June. The federal government cut 7K, and I guess most of that is military. There is obvious weakness in retail, transportation and warehousing and information. Information is strikingly weak. Manufacturing of nondurables continues to see jobs ooze slowly away. Construction ain't doing much, and won't. Manufacturing of durable goods is carrying the expansion ball still.
So the ultimate picture I derive is that the economy is expanding in part and retracting in part.
I am very concerned about the ability of the consumer to spend. The expansion of revolving credit seen in H.8 is not a good sign at all! It appears that many consumers ran out of money this spring, and I think this is showing up in retail.
When Fed Ex and UPS are looking to ramp down and cut costs somewhat, and you see these kinds of job numbers, it's time to get wary.
On the plus sign, rail is still decent, and the fact that US consumers backed off the credit so much over the last few years is very helpful. A lot of credit may juice expansions, but it tends to trigger waterfall effects when the economy weakens a bit, and we have very little relative drag there.