Jobs Data Perspective

In this economy, this is as close as it gets to “good news.”

America lost 247,000 jobs in July, the Labor Department announced today. That blows all popular expectations out of the water: ADP’s guess on Wednesday of 371,000 lost jobs didn’t come close, and even the Street’s expectations of 325,000 was beaten handily. At an official 247,000 jobs, it’s the best monthly report since August 2008.

According to the government, the unemployment rate actually fell, from 9.5% to 9.4%. The Labor Department revised June and May job losses for the better, taking out roughly 43,000 job losses previously reported. The average hourly workweek inched up from a record low 33 hours in June to 33.1 hours. The number of workers seeking full-time employment but regretfully working part-time fell 2%. And thank heavens: The government is adding new jobs at a slower pace.

But of course, it’s all a matter of perspective:

  • July was the 19th month in a row of net job losses
  • Since the start of 2008, 6.7 million jobs have been lost
  • A record 5 million people have been unemployed for more than 6 months
  • The unemployed have been jobless for an average 25.1 weeks, a 61-year high
  • And at the risk of belaboring the obvious, a quarter of a million lost jobs in one month is hardly worth celebrating.

Still, looking back, there’s a clear trend over the last six months — the job market has stopped plunging into the abyss. “The recovery is on!” we heard a CNBC anchor rejoice.

But we want to look WAY back today. Since everything in this Great Rescission is so akin to the Great Depression, how do the unemployment rates compare?


Of course, this argument has a million more layers that we couldn’t possibly cover in our humble 5 Min.… like the method unemployment rates are calculated by now and then, the differences between the two downturns, etc. But you get the idea — the same way this is no garden-variety recession, we don’t expect a quick-and-easy recovery.

“Our base case is that the U.S. economy is exiting recession and entering a shallow, tentative recovery that is primarily government led,” writes the steward of The Richebacher Letter, Rob Parenteau. “That is not the kind of sound growth that Dr. Richebächer favored, but if private investment is not quite ready to ramp up, we will take public infrastructure investment in the interim, with the hope that will have spillover effects on private businesses. It will take time to repair private-sector balance sheets, and this will weigh on growth prospects well into 2011.

“In the meantime, as with the March-June relief rally, when investors recognized the end of the free-fall phase, we anticipate the perception that the U.S. recession is over will spread across investors over the next two-three months, and another run-up in risky assets and inflation hedges (no doubt at the expense of less-risky asset classes like Treasuries) lies ahead.

“Ultimately, though, the world needs to find a new global growth model, and only the barest of outlines remains visible at this point. Our hope is that the next global growth model will be based on the principles that guided Dr. Richebächer’s understanding of sound growth, real wealth, profitability and sound credit.”

The Daily Reckoning