Thursday, April 26, 2018

Don't sweat the Q3 2017 job losses

 - by New Deal democrat

Yesterday the BLS issued its report on Q3 2017 Business Employment Dynamics. This has gotten some notice because, for the first time in 7 years, it showed a net loss last summer of -140,000 jobs.

As an initial matter, this is a good time to remind you that the data is the data is the data. It's not partisan. I've seen some of the same people who were touting "It's still Obama's economy" all last year (and I agree with that) now suddenly saying that the Q3 BED job losses show that "the Trump/GOP economy is tanking" No,  they don't.

The big flashing red neon sign is in this state by state map (h/t Bloomberg):

While job losses in Michigan and Ohio might not be so unexpected, for major job losses to happen in Florida sticks out in the data like a sore thumb.

While hurricanes and wildfires occur every summer, last year was a particularly bad one.  And a look at the three states most directly involved -- Florida, Texas, and California -- tells us exactly what happened. The BLS appended a note expressly stating that they did not adjust for this.

Here's a chart of the net job gains and losses over the last 5 quarters for each of the 3 affected states. The last line is the net change compared with the previous quarter:

Quarter   FL          TX       CA
Q3 2016  112.9     76.2   110.0
Q4           42.0       50.1    70.0
Q1 2017  35.9       61.0    90.3
Q2           37.8       48.9    45.3
Q3          (-133.5)   16.0    24.3
NET        (-171.3)   (-32.9) (-21.0)

The net loss of -171,300 jobs in Florida alone compared with the previous quarter exceeds the net nationwide loss of -140,000.  Add in the other two states affected by unusually severe disasters and you get a net loss of -224,200 jobs.

Does anyone seriously think the Florida economy suddenly went to hell in Q3 of last year in any cyclical manner? Of course it didn't.

So I'm not putting too much stock in this report. 

By the way, remember that initial claims shot through the roof for a month after the hurricanes:

This morning they made a new 48 year low, at 209,000. Wow!

When The End is really Near, I'll tell you. If my systems are right, hopefully about a year in advance. If the economy is left to its own devices, The End is not Near now.