- by New Deal democrat
While the NBER has declared that the recession ended in April 2020, neither the King nor Queen of Coincident Indicators, industrial production and jobs, have recovered to their pre-pandemic levels. The former is only off by -0.2%, but the latter - which is most important to ordinary Americans - as of this morning’s report is still -3.5% below its level in February 2020.
While this morning’s report came in well short of expectations, with the big positive revision to last month’s blockbuster report, which I’ll get into more detail about below, the 6 month average of monthly gains is still over 600,000.
Here’s my synopsis of the report:
Leading employment indicators of a slowdown or recession
These are leading sectors for the economy overall, and will help us gauge how strong the rebound from the pandemic will be. These were mixed, with a preponderance negative:
Wages of non-managerial workers
Aggregate hours and wages:
Other significant data:
As frequently happens, the messages of the Establishment report, which asks businesses about hiring, and the Household report, which asks individuals about being employed, were quite different. Despite the relative weakness in the former, overall this month’s jobs report was quite positive, as it continues existing good trends this year.
To begin with, July’s excellent 943,000 gain was revised higher to 1,053,000. Combined, July and August averaged 644,000/month, which is right in line with the average gains this year. In short, the strong trend in job gains is intact. Further, as was anticipated, this month’s report was distorted to the downside by losses in education. Seasonally August is when educators get rehired, but this year much of the gains were in June and July - so the seasonal adjustments paid us back to the downside in August.
The issue with labor and hospitality is murkier. The stalling out in gains, and losses in food and drink establishments, might also reflect distortions of seasonality this year, or they might reflect impacts from Delta, or some of each.
Meanwhile the 509,000 gain in jobs from the Household report, together with a slight increase in the labor force, caused all of the unemployment-related indicators to continue to decline. The unemployment rate is where it was in 2015, and the broader underemployment rate where it was in 2017, as is the even broader number of those outside of the labor force but who want a job. This is not bad at all.
Finally, wages for ordinary workers continue to increase at a strong rate. The issue is whether those gains will continue to be gobbled up by supply-bottleneck induced inflation.
Bottom line: some weak points, but the very good underlying trend continues.