Don't let the right wing apologists fool you; this is one BAD economy for the average American:
America’s once mighty job machine is struggling as never before. The combination of subpar job creation and real wage stagnation puts extraordinary pressure on the income-generating capacity of the world’s most aggressive consumer. Of course, you’d never know that from the spin that followed the release of the latest monthly labor market surveys of the US Bureau of Labor Statistics. From Washington to Wall Street, the verdict was nearly unanimous -- all is fine on the US labor market front. Nothing could be further from the truth.So this "recovery" has been anemic by any measure. And the bills are coming due. For the first time in six years, consumer spending declined in November and December, which could mean that wages are going up, or people are running out of ready credit.
The overall pace of job creation in December (108,000) was half that expected by the market consensus (200,000). Consolation for this miss was taken from a big upward revision to the original job count in November (from 215,000 to 305,000). As if that’s all that mattered. Never mind that the two largest contributors to this upward revision were temporary hiring agencies and the so-called leisure industry (mainly restaurants); the basic point is that the underlying hiring trend is decidedly on the wane. You can’t tell that by fixating on the vigor of average gains in November and December -- they were hugely distorted by a post-Katrina rebound effect. The four-month average, which covers the storm-related disruption -- which held employment growth to a mere 21,000 in September and October -- and its subsequent rebound, was a mere 114,000. That’s the only accurate way to measure the underlying trend in job growth during this storm-distorted period, and it represents a decided shortfall from the more robust pace of job creation that had prevailed over the preceding 18 months (197,000 per month).
But context is key in understanding that subpar job creation is now the norm in America. The US economy has just completed the 49th month of an expansion that began in November 2001. At this juncture in the four long cycles of the past -- the ones that began in 1961, 1976, 1982, and 1991 -- job growth was cruising ahead by about 210,000 per month. Moreover, in those earlier cycles both the economy and labor market were considerably smaller than is the case today. Adjusting for the scale effect, the 210,000 cyclical norm from earlier cycles would translate into about 325,000 per month in today’s economy. On that basis, the latest four-month average of 114,000 on the hiring front looks all the more pathetic -- literally 35% of the pace that would be expected at this phase in a normal business cycle expansion. Of course, this has never been a normal business cycle expansion insofar as hiring has been concerned. For the first two years, it was the infamous “jobless recovery.” While the pace of hiring has picked up somewhat in the subsequent two years, growth has been chronically weak when compared with any expansion of the past 40 years. Had hiring followed the trajectory of the previous four expansions, our calculations suggest about 11 million more workers would have been added to nonfarm payrolls by now.
You decide.
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