Daniel Indiviglio at The Atlantic:
The job market has been stagnant so far this summer. Although the U.S. economy lost 131,000 net jobs in July, that was due in large part to a loss of 143,000 temporary government Census workers. The net number was worse than the 60,000 lost economists expected. Meanwhile, the unemployment rate was unchanged in July at 9.5%, reports the Bureau of Labor Statistics. The number of unemployed Americans also remained at 14.6 million. Today’s report shows just how week the job market has been over the past few months, with a significant downward revision to June’s jobs number.
For the current employment recession, employment peaked in December 2007, and this recession is by far the worst recession since WWII in percentage terms, and 2nd worst in terms of the unemployment rate (only early ’80s recession with a peak of 10.8 percent was worse).
This is a very weak report, especially considering the downward revision to June. The participation rate declined again, and that is why the unemployment rate was steady – and that is bad news. I’ll have much more soon .
Many observers are looking for “glimmers of hope” in the report and pointing to private sector job growth of 71,000, which is higher than in previous months and thus evidence of acceleration in job growth, to an increase in hours worked, an increase in wages, and a fall in workers involuntarily working part-time.
However, as noted in the “glimmers of hope” link, and as I have noted many, many times, we need 100,000-150,000 jobs per month just to keep up with population growth, and even more than that if we want to make up for past losses. That is, we need faster growth than 100,000-150,000 per month if we want the economy to do more than just keep up with population growth and reemploy the millions and millions of people who are now out of work. So job growth of 71,000 still represents a declining labor market, and does nothing to offset past losses.
Philip Klein at The American Spectator:
Politically speaking, the difficulty for Democrats is that there are only two more job reports between now and the November elections, so they’re running out of time to change minds about their stewardship of the economy. And at this point, it’s increasingly unlikely that even one gangbusters report would change public attitudes — it would probably take a series of several months, or even quarters, of economic data.
Ryan Avent at Free Exchange at The Economist:
THERE is no getting around it—today is a bad day for the White House. They lose one of their top economic staffers, have the Senate reject one of their Fed nominees, and suffer a gut-wrenching employment report. Of course, the news is worse for the nation’s 14.6 million unemployed workers. In July, payroll employment fell by 131,000, while the unemployment rate held steady at 9.5%. Economists had expected a negative number in July, due to the continued decline in temporary employment associated with the decennial census. The loss of census jobs amounted to a hit to payrolls of 143,000. But the forecast was for other employment categories to perform better.
The real bright spot in the report is the increase in private payroll employment, of 71,000 jobs. Private payrolls have risen in every month of 2010, adding over 600,000 workers all told. Growth there undercuts the argument that economic uncertainty is proving an obstacle to private hiring. But that private payroll growth was largely offset by the loss of 48,000 jobs at the state and local government level. One recent estimate indicated that state and local governments could shed 500,000 workers over the next two years. Democratic leadership has sought to reduce the negative impact of these cuts with aid to states, but has faced stiff opposition. A $26 billion state aid bill passed out of the Senate yesterday only made it through the body after tweaks were made to pay for the cost of the bill—by cutting funding for food stamps.
There were other positive signs in the report. Hours worked and earnings ticked upward for the month. Both the mean and median duration of unemployment declined, as did the number of long-term unemployed. Of course, some of that shift is likely due to the exit of long-term unemployed workers from the labour force. The labour force shrank by 181,000 workers in July, and both the participation rate and the employment-population ratio edged down slightly. And meanwhile, the June payroll figure was revised from a loss of 125,000 jobs to a decline of 221,000 jobs.
This isn’t a Recovery Summer. It’s a slow slide, certainly better than the rapid disintegration of 2009, but we haven’t replaced those jobs yet, either. Job losses are cumulative. In a normal recovery with proper economic policies of lower barriers to investor entry, we would see a rapid replacement of jobs in this time frame that would take us back to somewhere around 80% of what was lost, with the remaining 20% being the most difficult to recover. We have not yet even begun that ascent. I’ll update this with a couple of slides later this morning to demonstrate the problem.
Expect the White House to hail the best private-sector job creation numbers since March, but economists won’t get fooled. We’re still descending, and will until we get job creation solidly above 100,000 new additions per month.