Brief Comment on U.S. Jobs Report
December 6, 2013
The data were better than forecast. The 203K rise in non-farm payroll jobs last month beat the market consensus by 30K and was consistent with an average increase over the past four reported months of 204K. Such a pace translates into a 1.81% annualized rate. That trend is virtually in line with annualized employment growth in both the 1980s and 1990s. It’s taken many years to get back to the old employment growth norm. The jobless rate of 7.0% was down from 7.3% in October and also better than projected. Unemployment peaked in October 2009 at 10.0% and is now at the lowest level since November 2008.
But here’s the sobering news. First, the employment/population ratio remains very low at 58.6%. Second, the level of jobs is still 1.29 million lower than its record high in December 2007. Third, if the trend in jobs growth between the ends of 1979 and 1999 had been subsequently maintained, there would now be 165.2 million workers, 28.4K more than the present number. Fourth, average average income growth remained very subdued, rising just 2.0% between November 2012 and November 2013. Fifth, a separate report on personal spending showed that the core personal consumption price deflator had edged down a tenth of a percentage point to a 12-month increase of 1.1%, and the total PCE deflator’s year-over-year pace fell by two tenths of a percentage point to 0.7%. Such was at 1.3% as recently as June-July.
Bottom line, the jobs data are good but not good enough. Tapering will start in a few months, but the fed funds rate will remain pinned for a considerable time longer.
Copyright 2013, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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