Twenty Eight Million Unemployed or Underemployed, Stagnating Real Wages, Recovery without Hiring, Youth and Middle-Aged Unemployment, United States International Trade, Global Financial and Economic Risk, World Economic Slowdown and Global Recession Risk
Carlos M. Pelaez
© Carlos M. Pelaez, 2009, 2010, 2011, 2012, 2013
Executive Summary
I Twenty Eight Million Unemployed or Underemployed
IIA1 Summary of the Employment Situation
IIA2 Number of People in Job Stress
IIA3 Long-term and Cyclical Comparison of Employment
IIA4 Job Creation
IB Stagnating Real Wages
IC Recovery without Hiring
IC1 Hiring Collapse
IC2 Labor Underutilization
IC3 Ten Million Fewer Full-time Job
IC4 Youth and Middle-Age Unemployment
II United States International Trade
III World Financial Turbulence
IIIA Financial Risks
IIIE Appendix Euro Zone Survival Risk
IIIF Appendix on Sovereign Bond Valuation
IV Global Inflation
V World Economic Slowdown
VA United States
VB Japan
VC China
VD Euro Area
VE Germany
VF France
VG Italy
VH United Kingdom
VI Valuation of Risk Financial Assets
VII Economic Indicators
VIII Interest Rates
IX Conclusion
References
Appendixes
Appendix I The Great Inflation
IIIB Appendix on Safe Haven Currencies
IIIC Appendix on Fiscal Compact
IIID Appendix on European Central Bank Large Scale Lender of Last Resort
IIIG Appendix on Deficit Financing of Growth and the Debt Crisis
IIIGA Monetary Policy with Deficit Financing of Economic Growth
IIIGB Adjustment during the Debt Crisis of the 1980s
Executive Summary
Contents of Executive Summary
ESI Increasing Interest Rate Risk, Tapering Quantitative Easing, Duration Dumping, Steepening Yield Curve and Global Financial and Economic Risk
ESII Twenty Million Unemployed or Underemployed
ESIII Faltering Job Creation
ESIV Stagnating Real Wages
ESV Recovery without Hiring
ESVI Ten Million Fewer Full-time Jobs
ESVII Youth Unemployment and Middle-Aged Unemployment
ESI Increasing Interest Rate Risk, Tapering Quantitative Easing, Duration Dumping, Steepening Yield Curve and Global Financial and Economic Risk. The International Monetary Fund (IMF) provides an international safety net for prevention and resolution of international financial crises. The IMF’s Financial Sector Assessment Program (FSAP) provides analysis of the economic and financial sectors of countries (see Pelaez and Pelaez, International Financial Architecture (2005), 101-62, Globalization and the State, Vol. II (2008), 114-23). Relating economic and financial sectors is a challenging task for both theory and measurement. The International Monetary Fund (IMF) provides an international safety net for prevention and resolution of international financial crises. The IMF’s Financial Sector Assessment Program (FSAP) provides analysis of the economic and financial sectors of countries (see Pelaez and Pelaez, International Financial Architecture (2005), 101-62, Globalization and the State, Vol. II (2008), 114-23). Relating economic and financial sectors is a challenging task for both theory and measurement. The IMF (2013WEOOct) provides surveillance of the world economy with its Global Economic Outlook (WEO) (http://www.imf.org/external/pubs/ft/weo/2013/02/), of the world financial system with its Global Financial Stability Report (GFSR) (IMF 2013GFSROct) (http://www.imf.org/External/Pubs/FT/GFSR/2013/02/index.htm) and of fiscal affairs with the Fiscal Monitor (IMF 2013FMOct) (http://www.imf.org/external/pubs/ft/fm/2013/02/fmindex.htm). There appears to be a moment of transition in global economic and financial variables that may prove of difficult analysis and measurement. It is useful to consider a summary of global economic and financial risks, which are analyzed in detail in the comments of this blog in Section VI Valuation of Risk Financial Assets, Table VI-4.
Economic risks include the following:
- China’s Economic Growth. China is lowering its growth target to 7.5 percent per year. China’s GDP growth decelerated significantly from annual equivalent 10.4 percent in IIQ2011 to 7.4 percent in IVQ2011 and 6.2 percent in IQ2012, rebounding to 8.7 percent in IIQ2012, 8.2 percent in IIIQ2012 and 7.8 percent in IVQ2012. Annual equivalent growth in IQ2013 fell to 6.6 percent and to 7.0 percent in IIQ2013 (See Subsection VC and earlier at http://cmpassocregulationblog.blogspot.com/2013/07/tapering-quantitative-easing-policy-and_7005.html and earlier at http://cmpassocregulationblog.blogspot.com/2013/01/recovery-without-hiring-world-inflation.html and earlier at http://cmpassocregulationblog.blogspot.com/2012/10/world-inflation-waves-stagnating-united_21.html).
- United States Economic Growth, Labor Markets and Budget/Debt Quagmire. The US is growing slowly with 28.3 million in job stress, fewer 10 million full-time jobs, high youth unemployment, historically low hiring and declining/stagnating real wages.
- Economic Growth and Labor Markets in Advanced Economies. Advanced economies are growing slowly. There is still high unemployment in advanced economies.
- World Inflation Waves. Inflation continues in repetitive waves globally (Section I and earlier http://cmpassocregulationblog.blogspot.com/2013/09/duration-dumping-and-peaking-valuations.html).
A list of financial uncertainties includes:
- Euro Area Survival Risk. The resilience of the euro to fiscal and financial doubts on larger member countries is still an unknown risk.
- Foreign Exchange Wars. Exchange rate struggles continue as zero interest rates in advanced economies induce devaluation of their currencies.
- Valuation of Risk Financial Assets. Valuations of risk financial assets have reached extremely high levels in markets with lower volumes.
- Duration Trap of the Zero Bound. The yield of the US 10-year Treasury rose from 2.031 percent on Mar 9, 2012, to 2.294 percent on Mar 16, 2012. Considering a 10-year Treasury with coupon of 2.625 percent and maturity in exactly 10 years, the price would fall from 105.3512 corresponding to yield of 2.031 percent to 102.9428 corresponding to yield of 2.294 percent, for loss in a week of 2.3 percent but far more in a position with leverage of 10:1. Min Zeng, writing on “Treasurys fall, ending brutal quarter,” published on Mar 30, 2012, in the Wall Street Journal (http://professional.wsj.com/article/SB10001424052702303816504577313400029412564.html?mod=WSJ_hps_sections_markets), informs that Treasury bonds maturing in more than 20 years lost 5.52 percent in the first quarter of 2012.
- Credibility and Commitment of Central Bank Policy. There is a credibility issue of the commitment of monetary policy (Sargent and Silber 2012Mar20).
- Carry Trades. Commodity prices driven by zero interest rates have resumed their increasing path with fluctuations caused by intermittent risk aversion
Professionals use a variety of techniques in measuring interest rate risk (Fabozzi, Buestow and Johnson, 2006, Chapter Nine, 183-226):
- Full valuation approach in which securities and portfolios are shocked by 50, 100, 200 and 300 basis points to measure their impact on asset values
- Stress tests requiring more complex analysis and translation of possible events with high impact even if with low probability of occurrence into effects on actual positions and capital
- Value at Risk (VaR) analysis of maximum losses that are likely in a time horizon
- Duration and convexity that are short-hand convenient measurement of changes in prices resulting from changes in yield captured by duration and convexity
- Yield volatility
Analysis of these methods is in Pelaez and Pelaez (International Financial Architecture (2005), 101-162) and Pelaez and Pelaez, Globalization and the States, Vol. (I) (2008a), 78-100). Frederick R. Macaulay (1938) introduced the concept of duration in contrast with maturity for analyzing bonds. Duration is the sensitivity of bond prices to changes in yields. In economic jargon, duration is the yield elasticity of bond price to changes in yield, or the percentage change in price after a percentage change in yield, typically expressed as the change in price resulting from change of 100 basis points in yield. The mathematical formula is the negative of the yield elasticity of the bond price or –[dB/d(1+y)]((1+y)/B), where d is the derivative operator of calculus, B the bond price, y the yield and the elasticity does not have dimension (Hallerbach 2001). The duration trap of unconventional monetary policy is that duration is higher the lower the coupon and higher the lower the yield, other things being constant. Coupons and yields are historically low because of unconventional monetary policy. Duration dumping during a rate increase may trigger the same crossfire selling of high duration positions that magnified the credit crisis. Traders reduced positions because capital losses in one segment, such as mortgage-backed securities, triggered haircuts and margin increases that reduced capital available for positioning in all segments, causing fire sales in multiple segments (Brunnermeier and Pedersen 2009; see Pelaez and Pelaez, Regulation of Banks and Finance (2008b), 217-24). Financial markets are currently experiencing fear of duration resulting from the debate within and outside the Fed on tapering quantitative easing. Table VIII-2 provides the yield curve of Treasury securities on Oct 25, 2013, Sep 5, 2013, May 1, 2013, Oct 25, 2012 and Oct 25, 2006. There is ongoing steepening of the yield curve for longer maturities, which are also the ones with highest duration. The 10-year yield increased from 1.45 percent on Jul 26, 2012 to 2.98 percent on Sep 5, 2013, as measured by the United States Treasury. Assume that a bond with maturity in 10 years were issued on Sep 5, 2013 at par or price of 100 with coupon of 1.45 percent. The price of that bond would be 86.8530 with instantaneous increase of the yield to 2.98 percent for loss of 13.1 percent and far more with leverage. Assume that the yield of a bond with exactly ten years to maturity and coupon of 2.53 percent as occurred on Oct 25, 2013 would jump instantaneously from 2.60 percent on Oct 25, 2013 to 4.78 percent as occurred on Oct 25, 2006 when the economy was closer to full employment. The price of the hypothetical bond issued with coupon of 2.53 percent would drop from 100 to 82.2786 after an instantaneous increase of the yield to 4.78 percent. The price loss would be 17.7 percent. Losses absorb capital available for positioning, triggering crossfire sales in multiple asset classes (Brunnermeier and Pedersen 2009). What is the path of adjustment of zero interest rates on fed funds and artificially low bond yields? There is no painless exit from unconventional monetary policy. Chris Dieterich, writing on “Bond investors turn to cash,” on Jul 25, 2013, published in the Wall Street Journal (http://online.wsj.com/article/SB10001424127887323971204578625900935618178.html), uses data of the Investment Company Institute (http://www.ici.org/) in showing withdrawals of $43 billion in taxable mutual funds in Jun, which is the largest in history, with flows into cash investments such as $8.5 billion in the week of Jul 17 into money-market funds.
Table VIII-2, United States, Treasury Yields
| 10/25/13 | 9/05/13 | 5/01/13 | 10/25/12 | 10/25/06 | |
| 1 M | 0.02 | 0.03 | 0.03 | 0.13 | 5.14 |
| 3 M | 0.04 | 0.02 | 0.06 | 0.11 | 5.12 |
| 6 M | 0.08 | 0.06 | 0.08 | 0.16 | 5.18 |
| 1 Y | 0.11 | 0.16 | 0.11 | 0.19 | 5.08 |
| 2 Y | 0.32 | 0.52 | 0.20 | 0.31 | 4.88 |
| 3 Y | 0.59 | 0.97 | 0.30 | 0.43 | 4.79 |
| 5 Y | 1.30 | 1.85 | 0.65 | 0.82 | 4.75 |
| 7 Y | 1.90 | 2.45 | 1.07 | 1.28 | 4.75 |
| 10 Y | 2.53 | 2.98 | 1.66 | 1.86 | 4.78 |
| 20 Y | 3.30 | 3.64 | 2.44 | 2.60 | 4.98 |
| 30 Y | 3.60 | 3.88 | 2.83 | 2.98 | 4.89 |
Source: United States Treasury
Interest rate risk is increasing in the US. Chart VI-13 of the Board of Governors provides the conventional mortgage rate for a fixed-rate 30-year mortgage. The rate stood at 5.87 percent on Jan 8, 2004, increasing to 6.79 percent on Jul 6, 2006. The rate bottomed at 3.35 percent on May 2, 2013. Fear of duration risk in longer maturities such as mortgage-backed securities caused continuing increases in the conventional mortgage rate that rose to 4.51 percent on Jul 11, 2013, 4.58 percent on Aug 22, 2013 and 4.13 percent on Oct 24, 2013, which is the last data point in Chart VI-13.
Chart VI-13, US, Conventional Mortgage Rate, Jan 8, 2004 to Oct 24, 2013
Source: Board of Governors of the Federal Reserve System
http://www.federalreserve.gov/releases/h15/update/
The major reason and channel of transmission of unconventional monetary policy is through expectations of inflation. Fisher (1930) provided theoretical and historical relation of interest rates and inflation. Let in be the nominal interest rate, ir the real or inflation-adjusted interest rate and πe the expectation of inflation in the time term of the interest rate, which are all expressed as proportions. The following expression provides the relation of real and nominal interest rates and the expectation of inflation:
(1 + ir) = (1 + in)/(1 + πe) (1)
That is, the real interest rate equals the nominal interest rate discounted by the expectation of inflation in time term of the interest rate. Fisher (1933) analyzed the devastating effect of deflation on debts. Nominal debt contracts remained at original principal interest but net worth and income of debtors contracted during deflation. Real interest rates increase during declining inflation. For example, if the interest rate is 3 percent and prices decline 0.2 percent, equation (1) calculates the real interest rate as:
(1 +0.03)/(1 – 0.02) = 1.03/(0.998) = 1.032
That is, the real rate of interest is (1.032 – 1) 100 or 3.2 percent. If inflation were 2 percent, the real rate of interest would be 0.98 percent, or about 1.0 percent {[(1.03/1.02) -1]100 = 0.98%}.
The yield of the one-year Treasury security was quoted in the Wall Street Journal at 0.114 percent on Fri May 17, 2013 (http://online.wsj.com/mdc/page/marketsdata.html?mod=WSJ_topnav_marketdata_main). The expected rate of inflation πe in the next twelve months is not observed. Assume that it would be equal to the rate of inflation in the past twelve months estimated by the Bureau of Economic Analysis (BLS) at 1.1 percent (http://www.bls.gov/cpi/). The real rate of interest would be obtained as follows:
(1 + 0.00114)/(1 + 0.011) = (1 + rr) = 0.9902
That is, ir is equal to 1 – 0.9902 or minus 0.98 percent. Investing in a one-year Treasury security results in a loss of 0.98 percent relative to inflation. The objective of unconventional monetary policy of zero interest rates is to induce consumption and investment because of the loss to inflation of riskless financial assets. Policy would be truly irresponsible if it intended to increase inflationary expectations or πe. The result could be the same rate of unemployment with higher inflation (Kydland and Prescott 1977).
Current focus is on tapering quantitative easing by the Federal Open Market Committee (FOMC). There is sharp distinction between the two measures of unconventional monetary policy: (1) fixing of the overnight rate of fed funds at 0 to ¼ percent; and (2) outright purchase of Treasury and agency securities and mortgage-backed securities for the balance sheet of the Federal Reserve. Market are overreacting to the so-called “paring” of outright purchases of $85 billion of securities per month for the balance sheet of the Fed. What is truly important is the fixing of the overnight fed funds at 0 to ¼ percent for which there is no end in sight as evident in the FOMC statement for Sep 18, 2013 (http://www.federalreserve.gov/newsevents/press/monetary/20130918a.htm):
“To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee's 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored” (emphasis added).
There is a critical phrase in the statement of Sep 19, 2013 (http://www.federalreserve.gov/newsevents/press/monetary/20130918a.htm): “but mortgage rates have risen further.” Did the increase of mortgage rates influence the decision of the FOMC not to taper? Is FOMC “communication” and “guidance” successful?
In delivering the biannual report on monetary policy (Board of Governors 2013Jul17), Chairman Bernanke (2013Jul17) advised Congress that:
“Instead, we are providing additional policy accommodation through two distinct yet complementary policy tools. The first tool is expanding the Federal Reserve's portfolio of longer-term Treasury securities and agency mortgage-backed securities (MBS); we are currently purchasing $40 billion per month in agency MBS and $45 billion per month in Treasuries. We are using asset purchases and the resulting expansion of the Federal Reserve's balance sheet primarily to increase the near-term momentum of the economy, with the specific goal of achieving a substantial improvement in the outlook for the labor market in a context of price stability. We have made some progress toward this goal, and, with inflation subdued, we intend to continue our purchases until a substantial improvement in the labor market outlook has been realized. We are relying on near-zero short-term interest rates, together with our forward guidance that rates will continue to be exceptionally low--our second tool--to help maintain a high degree of monetary accommodation for an extended period after asset purchases end, even as the economic recovery strengthens and unemployment declines toward more-normal levels. In appropriate combination, these two tools can provide the high level of policy accommodation needed to promote a stronger economic recovery with price stability.
The Committee's decisions regarding the asset purchase program (and the overall stance of monetary policy) depend on our assessment of the economic outlook and of the cumulative progress toward our objectives. Of course, economic forecasts must be revised when new information arrives and are thus necessarily provisional.”
Friedman (1953) argues there are three lags in effects of monetary policy: (1) between the need for action and recognition of the need; (2) the recognition of the need and taking of actions; and (3) taking of action and actual effects. Friedman (1953) finds that the combination of these lags with insufficient knowledge of the current and future behavior of the economy causes discretionary economic policy to increase instability of the economy or standard deviations of real income σy and prices σp. Policy attempts to circumvent the lags by policy impulses based on forecasts. We are all naïve about forecasting. Data are available with lags and revised to maintain high standards of estimation. Policy simulation models estimate economic relations with structures prevailing before simulations of policy impulses such that parameters change as discovered by Lucas (1977). Economic agents adjust their behavior in ways that cause opposite results from those intended by optimal control policy as discovered by Kydland and Prescott (1977). Advance guidance attempts to circumvent expectations by economic agents that could reverse policy impulses but is of dubious effectiveness. There is strong case for using rules instead of discretionary authorities in monetary policy (http://cmpassocregulationblog.blogspot.com/search?q=rules+versus+authorities).
The key policy is maintaining fed funds rate between 0 and ¼ percent. An increase in fed funds rates could cause flight out of risk financial markets worldwide. There is no exit from this policy without major financial market repercussions. Indefinite financial repression induces carry trades with high leverage, risks and illiquidity.
A competing event is the high level of valuations of risk financial assets (http://cmpassocregulationblog.blogspot.com/2013/01/peaking-valuation-of-risk-financial.html). Matt Jarzemsky, writing on Dow industrials set record,” on Mar 5, 2013, published in the Wall Street Journal (http://professional.wsj.com/article/SB10001424127887324156204578275560657416332.html), analyzes that the DJIA broke the closing high of 14,164.53 set on Oct 9, 2007, and subsequently also broke the intraday high of 14,198.10 reached on Oct 11, 2007. The DJIA closed at 15,570.28 on Fri Oct 25, 2013, which is higher by 9.9 percent than the value of 14,164.53 reached on Oct 9, 2007 and higher by 9.7 percent than the value of 14,198.10 reached on Oct 11, 2007. Values of risk financial are approaching or exceeding historical highs. Jon Hilsenrath, writing on “Jobs upturn isn’t enough to satisfy Fed,” on Mar 8, 2013, published in the Wall Street Journal (http://professional.wsj.com/article/SB10001424127887324582804578348293647760204.html), finds that much stronger labor market conditions are required for the Fed to end quantitative easing. Unconventional monetary policy with zero interest rates and quantitative easing is quite difficult to unwind because of the adverse effects of raising interest rates on valuations of risk financial assets and home prices, including the very own valuation of the securities held outright in the Fed balance sheet. Gradual unwinding of 1 percent fed funds rates from Jun 2003 to Jun 2004 by seventeen consecutive increases of 25 percentage points from Jun 2004 to Jun 2006 to reach 5.25 percent caused default of subprime mortgages and adjustable-rate mortgages linked to the overnight fed funds rate. The zero interest rate has penalized liquidity and increased risks by inducing carry trades from zero interest rates to speculative positions in risk financial assets. There is no exit from zero interest rates without provoking another financial crash.
The carry trade from zero interest rates to leveraged positions in risk financial assets had proved strongest for commodity exposures but US equities have regained leadership. The DJIA has increased 60.7 percent since the trough of the sovereign debt crisis in Europe on Jul 2, 2010 to Oct 25, 2013; S&P 500 has gained 72.1 percent and DAX 58.5 percent. Before the current round of risk aversion, almost all assets in the column “∆% Trough to 10/25/13” had double digit gains relative to the trough around Jul 2, 2010 followed by negative performance but now some valuations of equity indexes show varying behavior. China’s Shanghai Composite is 10.5 percent below the trough. Japan’s Nikkei Average is 59.7 percent above the trough. DJ Asia Pacific TSM is 26.6 percent above the trough. Dow Global is 41.8 percent above the trough. STOXX 50 of 50 blue-chip European equities (http://www.stoxx.com/indices/index_information.html?symbol=sx5E) is 24.3 percent above the trough. NYSE Financial Index is 46.7 percent above the trough. DJ UBS Commodities is 2.8 percent above the trough. DAX index of German equities (http://www.bloomberg.com/quote/DAX:IND) is 58.5 percent above the trough. Japan’s Nikkei Average is 59.7 percent above the trough on Aug 31, 2010 and 23.7 percent above the peak on Apr 5, 2010. The Nikkei Average closed at 14,088.19 on Fri Oct 25, 2013 (http://professional.wsj.com/mdc/public/page/marketsdata.html?mod=WSJ_PRO_hps_marketdata), which is 37.4 percent higher than 10,254.43 on Mar 11, 2011, on the date of the Tōhoku or Great East Japan Earthquake/tsunami. Global risk aversion erased the earlier gains of the Nikkei. The dollar depreciated by 15.8 percent relative to the euro and even higher before the new bout of sovereign risk issues in Europe. The column “∆% week to 10/25/13” in Table VI-4 shows decrease of 2.8 percent in the week for China’s Shanghai Composite. DJ Asia Pacific decreased 1.3 percent. NYSE Financial decreased 0.8 percent in the week. DJ UBS Commodities decreased 0.9 percent. Dow Global increased 0.2 percent in the week of Oct 25, 2013. The DJIA increased 1.1 percent and S&P 500 increased 0.9 percent. DAX of Germany increased 1.4 percent. STOXX 50 increased 0.7 percent. The USD depreciated 0.9 percent. There are still high uncertainties on European sovereign risks and banking soundness, US and world growth slowdown and China’s growth tradeoffs. Sovereign problems in the “periphery” of Europe and fears of slower growth in Asia and the US cause risk aversion with trading caution instead of more aggressive risk exposures. There is a fundamental change in Table VI-4 from the relatively upward trend with oscillations since the sovereign risk event of Apr-Jul 2010. Performance is best assessed in the column “∆% Peak to 10/25/13” that provides the percentage change from the peak in Apr 2010 before the sovereign risk event to Oct 25, 2013. Most risk financial assets had gained not only relative to the trough as shown in column “∆% Trough to 10/25/13” but also relative to the peak in column “∆% Peak to 10/25/13.” There are now several equity indexes above the peak in Table VI-4: DJIA 39.0 percent, S&P 500 44.6 percent, DAX 41.9 percent, Dow Global 15.7 percent, DJ Asia Pacific 10.8 percent, NYSE Financial Index (http://www.nyse.com/about/listed/nykid.shtml) 16.9 percent, Nikkei Average 23.7 percent and STOXX 50 5.3 percent. There is only one equity index below the peak: Shanghai Composite by 32.6 percent. DJ UBS Commodities Index is now 12.1 percent below the peak. The US dollar strengthened 8.8 percent relative to the peak. The factors of risk aversion have adversely affected the performance of risk financial assets. The performance relative to the peak in Apr 2010 is more important than the performance relative to the trough around early Jul 2010 because improvement could signal that conditions have returned to normal levels before European sovereign doubts in Apr 2010. Alexandra Scaggs, writing on “Tepid profits, roaring stocks,” on May 16, 2013, published in the Wall Street Journal (http://online.wsj.com/article/SB10001424127887323398204578487460105747412.html), analyzes stabilization of earnings growth: 70 percent of 458 reporting companies in the S&P 500 stock index reported earnings above forecasts but sales fell 0.2 percent relative to forecasts of increase of 0.5 percent. Paul Vigna, writing on “Earnings are a margin story but for how long,” on May 17, 2013, published in the Wall Street Journal (http://blogs.wsj.com/moneybeat/2013/05/17/earnings-are-a-margin-story-but-for-how-long/), analyzes that corporate profits increase with stagnating sales while companies manage costs tightly. More than 90 percent of S&P components reported moderate increase of earnings of 3.7 percent in IQ2013 relative to IQ2012 with decline of sales of 0.2 percent. Earnings and sales have been in declining trend. In IVQ2009, growth of earnings reached 104 percent and sales jumped 13 percent. Net margins reached 8.92 percent in IQ2013, which is almost the same at 8.95 percent in IIIQ2006. Operating margins are 9.58 percent. There is concern by market participants that reversion of margins to the mean could exert pressure on earnings unless there is more accelerated growth of sales. Vigna (op. cit.) finds sales growth limited by weak economic growth. Kate Linebaugh, writing on “Falling revenue dings stocks,” on Oct 20, 2012, published in the Wall Street Journal (http://professional.wsj.com/article/SB10000872396390444592704578066933466076070.html?mod=WSJPRO_hpp_LEFTTopStories), identifies a key financial vulnerability: falling revenues across markets for United States reporting companies. Global economic slowdown is reducing corporate sales and squeezing corporate strategies. Linebaugh quotes data from Thomson Reuters that 100 companies of the S&P 500 index have reported declining revenue only 1 percent higher in Jun-Sep 2012 relative to Jun-Sep 2011 but about 60 percent of the companies are reporting lower sales than expected by analysts with expectation that revenue for the S&P 500 will be lower in Jun-Sep 2012 for the entities represented in the index. Results of US companies are likely repeated worldwide. Future company cash flows derive from investment projects. In IQ1980, gross private domestic investment in the US was $951.6 billion of 2009 dollars, growing to $1,143.0 billion in IVQ1986 or 20.1 percent. Real gross private domestic investment in the US decreased 3.1 percent from $2,605.2 billion of 2009 dollars in IVQ2007 to $2,524.9 billion in IIQ2013. Real private fixed investment fell 4.9 percent from $2,586.3 billion of 2009 dollars in IVQ2007 to $2,458.4 billion in IIQ2013. Growth of real private investment in is mediocre for all but four quarters from IIQ2011 to IQ2012 (Section I and earlier http://cmpassocregulationblog.blogspot.com/2013/09/increasing-interest-rate-risk.html). The investment decision of United States corporations has been fractured in the current economic cycle in preference of cash. Corporate profits with IVA and CCA fell $26.6 billion in IQ2013 after increasing $34.9 billion in IVQ2012 and $13.9 billion in IIIQ2012. Corporate profits with IVA and CCA rebounded with $66.8 billion in IIQ2013. Profits after tax with IVA and CCA fell $1.7 billion in IQ2013 after increasing $40.8 billion in IVQ2012 and $4.5 billion in IIIQ2012. In IIQ2013, profits after tax with IVA and CCA increased $56.9 billion. Anticipation of higher taxes in the “fiscal cliff” episode caused increase of $120.9 billion in net dividends in IVQ2012 followed with adjustment in the form of decrease of net dividends by $103.8 billion in IQ2013, rebounding with $273.5 billion in IIQ2013. There is similar decrease of $80.1 billion in undistributed profits with IVA and CCA in IVQ2012 followed by increase of $102.1 billion in IQ2013 and decline of $216.6 billion in IIQ2013. Undistributed profits of US corporations swelled 263.4 percent from $107.7 billion IQ2007 to $391.4 billion in IIQ2013 and changed signs from minus $55.9 billion in billion in IVQ2007 (Section IA2). In IQ2013, corporate profits with inventory valuation and capital consumption adjustment fell $26.6 billion relative to IVQ2012, from $2047.2 billion to $2020.6 billion at the quarterly rate of minus 1.3 percent. In IIQ2013, corporate profits with IVA and CCA increased $66.8 billion from $2020.6 billion in IQ2013 to $2087.4 billion at the quarterly rate of 3.3 percent (http://www.bea.gov/newsreleases/national/gdp/2013/pdf/gdp2q13_3rd.pdf). Uncertainty originating in fiscal, regulatory and monetary policy causes wide swings in expectations and decisions by the private sector with adverse effects on investment, real economic activity and employment. The investment decision of US business is fractured.
It may be quite painful to exit QE→∞ or use of the balance sheet of the central together with zero interest rates forever. The basic valuation equation that is also used in capital budgeting postulates that the value of stocks or of an investment project is given by:
Where Rτ is expected revenue in the time horizon from τ =1 to T; Cτ denotes costs; and ρ is an appropriate rate of discount. In words, the value today of a stock or investment project is the net revenue, or revenue less costs, in the investment period from τ =1 to T discounted to the present by an appropriate rate of discount. In the current weak economy, revenues have been increasing more slowly than anticipated in investment plans. An increase in interest rates would affect discount rates used in calculations of present value, resulting in frustration of investment decisions. If V represents value of the stock or investment project, as ρ → ∞, meaning that interest rates increase without bound, then V → 0, or
![clip_image002[1]](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi5IJg_Cdrnm-9hzGT8HuhgnrXaq1kb4hcdj9-zsXm1NJgt8g7l-Ucdo5UuJ2jNquzZMnXpi4-T6xubOaGPqxBYMiordOx9g3Ys-4m-JCQytJhycJ7bxVcRQDqOLLCKxwqDyuTQ1DaCA1M/s1600-h/clip_image002%25255B1%25255D%25255B2%25255D.gif "clip_image002[1]"){kind=small}
declines. Equally, decline in expected revenue from the stock or project, Rτ, causes decline in valuation. An intriguing issue is the difference in performance of valuations of risk financial assets and economic growth and employment. Paul A. Samuelson (http://www.nobelprize.org/nobel_prizes/economics/laureates/1970/samuelson-bio.html) popularized the view of the elusive relation between stock markets and economic activity in an often-quoted phrase “the stock market has predicted nine of the last five recessions.” In the presence of zero interest rates forever, valuations of risk financial assets are likely to differ from the performance of the overall economy. The interrelations of financial and economic variables prove difficult to analyze and measure.
Table VI-4, Stock Indexes, Commodities, Dollar and 10-Year Treasury
| Peak | Trough | ∆% to Trough | ∆% Peak to 10/25/ /13 | ∆% Week 10/25/13 | ∆% Trough to 10/25/ 13 | |
| DJIA | 4/26/ | 7/2/10 | -13.6 | 39.0 | 1.1 | 60.7 |
| S&P 500 | 4/23/ | 7/20/ | -16.0 | 44.6 | 0.9 | 72.1 |
| NYSE Finance | 4/15/ | 7/2/10 | -20.3 | 16.9 | -0.8 | 46.7 |
| Dow Global | 4/15/ | 7/2/10 | -18.4 | 15.7 | 0.2 | 41.8 |
| Asia Pacific | 4/15/ | 7/2/10 | -12.5 | 10.8 | -1.3 | 26.6 |
| Japan Nikkei Aver. | 4/05/ | 8/31/ | -22.5 | 23.7 | -3.3 | 59.7 |
| China Shang. | 4/15/ | 7/02 | -24.7 | -32.6 | -2.8 | -10.5 |
| STOXX 50 | 4/15/10 | 7/2/10 | -15.3 | 5.3 | 0.7 | 24.3 |
| DAX | 4/26/ | 5/25/ | -10.5 | 41.9 | 1.4 | 58.5 |
| Dollar | 11/25 2009 | 6/7 | 21.2 | 8.8 | -0.9 | -15.8 |
| DJ UBS Comm. | 1/6/ | 7/2/10 | -14.5 | -12.1 | -0.9 | 2.8 |
| 10-Year T Note | 4/5/ | 4/6/10 | 3.986 | 2.784 | 2.507 |
T: trough; Dollar: positive sign appreciation relative to euro (less dollars paid per euro), negative sign depreciation relative to euro (more dollars paid per euro)
Source: http://professional.wsj.com/mdc/page/marketsdata.html?mod=WSJ_hps_marketdata
ESII Twenty Million Unemployed or Underemployed. Charts I-1 to I-12 explain the reasons for considering another approach to calculating job stress in the US. Chart I-1 of the Bureau of Labor Statistics provides the level of employment in the US from 2001 to 2013. There was a big drop of the number of people employed from 147.315 million at the peak in Jul 2007 (NSA) to 136.809 million at the trough in Jan 2010 (NSA) with 10.506 million fewer people employed. Recovery has been anemic compared with the shallow recession of 2001 that was followed by nearly vertical growth in jobs. The number employed in Sep 2013 was 144.651 million (NSA) or 2.664 million fewer people with jobs relative to the peak of 147.315 million in Jul 2007 while the civilian noninstitutional population increased from 231.958 million in Jul 2007 to 246.168 million in Sep 2013 or by 14.210 million. The number employed fell 1.8 percent from Jul 2007 to Sep 2013 while population increased 6.1 percent.
Chart I-1, US, Employed, Thousands, SA, 2001-2013
Source: Bureau of Labor Statistics
Chart I-2 of the Bureau of Labor Statistics provides 12-month percentage changes of the number of people employed in the US from 2001 to 2013. There was recovery since 2010 but not sufficient to recover lost jobs. Many people in the US who had jobs before the global recession are not working now.
Chart I-2, US, Employed, 12-Month Percentage Change NSA, 2001-2013
Source: Bureau of Labor Statistics
The foundation of the second approach derives from Chart II-3 of the Bureau of Labor Statistics providing the level of the civilian labor force in the US. The civilian labor force consists of people who are available and willing to work and who have searched for employment recently. The labor force of the US grew 9.4 percent from 142.828 million in Jan 2001 to 156.255 million in Jul 2009 but is lower at 155.536 million in Aug 2013, all numbers not seasonally adjusted. Chart I-3 shows the flattening of the curve of expansion of the labor force and its decline in 2010 and 2011. The ratio of the labor force of 154.871 million in Jul 2007 to the noninstitutional population of 231.958 million in Jul 2007 was 66.8 percent while the ratio of the labor force of 155.536 million in Sep 2013 to the noninstitutional population of 246.168 million in Sep 2013 was 63.2 percent. The labor force of the US in Sep 2013 corresponding to 66.8 percent of participation in the population would be 164.440 million (0.668 x 246.168). The difference between the measured labor force in Sep 2013 of 155.536 million and the labor force in Sep 2013 with participation rate of 66.8 percent (as in Jul 2007) of 164.440 million is 8.904 million. The level of the labor force in the US has stagnated and is 8.904 million lower than what it would have been had the same participation rate been maintained. Millions of people have abandoned their search for employment because they believe there are no jobs available for them. The key issue is whether the decline in participation of the population in the labor force is the result of people giving up on finding another job.
Chart I-3, US, Civilian Labor Force, Thousands, SA, 2001-2013
Source: US Bureau of Labor Statistics http://www.bls.gov/data/
Chart I-4 of the Bureau of Labor Statistics provides 12-month percentage changes of the level of the labor force in the US. The rate of growth fell almost instantaneously with the global recession and became negative from 2009 to 2011. The labor force of the US collapsed and did not recover. Growth in the beginning of the summer originates in younger people looking for jobs in the summer after graduation or during school recess.
Chart I-4, US, Civilian Labor Force, Thousands, NSA, 12-month Percentage Change, 2001-2013
Source: US Bureau of Labor Statistics http://www.bls.gov/data/
Chart I-5 of the Bureau of Labor Statistics provides the labor force participation rate in the US or labor force as percent of the population. The labor force participation rate of the US fell from 66.8 percent in Jan 2001 to 63.4 percent NSA in Aug 2013, all numbers not seasonally adjusted. The annual labor force participation rate for 1979 was 63.7 percent and also 63.7 percent in Nov 1980 during sharp economic contraction. This comparison is further elaborated below. Chart I-5 shows an evident downward trend beginning with the global recession that has continued throughout the recovery beginning in IIIQ2009. The critical issue is whether people left the workforce of the US because they believe there is no longer a job for them.
Chart I-5, Civilian Labor Force Participation Rate, Percent of Population in Labor Force SA, 2001-2013
Source: US Bureau of Labor Statistics http://www.bls.gov/data/
Chart I-6 of the Bureau of Labor Statistics provides the level of unemployed in the US. The number unemployed rose from the trough of 6.272 million in Oct 2006 to the peak of 16.147 million in Jan 2010, declining to 13.400 million in Jul 2012, 12.696 million in Aug 2012 and 11.742 million in Sep 2012. The level unemployed fell to 11.741 million in Oct 2012, 11.404 million in Nov 2012, 11.844 million in Dec 2012, 13.181 million in Jan 2013, 12.500 million in Feb 2013 and 10.885 million in Sep 2013, all numbers not seasonally adjusted.
Chart I-6, US, Unemployed, Thousands, SA, 2001-2013
Source: US Bureau of Labor Statistics http://www.bls.gov/data/
Chart I-7 of the Bureau of Labor Statistics provides the rate of unemployment in the US or unemployed as percent of the labor force. The rate of unemployment of the US rose from 4.7 percent in Jan 2001 to 6.5 percent in Jun 2003, declining to 4.1 percent in Oct 2006. The rate of unemployment jumped to 10.6 percent in Jan 2010 and declined to 7.6 percent in Dec 2012 but increased to 8.5 percent in Jan 2013 and 8.1 percent in Feb 2013, falling back to 7.1 percent in Apr 2013 and 7.8 percent in Jun 2013, all numbers not seasonally adjusted. The rate of unemployment not seasonally adjusted stabilized at 7.7 percent in Jul 2013 and fell to 7.0 percent in Sep 2013.
Chart I-7, US, Unemployment Rate, SA, 2001-2013
Source: Bureau of Labor Statistics
Chart I-8 of the Bureau of Labor Statistics provides 12-month percentage changes of the level of unemployed. There was a jump of 81.8 percent in Apr 2009 with subsequent decline and negative rates since 2010. On an annual basis, the level of unemployed rose 59.8 percent in 2009 and 26.1 percent in 2008 with increase of 3.9 percent in 2010, decline of 7.3 percent in 2011, decrease of 9.0 percent in 2012 and decrease of 7.3 percent in Sep 2013 relative to Sep 2012.
Chart I-8, US, Unemployed, 12-month Percentage Change, NSA, 2001-2013
Source: US Bureau of Labor Statistics http://www.bls.gov/data/
Chart I-9 of the Bureau of Labor Statistics provides the number of people in part-time occupations because of economic reasons, that is, because they cannot find full-time employment. The number underemployed in part-time occupations not seasonally adjusted rose from 3.732 million in Jan 2001 to 5.270 million in Jan 2004, falling to 3.787 million in Apr 2006. The number underemployed seasonally adjusted jumped to 9.103 million in Nov 2009, falling to 8.168 million in Dec 2011 but increasing to 8.220 million in Jan 2012 and 8.127 million in Feb 2012 but then falling to 7.918 million in Dec 2012 and increasing to 8.245 million in Jul 2013. The number employed part-time for economic reasons seasonally adjusted reached 7.926 million in Sep 2013. Without seasonal adjustment, the number employed part-time for economic reasons reached 9.354 million in Dec 2009, declining to 8.918 million in Jan 2012 and 8.166 million in Dec 2012 but increasing to 8.324 million in Jul 2013. The number employed part-time for economic reasons NSA stood at 7.522 million in Sep 2013. The longer the period in part-time jobs the lower are the chances of finding another full-time job.
Chart I-9, US, Part-Time for Economic Reasons, Thousands, SA, 2001-2013
Source: US Bureau of Labor Statistics http://www.bls.gov/data/
Chart I-10 of the Bureau of Labor Statistics repeats the behavior of unemployment. The 12-month percentage change of the level of people at work part-time for economic reasons jumped 84.7 percent in Mar 2009 and declined subsequently. The declines have been insufficient to reduce significantly the number of people who cannot shift from part-time to full-time employment. On an annual basis, the number of part-time for economic reasons increased 33.5 percent in 2008 and 51.7 percent in 2009, declining 0.4 percent in 2010, 3.5 percent in 2011 and 5.1 percent in 2012. The number of part-time for economic reasons decreased 7/3 percent in Sep 2013 relative to Sep 2012.
Chart I-10, US, Part-Time for Economic Reasons NSA 12-Month Percentage Change, 2001-2013
Source: US Bureau of Labor Statistics http://www.bls.gov/data/
Chart II-11 of the Bureau of Labor Statistics provides the same pattern of the number marginally attached to the labor force jumping to significantly higher levels during the global recession and remaining at historically high levels. The number marginally attached to the labor force not seasonally adjusted increased from 1.295 million in Jan 2001 to 1.691 million in Feb 2004. The number of marginally attached to the labor force fell to 1.299 million in Sep 2006 and increased to 2.609 million in Dec 2009 and 2.800 million in Jan 2011. The number marginally attached to the labor force was 2.540 million in Dec 2011, increasing to 2.809 million in Jan 2012, falling to 2.608 million in Feb 2012, 2.352 million in Mar 2012, 2.363 million in Apr 2012, 2.423 million in May 2012, 2.483 million in Jun 2012, 2.529 million in Jul 2012, 2.561 million in Aug 2012, 2.517 million in Sep 2012, 2.433 million in Oct 2012, 2.505 million in Nov 2012 and 2.614 million in Dec 2012. The number marginally attached to the labor force fell to 2.302 million in Sep 2013.
Chart I-11, US, Marginally Attached to the Labor Force, Thousands, NSA, 2001-2013
Source: US Bureau of Labor Statistics http://www.bls.gov/data/
Chart I-12 provides 12-month percentage changes of the marginally attached to the labor force from 2001 to 2013. There was a jump of 56.1 percent in May 2009 during the global recession followed by declines in percentage changes but insufficient negative changes. On an annual basis, the number of marginally attached to the labor force increased in four consecutive years: 15.7 percent in 2008, 37.9 percent in 2009, 11.7 percent in 2010 and 3.5 percent in 2011. The number marginally attached to the labor force fell 2.2 percent on annual basis in 2012 but increased 2.9 percent in the 12 months ending in Dec 2012, fell 13.0 percent in the 12 months ending in Jan 2013, falling 10.7 percent in the 12 months ending in May 2013. The number marginally attached to the labor force increased 4.0 percent in the 12 months ending in Jun 2013 and fell 4.5 percent in the 12 months ending in Jul 2013 and 8.6 percent in the 12 months ending in Aug 2013. The number marginally attached to the labor force fell 8.5 percent in the 12 months ending in Sep 2013.
Chart I-12, US, Marginally Attached to the Labor Force 12-Month Percentage Change, NSA, 2001-2013
Source: US Bureau of Labor Statistics http://www.bls.gov/data/
Table I-4 consists of data and additional calculations using the BLS household survey, illustrating the possibility that the actual rate of unemployment could be 11.2 percent and the number of people in job stress could be around 28.1 million, which is 17.3 percent of the effective labor force. The first column provides for 2006 the yearly average population (POP), labor force (LF), participation rate or labor force as percent of population (PART %), employment (EMP), employment population ratio (EMP/POP %), unemployment (UEM), the unemployment rate as percent of labor force (UEM/LF Rate %) and the number of people not in the labor force (NLF). All data are unadjusted or not-seasonally-adjusted (NSA). The numbers in column 2006 are averages in millions while the monthly numbers for Sep 2012, Aug 2013 and Sep 2013 are in thousands, not seasonally adjusted. The average yearly participation rate of the population in the labor force was in the range of 66.0 percent minimum to 67.1 percent maximum between 2000 and 2006 with the average of 66.4 percent (ftp://ftp.bls.gov/pub/special.requests/lf/aa2006/pdf/cpsaat1.pdf). Table I-4b provides the yearly labor force participation rate from 1979 to 2013. The objective of Table I-4 is to assess how many people could have left the labor force because they do not think they can find another job. Row “LF PART 66.2 %” applies the participation rate of 2006, almost equal to the rates for 2000 to 2006, to the noninstitutional civilian population in Aug 2012, Jul 2013 and Aug 2013 to obtain what would be the labor force of the US if the participation rate had not changed. In fact, the participation rate fell to 63.6 percent by Sep 2012 and was 63.4 percent in Aug 2013 and 63.2 percent in Sep 2013, suggesting that many people simply gave up on finding another job. Row “∆ NLF UEM” calculates the number of people not counted in the labor force because they could have given up on finding another job by subtracting from the labor force with participation rate of 66.2 percent (row “LF PART 66.2%”) the labor force estimated in the household survey (row “LF”). Total unemployed (row “Total UEM”) is obtained by adding unemployed in row “∆NLF UEM” to the unemployed of the household survey in row “UEM.” The row “Total UEM%” is the effective total unemployed “Total UEM” as percent of the effective labor force in row “LF PART 66.2%.” The results are that:
- there are an estimated 7.427 million unemployed in Sep 2013 who are not counted because they left the labor force on their belief they could not find another job (∆NLF UEM), that is, they dropped out of their job searches
- the total number of unemployed is effectively 18.312 million (Total UEM) and not 10.885 million (UEM) of whom many have been unemployed long term
- the rate of unemployment is 11.2 percent (Total UEM%) and not 7.0 percent, not seasonally adjusted, or 7.2 percent seasonally adjusted
- the number of people in job stress is close to 28.1 million by adding the 7.427 million leaving the labor force because they believe they could not find another job.
The row “In Job Stress” in Table I-4 provides the number of people in job stress not seasonally adjusted at 28.136 million in Sep 2013, adding the total number of unemployed (“Total UEM”), plus those involuntarily in part-time jobs because they cannot find anything else (“Part Time Economic Reasons”) and the marginally attached to the labor force (“Marginally attached to LF”). The final row of Table I-4 shows that the number of people in job stress is equivalent to 17.3 percent of the labor force in Sep 2013. The employment population ratio “EMP/POP %” dropped from 62.9 percent on average in 2006 to 58.8 percent in Sep 2012, 58.8 percent in Aug 2013 and 58.8 percent in Sep 2013. The number employed in Sep 2013 was 144.651 million (NSA) or 2.664 million fewer people with jobs relative to the peak of 147.315 million in Jul 2007 while the civilian noninstitutional population increased from 231.958 million in Jul 2007 to 246.168 million in Sep 2013 or by 14.210 million. The number employed fell 1.8 percent from Jul 2007 to Sep 2013 while population increased 6.1 percent. There is actually not sufficient job creation in merely absorbing new entrants in the labor force because of those dropping from job searches, worsening the stock of unemployed or underemployed in involuntary part-time jobs. What really matters for labor input in production and wellbeing is the number of people with jobs or the employment/population ratio, which has declined and does not show signs of increasing. There are several million fewer people working in 2013 than in 2006 and the number employed is not increasing while population increased 14.210 million. The number of hiring relative to the number unemployed measures the chances of becoming employed. The number of hiring in the US economy has declined by 17 million and does not show signs of increasing in an unusual recovery without hiring (Section IC and earlier http://cmpassocregulationblog.blogspot.com/2013/09/recovery-without-hiring-ten-million.html).
Table I-4, US, Population, Labor Force and Unemployment, NSA
| 2006 | Sep 2012 | Aug 2013 | Sep 2013 | |
| POP | 229 | 243,772 | 245,959 | 246.168 |
| LF | 151 | 155,075 | 155,971 | 155,536 |
| PART% | 66.2 | 63.6 | 63.4 | 63.2 |
| EMP | 144 | 143,333 | 144,509 | 145,651 |
| EMP/POP% | 62.9 | 58.8 | 58.8 | 58.8 |
| UEM | 7 | 11,742 | 11,462 | 10,885 |
| UEM/LF Rate% | 4.6 | 7.6 | 7.3 | 7.0 |
| NLF | 77 | 88,697 | 89,988 | 90,362 |
| LF PART 66.2% | 161,377 | 162,825 | 162,963 | |
| ∆NLF UEM | 5,986 | 6,854 | 7,427 | |
| Total UEM | 17,728 | 18,316 | 18,312 | |
| Total UEM% | 11.0 | 11.2 | 11.2 | |
| Part Time Economic Reasons | 8,110 | 7,690 | 7,522 | |
| Marginally Attached to LF | 2,517 | 2,342 | 2,302 | |
| In Job Stress | 28,355 | 28,348 | 28,136 | |
| People in Job Stress as % Labor Force | 17.6 | 17.4 | 17.3 |
Pop: population; LF: labor force; PART: participation; EMP: employed; UEM: unemployed; NLF: not in labor force; ∆NLF UEM: additional unemployed; Total UEM is UEM + ∆NLF UEM; Total UEM% is Total UEM as percent of LF PART 66.2%; In Job Stress = Total UEM + Part Time Economic Reasons + Marginally Attached to LF
Note: the first column for 2006 is in average millions; the remaining columns are in thousands; NSA: not seasonally adjusted
The labor force participation rate of 66.2% in 2006 is applied to current population to obtain LF PART 66.2%; ∆NLF UEM is obtained by subtracting the labor force with participation of 66.2 percent from the household survey labor force LF; Total UEM is household data unemployment plus ∆NLF UEM; and total UEM% is total UEM divided by LF PART 66.2%
Source: US Bureau of Labor Statistics http://www.bls.gov/
In revealing research, Edward P. Lazear and James R. Spletzer (2012JHJul22) use the wealth of data in the valuable database and resources of the Bureau of Labor Statistics (http://www.bls.gov/data/) in providing clear thought on the nature of the current labor market of the United States. The critical issue of analysis and policy currently is whether unemployment is structural or cyclical. Structural unemployment could occur because of (1) industrial and demographic shifts and (2) mismatches of skills and job vacancies in industries and locations. Consider the aggregate unemployment rate, Y, expressed in terms of share si of a demographic group in an industry i and unemployment rate yi of that demographic group (Lazear and Spletzer 2012JHJul22, 5-6):
Y = ∑isiyi (1)
This equation can be decomposed for analysis as (Lazear and Spletzer 2012JHJul22, 6):
∆Y = ∑i∆siy*i + ∑i∆yis*i (2)
The first term in (2) captures changes in the demographic and industrial composition of the economy ∆si multiplied by the average rate of unemployment y*i , or structural factors. The second term in (2) captures changes in the unemployment rate specific to a group, or ∆yi, multiplied by the average share of the group s*i, or cyclical factors. There are also mismatches in skills and locations relative to available job vacancies. A simple observation by Lazear and Spletzer (2012JHJul22) casts intuitive doubt on structural factors: the rate of unemployment jumped from 4.4 percent in the spring of 2007 to 10 percent in October 2009. By nature, structural factors should be permanent or occur over relative long periods. The revealing result of the exhaustive research of Lazear and Spletzer (2012JHJul22) is:
“The analysis in this paper and in others that we review do not provide any compelling evidence that there have been changes in the structure of the labor market that are capable of explaining the pattern of persistently high unemployment rates. The evidence points to primarily cyclic factors.”
Table I-4b and Chart I-12-b provide the US labor force participation rate or percentage of the labor force in population. It is not likely that simple demographic trends caused the sharp decline during the global recession and failure to recover earlier levels. The civilian labor force participation rate dropped from the peak of 66.9 percent in Jul 2006 to 63.2 percent in Sep 2013. The civilian labor force participation rate was 63.7 percent on an annual basis in 1979 and 63.4 percent in Dec 1980 and Dec 1981, reaching even 62.9 percent in both Apr and May 1979. The civilian labor force participation rate jumped with the recovery to 64.8 percent on an annual basis in 1985 and 65.9 percent in Jul 1985. Structural factors cannot explain these sudden changes vividly shown visually in the final segment of Chart I-12b. Seniors would like to delay their retiring especially because of the adversities of financial repression on their savings. Labor force statistics are capturing the disillusion of potential workers with their chances in finding a job in what Lazear and Spletzer (2012JHJul22) characterize as accentuated cyclical factors.
Table I-4b, US, Labor Force Participation Rate, Percent of Labor Force in Population, NSA, 1979-2013
| Year | Mar | Apr | May | Jun | Jul | Aug | Sep | Dec | Annual |
| 1979 | 63.2 | 62.9 | 62.9 | 64.5 | 64.9 | 64.5 | 63.8 | 63.8 | 63.7 |
| 1980 | 63.2 | 63.2 | 63.5 | 64.6 | 65.1 | 64.5 | 63.6 | 63.4 | 63.8 |
| 1981 | 63.5 | 63.6 | 63.9 | 64.6 | 65.0 | 64.6 | 63.5 | 63.4 | 63.9 |
| 1982 | 63.4 | 63.3 | 63.9 | 64.8 | 65.3 | 64.9 | 64.0 | 63.8 | 64.0 |
| 1983 | 63.3 | 63.2 | 63.4 | 65.1 | 65.4 | 65.1 | 64.3 | 63.8 | 64.0 |
| 1984 | 63.6 | 63.7 | 64.3 | 65.5 | 65.9 | 65.2 | 64.4 | 64.3 | 64.4 |
| 1985 | 64.4 | 64.3 | 64.6 | 65.5 | 65.9 | 65.4 | 64.9 | 64.6 | 64.8 |
| 1986 | 64.6 | 64.6 | 65.0 | 66.3 | 66.6 | 66.1 | 65.3 | 65.0 | 65.3 |
| 1987 | 65.0 | 64.9 | 65.6 | 66.3 | 66.8 | 66.5 | 65.5 | 65.5 | 65.6 |
| 1988 | 65.2 | 65.3 | 65.5 | 66.7 | 67.1 | 66.8 | 65.9 | 65.9 | 65.9 |
| 1989 | 65.7 | 65.9 | 66.2 | 67.4 | 67.7 | 67.2 | 66.3 | 66.3 | 66.5 |
| 1990 | 66.2 | 66.1 | 66.5 | 67.4 | 67.7 | 67.1 | 66.4 | 66.1 | 66.5 |
| 1991 | 65.9 | 66.0 | 66.0 | 67.2 | 67.3 | 66.6 | 66.1 | 65.8 | 66.2 |
| 1992 | 66.0 | 66.0 | 66.4 | 67.6 | 67.9 | 67.2 | 66.3 | 66.1 | 66.4 |
| 1993 | 65.8 | 65.6 | 66.3 | 67.3 | 67.5 | 67.0 | 66.1 | 66.2 | 66.3 |
| 1994 | 66.1 | 66.0 | 66.5 | 67.2 | 67.5 | 67.2 | 66.5 | 66.5 | 66.6 |
| 1995 | 66.4 | 66.4 | 66.4 | 67.2 | 67.7 | 67.1 | 66.5 | 66.2 | 66.6 |
| 1996 | 66.4 | 66.2 | 66.7 | 67.4 | 67.9 | 67.2 | 66.8 | 66.7 | 66.8 |
| 1997 | 66.9 | 66.7 | 67.0 | 67.8 | 68.1 | 67.6 | 67.0 | 67.0 | 67.1 |
| 1998 | 67.0 | 66.6 | 67.0 | 67.7 | 67.9 | 67.3 | 67.0 | 67.0 | 67.1 |
| 1999 | 66.9 | 66.7 | 67.0 | 67.7 | 67.9 | 67.3 | 66.8 | 67.0 | 67.1 |
| 2000 | 67.1 | 67.0 | 67.0 | 67.7 | 67.6 | 67.2 | 66.7 | 67.0 | 67.1 |
| 2001 | 67.0 | 66.7 | 66.6 | 67.2 | 67.4 | 66.8 | 66.6 | 66.6 | 66.8 |
| 2002 | 66.6 | 66.4 | 66.5 | 67.1 | 67.2 | 66.8 | 66.6 | 66.2 | 66.6 |
| 2003 | 66.2 | 66.2 | 66.2 | 67.0 | 66.8 | 66.3 | 65.9 | 65.8 | 66.2 |
| 2004 | 65.8 | 65.7 | 65.8 | 66.5 | 66.8 | 66.2 | 65.7 | 65.8 | 66.0 |
| 2005 | 65.6 | 65.8 | 66.0 | 66.5 | 66.8 | 66.5 | 66.1 | 65.9 | 66.0 |
| 2006 | 65.8 | 65.8 | 66.0 | 66.7 | 66.9 | 66.5 | 66.1 | 66.3 | 66.2 |
| 2007 | 65.9 | 65.7 | 65.8 | 66.6 | 66.8 | 66.1 | 66.0 | 65.9 | 66.0 |
| 2008 | 65.7 | 65.7 | 66.0 | 66.6 | 66.8 | 66.4 | 65.9 | 65.7 | 66.0 |
| 2009 | 65.4 | 65.4 | 65.5 | 66.2 | 66.2 | 65.6 | 65.0 | 64.4 | 65.4 |
| 2010 | 64.8 | 64.9 | 64.8 | 65.1 | 65.3 | 65.0 | 64.6 | 64.1 | 64.7 |
| 2011 | 64.0 | 63.9 | 64.1 | 64.5 | 64.6 | 64.3 | 64.2 | 63.8 | 64.1 |
| 2012 | 63.6 | 63.4 | 63.8 | 64.3 | 64.3 | 63.7 | 63.6 | 63.4 | 63.7 |
| 2013 | 63.1 | 63.1 | 63.5 | 64.0 | 64.0 | 63.4 | 63.2 |
Source: US Bureau of Labor Statistics http://www.bls.gov/
Chart I-12b, US, Labor Force Participation Rate, Percent of Labor Force in Population, NSA, 1979-2013
Source: Bureau of Labor Statistics
Broader perspective is provided by Chart I-12c of the US Bureau of Labor Statistics. The United States civilian noninstitutional population has increased along a consistent trend since 1948 that continued through earlier recessions and the global recession from IVQ2007 to IIQ2009 and the cyclical expansion after IIIQ2009.
Chart I-12c, US, Civilian Noninstitutional Population, Thousands, NSA, 1948-2013
Sources: US Bureau of Labor Statistics
The labor force of the United States in Chart I-12d has increased along a trend similar to that of the civilian noninstitutional population in Chart I-12c. There is an evident stagnation of the civilian labor force in the final segment of Chart I-12d during the current economic cycle. This stagnation is explained by cyclical factors similar to those analyzed by Lazear and Spletzer (2012JHJul22) that motivated an increasing population to drop out of the labor force instead of structural factors. Large segments of the potential labor force are not observed, constituting unobserved unemployment and of more permanent nature because those afflicted have been seriously discouraged from working by the lack of opportunities.
Chart I-12d, US, Labor Force, Thousands, NSA, 1948-2013
Sources: US Bureau of Labor Statistics
http://www.bea.gov/iTable/index_nipa.cfm
ESIII Faltering Job Creation. What is striking about the data in Table I-8 is that the numbers of monthly increases in jobs in 1983 and 1984 are several times higher than in 2010 to 2013. The civilian noninstitutional population grew by 39.6 percent from 174.215 million in 1983 to 243.284 million in 2012 and labor force higher by 38.9 percent, growing from 111.550 million in 1983 to 154.975 million in 2012. Total nonfarm payroll employment seasonally adjusted (SA) increased 148,000 in Sep 2013 and private payroll employment rose 126,000. The average number of nonfarm jobs created in Jan-Sep 2012 was 174,111 while the average number of private jobs created in Jan-Sep 2013 was 177,667, or increase by 2.0 percent. The average number of private jobs created in the US in Jan-Sep 2012 was 174,667 while the average in Jan-Sep 2013 was 177,000, or increase by 1.3 percent. The US labor force increased from 153.617 million in 2011 to 154.975 million in 2012 by 1.358 million or 113,167 per month. The average increase of nonfarm jobs in the eight months from Jan to Sep 2013 was 177,667, which is a rate of job creation inadequate to reduce significantly unemployment and underemployment in the United States because of 113,167 new entrants in the labor force per month with 28.1 million unemployed or underemployed. The difference between the average increase of 177,667 new private nonfarm jobs per month in the US from Jan to Sep 2013 and the 113,167 average monthly increase in the labor force from 2011 to 2012 is 64,500 monthly new jobs net of absorption of new entrants in the labor force. There are 28.1 million in job stress in the US currently. Creation of 64,500 new jobs per month net of absorption of new entrants in the labor force would require 436 months to provide jobs for the unemployed and underemployed (28.136 million divided by 64,500) or 36 years (436 divided by 12). The civilian labor force of the US in Sep 2013 not seasonally adjusted stood at 155.536 million with 10.885 million unemployed or effectively 18.312 million unemployed in this blog’s calculation by inferring those who are not searching because they believe there is no job for them for effective labor force of 162.963 million. Reduction of one million unemployed at the current rate of job creation without adding more unemployment requires 1.3 years (1 million divided by product of 64,500 by 12, which is 774,000). Reduction of the rate of unemployment to 5 percent of the labor force would be equivalent to unemployment of only 7.777 million (0.05 times labor force of 155.536 million) for new net job creation of 3.108 million (10.885 million unemployed minus 7.777 million unemployed at rate of 5 percent) that at the current rate would take 4.0 years (3.108 million divided by 0.774000). Under the calculation in this blog, there are 18.312 million unemployed by including those who ceased searching because they believe there is no job for them and effective labor force of 162.963 million. Reduction of the rate of unemployment to 5 percent of the labor force would require creating 10.164 million jobs net of labor force growth that at the current rate would take 13.1 years (18.312 million minus 0.05(162.963 million) = 10.164 million divided by 0.774000, using LF PART 66.2% and Total UEM in Table I-4). These calculations assume that there are no more recessions, defying United States economic history with periodic contractions of economic activity when unemployment increases sharply. The number employed in Sep 2013 was 144.651 million (NSA) or 2.664 million fewer people with jobs relative to the peak of 147.315 million in Jul 2007 while the civilian noninstitutional population increased from 231.958 million in Jul 2007 to 246.168 million in Sep 2013 or by 14.210 million. The number employed fell 1.8 percent from Jul 2007 to Sep 2013 while population increased 6.1 percent. There is actually not sufficient job creation in merely absorbing new entrants in the labor force because of those dropping from job searches, worsening the stock of unemployed or underemployed in involuntary part-time jobs. The United States economy has grown at the average yearly rate of 3 percent per year and 2 percent per year in per capita terms from 1870 to 2010, as measured by Lucas (2011May). An important characteristic of the economic cycle in the US has been rapid growth in the initial phase of expansion after recessions.
Inferior performance of the US economy and labor markets is the critical current issue of analysis and policy design. Long-term economic performance in the United States consisted of trend growth of GDP at 3 percent per year and of per capita GDP at 2 percent per year as measured for 1870 to 2010 by Robert E Lucas (2011May). The economy returned to trend growth after adverse events such as wars and recessions. The key characteristic of adversities such as recessions was much higher rates of growth in expansion periods that permitted the economy to recover output, income and employment losses that occurred during the contractions. Over the business cycle, the economy compensated the losses of contractions with higher growth in expansions to maintain trend growth of GDP of 3 percent and of GDP per capita of 2 percent. US economic growth has been at only 2.2 percent on average in the cyclical expansion in the 16 quarters from IIIQ2009 to IIQ2013. Boskin (2010Sep) measures that the US economy grew at 6.2 percent in the first four quarters and 4.5 percent in the first 12 quarters after the trough in the second quarter of 1975; and at 7.7 percent in the first four quarters and 5.8 percent in the first 12 quarters after the trough in the first quarter of 1983 (Professor Michael J. Boskin, Summer of Discontent, Wall Street Journal, Sep 2, 2010 http://professional.wsj.com/article/SB10001424052748703882304575465462926649950.html). There are new calculations using the revision of US GDP and personal income data since 1929 by the Bureau of Economic Analysis (BEA) (http://bea.gov/iTable/index_nipa.cfm http://bea.gov/newsreleases/national/gdp/2013/pdf/gdp2q13_adv.pdf http://bea.gov/newsreleases/national/pi/2013/pdf/pi0613.pdf) and the second estimate of GDP for IIQ2013 (http://www.bea.gov/newsreleases/national/gdp/2013/pdf/gdp2q13_3rd.pdf). The average of 7.7 percent in the first four quarters of major cyclical expansions is in contrast with the rate of growth in the first four quarters of the expansion from IIIQ2009 to IIQ2010 of only 2.7 percent obtained by diving GDP of $14,738.0 billion in IIQ2010 by GDP of $14,356.9 billion in IIQ2009 {[$14,738.0/$14,356.9 -1]100 = 2.7%], or accumulating the quarter on quarter growth rates (http://cmpassocregulationblog.blogspot.com/2013/09/mediocre-and-decelerating-united-states.html and earlier http://cmpassocregulationblog.blogspot.com/2013/09/increasing-interest-rate-risk.html). The expansion from IQ1983 to IVQ1985 was at the average annual growth rate of 5.7 percent and at 7.8 percent from IQ1983 to IVQ1983 (http://cmpassocregulationblog.blogspot.com/2013/09/mediocre-and-decelerating-united-states.html). As a result, there are 28.1 million unemployed or underemployed in the United States for an effective unemployment rate of 17.3 percent (Section I and earlier http://cmpassocregulationblog.blogspot.com/2013/09/twenty-eight-million-unemployed-or.html). Zero interest rates and quantitative easing have not provided the impulse for growth and were not required in past successful cyclical expansions.
Table I-8, US, Monthly Change in Jobs, Number SA
| Month | 1981 | 1982 | 1983 | 2008 | 2009 | 2010 | Private |
| Jan | 95 | -327 | 225 | 14 | -794 | -13 | -17 |
| Feb | 67 | -6 | -78 | -85 | -695 | -40 | -26 |
| Mar | 104 | -129 | 173 | -79 | -830 | 154 | 111 |
| Apr | 74 | -281 | 276 | -215 | -704 | 229 | 170 |
| May | 10 | -45 | 277 | -186 | -352 | 521 | 102 |
| Jun | 196 | -243 | 378 | -169 | -472 | -130 | 94 |
| Jul | 112 | -343 | 418 | -216 | -351 | -86 | 103 |
| Aug | -36 | -158 | -308 | -270 | -210 | -37 | 129 |
| Sep | -87 | -181 | 1114 | -459 | -233 | -43 | 113 |
| Oct | -100 | -277 | 271 | -472 | -170 | 228 | 188 |
| Nov | -209 | -124 | 352 | -775 | -21 | 144 | 154 |
| Dec | -278 | -14 | 356 | -705 | -220 | 95 | 114 |
| 1984 | 2011 | Private | |||||
| Jan | 447 | 69 | 80 | ||||
| Feb | 479 | 196 | 243 | ||||
| Mar | 275 | 205 | 223 | ||||
| Apr | 363 | 304 | 303 | ||||
| May | 308 | 115 | 183 | ||||
| Jun | 379 | 209 | 177 | ||||
| Jul | 312 | 78 | 206 | ||||
| Aug | 241 | 132 | 129 | ||||
| Sep | 311 | 225 | 256 | ||||
| Oct | 286 | 166 | 174 | ||||
| Nov | 349 | 174 | 197 | ||||
| Dec | 127 | 230 | 249 | ||||
| 1985 | 2012 | Private | |||||
| Jan | 266 | 311 | 323 | ||||
| Feb | 124 | 271 | 265 | ||||
| Mar | 346 | 205 | 208 | ||||
| Apr | 195 | 112 | 120 | ||||
| May | 274 | 125 | 152 | ||||
| Jun | 145 | 87 | 78 | ||||
| Jul | 189 | 153 | 177 | ||||
| Aug | 193 | 165 | 131 | ||||
| Sep | 204 | 138 | 118 | ||||
| Oct | 187 | 160 | 217 | ||||
| Nov | 209 | 247 | 256 | ||||
| Dec | 168 | 219 | 224 | ||||
| 1985 | 2013 | Private | |||||
| Jan | 123 | 148 | 164 | ||||
| Feb | 107 | 332 | 319 | ||||
| Mar | 93 | 142 | 154 | ||||
| Apr | 188 | 199 | 188 | ||||
| May | 125 | 176 | 187 | ||||
| Jun | -93 | 172 | 194 | ||||
| Jul | 318 | 89 | 100 | ||||
| Aug | 113 | 193 | 161 | ||||
| Sep | 346 | 148 | 126 | ||||
| Oct | 187 | ||||||
| Nov | 186 | ||||||
| Dec | 204 |
Source: US Bureau of Labor Statistics http://www.bls.gov/
Charts numbered from I-38 to I-41 from the database of the Bureau of Labor Statistics provide a comparison of payroll survey data for the contractions and expansions in the 1980s and after 2007. Chart I-38 provides total nonfarm payroll jobs from 2001 to 2013. The sharp decline in total nonfarm jobs during the contraction after 2007 has been followed by initial stagnation and then inadequate growth in 2012 and 2013.
Chart I-38, US, Total Nonfarm Payroll Jobs SA 2001-2013
Source: US Bureau of Labor Statistics
Chart I-39 provides total nonfarm jobs SA from 1979 to 1989. Recovery is strong throughout the decade with the economy growing at trend.
Chart I-39, US, Total Nonfarm Payroll Jobs SA 1979-1989
Source: US Bureau of Labor Statistics
Most job creation in the US is by the private sector. Chart I-40 shows the sharp destruction of private payroll jobs during the contraction after 2007. There has been growth after 2010 but insufficient to recover higher levels of employment prevailing before the contraction. At current rates, recovery of employment may spread over several years in contrast with past expansions of the business cycle in the US.
Chart I-40, US, Total Private Payroll Jobs SA 2001-2013
Source: US Bureau of Labor Statistics
In contrast, growth of private payroll jobs in the US recovered vigorously during the expansion in 1983 through 1985, as shown in Chart I-41. Rapid growth of creation of private jobs continued throughout the 1980s.
Chart I-41, US, Total Private Payroll Jobs SA 1979-1989
Source: US Bureau of Labor Statistics
ESIV Stagnating Real Wages. Calculations using BLS data of inflation-adjusted average hourly earnings are in Table IB-3. The final column of Table IB-3 (“12 Month Real ∆%”) provides inflation-adjusted average hourly earnings of all employees in the US. Average hourly earnings rose above inflation throughout the first nine months of 2007 just before the global recession that began in the final quarter of 2007 when average hourly earnings lost to inflation. In contrast, average hourly earnings of all US workers have risen less than inflation in five months in 2010 and in all but the first month in 2011 and the loss accelerated at 1.8 percent in Sep 2011, declining to a real loss of 1.1 percent in Feb 2012 and 0.6 percent in Mar 2012. There was a gain of 0.6 percent in Apr 2012 in inflation-adjusted average hourly earnings but another fall of 0.5 percent in May 2012 followed by increases of 0.3 percent in Jun and 1.0 percent in Jul 2012. Real hourly earnings stagnated in the 12 months ending in Aug 2012 with increase of only 0.1 percent and increased 0.7 percent in the 12 months ending in Sep 2012. Real hourly earnings fell 1.3 percent in Oct 2012 and gained 1.1 percent in Dec 2012 but declined 0.2 percent in Jan 2012 and stagnated at change of 0.1 percent in Feb 2013. Real hourly earnings increased 0.4 percent in the 12 months ending in Mar 2013 and stagnated at 0.1 percent in Apr 2013, increasing 0.5 percent in May 2013. In Jun 2013, real hourly earnings increased 1.0 percent relative to Jun 2012. Real hourly earnings fell 0.7 percent in the 12 months ending in Jul 2013 and increased 0.7 percent in the 12 months ending in Aug 2013. Real hourly earnings are oscillating in part because of world inflation waves caused by carry trades from zero interest rates to commodity futures (http://cmpassocregulationblog.blogspot.com/2013/10/world-inflation-waves-regional-economic.html) and in part because of the collapse of hiring (Section IC and earlier http://cmpassocregulationblog.blogspot.com/2013/09/recovery-without-hiring-ten-million.html) originating in weak economic growth (http://cmpassocregulationblog.blogspot.com/2013/09/mediocre-and-decelerating-united-states.html).
Table IB-3, US, Average Hourly Earnings Nominal and Inflation Adjusted, Dollars and % NSA
| AHE ALL | 12 Month | ∆% 12 Month CPI | 12 Month | |
| 2007 | ||||
| Jan* | $20.70* | 4.2* | 2.1 | 2.1* |
| Feb* | $20.79* | 4.1* | 2.4 | 1.7* |
| Mar | $20.82 | 3.7 | 2.8 | 0.9 |
| Apr | $21.05 | 3.3 | 2.6 | 0.7 |
| May | $20.83 | 3.7 | 2.7 | 1.0 |
| Jun | $20.82 | 3.8 | 2.7 | 1.1 |
| Jul | $20.99 | 3.4 | 2.4 | 1.0 |
| Aug | $20.85 | 3.5 | 2.0 | 1.5 |
| Sep | $21.19 | 4.1 | 2.8 | 1.3 |
| Oct | $21.07 | 2.7 | 3.5 | -0.8 |
| Nov | $21.13 | 3.3 | 4.3 | -0.9 |
| Dec | $21.37 | 3.7 | 4.1 | -0.4 |
| 2010 | ||||
| Jan | $22.55 | 1.9 | 2.6 | -0.7 |
| Feb | $22.61 | 1.4 | 2.1 | -0.7 |
| Mar | $22.52 | 1.2 | 2.3 | -1.1 |
| Apr | $22.57 | 1.8 | 2.2 | -0.4 |
| May | $22.64 | 2.5 | 2.0 | 0.5 |
| Jun | $22.38 | 1.8 | 1.1 | 0.7 |
| Jul | $22.44 | 1.8 | 1.2 | 0.6 |
| Aug | $22.58 | 1.7 | 1.1 | 0.6 |
| Sep | $22.63 | 1.8 | 1.1 | 0.7 |
| Oct | $22.73 | 1.9 | 1.2 | 0.7 |
| Nov | $22.72 | 1.0 | 1.1 | -0.1 |
| Dec | $22.79 | 1.7 | 1.5 | 0.2 |
| 2011 | ||||
| Jan | $23.20 | 2.9 | 1.6 | 1.3 |
| Feb | $23.03 | 1.9 | 2.1 | -0.2 |
| Mar | $22.93 | 1.8 | 2.7 | -0.9 |
| Apr | $22.99 | 1.9 | 3.2 | -1.3 |
| May | $23.09 | 2.0 | 3.6 | -1.5 |
| Jun | $22.84 | 2.1 | 3.6 | -1.4 |
| Jul | $22.97 | 2.4 | 3.6 | -1.2 |
| Aug | $22.88 | 1.3 | 3.8 | -2.4 |
| Sep | $23.08 | 2.0 | 3.9 | -1.8 |
| Oct | $23.33 | 2.6 | 3.5 | -0.9 |
| Nov | $23.18 | 2.0 | 3.4 | -1.4 |
| Dec | $23.25 | 2.0 | 3.0 | -1.0 |
| 2012 | ||||
| Jan | $23.59 | 1.7 | 2.9 | -1.2 |
| Feb | $23.44 | 1.8 | 2.9 | -1.1 |
| Mar | $23.42 | 2.1 | 2.7 | -0.6 |
| Apr | $23.65 | 2.9 | 2.3 | 0.6 |
| May | $23.36 | 1.2 | 1.7 | -0.5 |
| Jun | $23.30 | 2.0 | 1.7 | 0.3 |
| Jul | $23.52 | 2.4 | 1.4 | 1.0 |
| Aug | $23.30 | 1.8 | 1.7 | 0.1 |
| Sep | $23.70 | 2.7 | 2.0 | 0.7 |
| Oct | $23.55 | 0.9 | 2.2 | -1.3 |
| Nov | $23.62 | 1.9 | 1.8 | 0.1 |
| Dec | $23.89 | 2.8 | 1.7 | 1.1 |
| 2013 | ||||
| Jan | $23.92 | 1.4 | 1.6 | -0.2 |
| Feb | $23.94 | 2.1 | 2.0 | 0.1 |
| Mar | $23.86 | 1.9 | 1.5 | 0.4 |
| Apr | $23.94 | 1.2 | 1.1 | 0.1 |
| May | $23.81 | 1.9 | 1.4 | 0.5 |
| Jun | $23.95 | 2.8 | 1.8 | 1.0 |
| Jul | $23.83 | 1.3 | 2.0 | -0.7 |
| Aug | $23.81 | 2.2 | 1.5 | 0.7 |
| Sep | $24.18 | 2.0 |
Note: AHE ALL: average hourly earnings of all employees; CPI: consumer price index; Real: adjusted by CPI inflation; NA: not available
*AHE of production and nonsupervisory employees because of unavailability of data for all employees for Jan-Feb 2006
Source: US Bureau of Labor Statistics http://www.bls.gov/
Average hourly earnings of all US employees in the US in constant dollars of 1982-1984 from the dataset of the US Bureau of Labor Statistics (BLS) are provided in Table IB-4. Average hourly earnings fell 0.5 percent after adjusting for inflation in the 12 months ending in Mar 2012 and gained 0.6 percent in the 12 months ending in Apr 2012 but then lost 0.6 percent in the 12 months ending in May 2012 with a gain of 0.3 percent in the 12 months ending in Jun 2012 and 1.0 percent in Jul 2012 followed by 0.1 percent in Aug 2012 and 0.7 percent in Sep 2012. Average hourly earnings adjusted by inflation fell 1.2 percent in the 12 months ending in Oct 2012. Average hourly earnings adjusted by inflation increased 0.1 percent in the 12 months ending in Nov 2012 and 1.1 percent in the 12 months ending in Dec 2012 but fell 0.2 percent in the 12 months ending in Jan 2013 and stagnated with gain of 0.1 percent in the 12 months ending in Feb 2013. Average hourly earnings adjusted for inflation increased 0.4 percent in the 12 months ending in Mar 2013 and increased 0.2 percent in the 12 months ending in Apr 2013. Average hourly earnings adjusted for inflation increased 0.6 percent in the 12 months ending in May 2013 and 1.1 percent in the 12 months ending in Jun 2013. Average hourly earnings of all employees adjusted for inflation fell 0.7 percent in the 12 months ending in Jul 2013 and increased 0.7 percent in the 12 months ending in Sep 2013. Table IB-4 confirms the trend of deterioration of purchasing power of average hourly earnings in 2011 and into 2012 with 12-month percentage declines in three of the first three months of 2012 (-1.1 percent in Jan, -1.1 percent in Feb and -0.5 percent in Mar), declines of 0.6 percent in May and 1.2 percent in Oct and increase in five (0.6 percent in Apr, 0.3 percent in Jun, 1.0 percent in Jul, 0.7 percent in Sep and 1.1 percent in Dec) and stagnation in two (0.1 percent in Aug and 0.1 percent in Nov). Average hourly earnings adjusted for inflation fell 0.2 percent in the 12 months ending in Jan 2013, stagnated with gain of 0.1 percent in the 12 months ending in Feb 2013 and gained 0.4 percent in the 12 months ending Mar 2013. Real average hourly earnings increased 0.2 percent in the 12 months ending in Apr 2013 and 0.6 percent in the 12 months ending in May 2013. Average hourly earnings increased 1.1 percent in the 12 months ending in Jun 2013 and fell 0.7 percent in the 12 months ending in Jul 2013. Annual data are revealing: -0.7 percent in 2008 during carry trades into commodity futures in a global recession, 3.2 percent in 2009 with reversal of carry trades, no change in 2010 and 2012 and decline by 1.1 percent in 2011. Annual average hourly earnings of all employees in the United States adjusted for inflation increased 1.4 percent from 2007 to 2012 at the yearly average rate of 0.3 percent (from $10.11 in 2007 to $10.25 in 2012 in dollars of 1982-1984 using data in http://www.bls.gov/data/). Those who still work bring back home a paycheck that buys fewer goods than a year earlier and savings in bank deposits do not pay anything because of financial repression (http://cmpassocregulationblog.blogspot.com/2013/09/mediocre-and-decelerating-united-states.html).
Table IB-4, US, Average Hourly Earnings of All Employees NSA in Constant Dollars of 1982-1984
| Year | Jan | Feb | Mar | Apr | May | Jun | Jul | Aug |
| 2006 | 10.05 | 10.11 | 9.92 | 9.89 | 9.97 | 9.88 | ||
| 2007 | 10.23 | 10.22 | 10.14 | 10.18 | 10.02 | 9.99 | 10.08 | 10.03 |
| 2008 | 10.11 | 10.12 | 10.11 | 10.00 | 9.91 | 9.84 | 9.77 | 9.83 |
| 2009 | 10.48 | 10.50 | 10.47 | 10.40 | 10.32 | 10.20 | 10.23 | 10.29 |
| 2010 | 10.41 | 10.43 | 10.35 | 10.35 | 10.38 | 10.27 | 10.29 | 10.34 |
| 2011 | 10.53 | 10.41 | 10.26 | 10.22 | 10.22 | 10.12 | 10.17 | 10.10 |
| 2012 | 10.41 | 10.30 | 10.21 | 10.28 | 10.16 | 10.15 | 10.27 | 10.11 |
| ∆%12M | -1.1 | -1.1 | -0.5 | 0.6 | -0.6 | 0.3 | 1.0 | 0.1 |
| 2013 | 10.39 | 10.31 | 10.25 | 10.30 | 10.22 | 10.26 | 10.20 | 10.18 |
| ∆%12M | -0.2 | 0.1 | 0.4 | 0.2 | 0.6 | 1.1 | -0.7 | 0.7 |
Source: US Bureau of Labor Statistics http://www.bls.gov/
Chart IB-2 of the US Bureau of Labor Statistics plots average hourly earnings of all US employees in constant 1982-1984 dollars with evident decline from annual earnings of $10.36 in 2009 and $10.36 again in 2010 to $10.25 in 2011 and $10.25 again in 2012 or loss of 1.1 percent (data in http://www.bls.gov/data/). The economic welfare or wellbeing of United States workers deteriorated in a recovery without hiring (Section IC and earlier http://cmpassocregulationblog.blogspot.com/2013/09/recovery-without-hiring-ten-million.html), stagnating/declining real wages and 28 million unemployed or underemployed (Section I and earlier http://cmpassocregulationblog.blogspot.com/2013/09/twenty-eight-million-unemployed-or.html) because of mediocre economic growth (http://cmpassocregulationblog.blogspot.com/2013/09/mediocre-and-decelerating-united-states.html).
Chart IB-2, US, Average Hourly Earnings of All Employees in Constant Dollars of 1982-1984, SA 2006-2013
Source: US Bureau of Labor Statistics http://www.bls.gov/
Chart IB-3 provides 12-month percentage changes of average hourly earnings of all employees in constant dollars of 1982-1984, that is, adjusted for inflation. There was sharp contraction of inflation-adjusted average hourly earnings of US employees during parts of 2007 and 2008. Rates of change in 12 months became positive in parts of 2009 and 2010 but then became negative again in 2011 and into 2012 with temporary increase in Apr 2012 that was reversed in May with another gain in Jun and Jul 2012 followed by stagnation in Aug 2012 and marginal gain in Sep 2012 with sharp decline in Oct 2012, stagnation in Nov 2012, increase in Dec 2012 and renewed decrease in Jan 2013 with near stagnation in Feb 2013 followed by mild increase in Mar-Apr 2013. Hourly earnings adjusted for inflation increased in Jun 2013 and fell in Jul 2013, increasing in Aug 2013.
Chart IB-3, Average Hourly Earnings of All Employees NSA 12-Month Percent Change, 1982-1984 Dollars, NSA 2007-2013
Source: US Bureau of Labor Statistics http://www.bls.gov/
Average weekly earnings of all US employees in the US in constant dollars of 1982-1984 from the dataset of the US Bureau of Labor Statistics (BLS) are provided in Table IB-5. Average weekly earnings fell 3.2 percent after adjusting for inflation in the 12 months ending in Aug 2011, decreased 0.9 percent in the 12 months ending in Sep 2011, increased 0.9 percent in the 12 months ending in Oct 2011, fell 1.0 percent in the 12 months ending in Nov 2011 and 0.3 in the 12 months ending in Dec 2011, declining 0.3 percent in the 12 months ending in Jan 2012 and 0.5 percent in the 12 months ending in Feb 2012. Average weekly earnings in constant dollars were virtually flat in Mar 2012 relative to Mar 2011, increasing 0.1 percent. Average weekly earnings in constant dollars increased 1.7 percent in Apr 2012 relative to Apr 2011 but fell 1.4 percent in May 2012 relative to May 2011, increasing 0.3 percent in the 12 months ending in Jun and 2.1 percent in Jul 2012. Real weekly earnings increased 0.4 percent in the 12 months ending in Aug 2012 and 2.1 percent in the 12 months ending in Sep 2012. Real weekly earnings fell 2.9 percent in the 12 months ending in Oct 2012 and increased 0.1 percent in the 12 months ending in Nov 2012 and 2.5 percent in the 12 months ending in Dec 2012. Real weekly earnings fell 1.6 percent in the 12 months ending in Jan 2013 and virtually stagnated with gain of 0.2 percent in the 12 months ending in Feb 2013, increasing 0.4 percent in the 12 months ending in Mar 2013. Real weekly earnings fell 1.0 percent in the 12 months ending in Apr 2013 and increased 0.6 percent in the 12 months ending in May 2013. Average weekly earnings increased 2.5 percent in the 12 months ending in Jun 2013 and fell 1.8 percent in the 12 months ending in Jul 2013. Real weekly earnings increased 1.0 percent in the 12 months ending in Aug 2013. Table I-5 confirms the trend of deterioration of purchasing power of average weekly earnings in 2011 and into 2012 with oscillations according to carry trades causing world inflation waves (http://cmpassocregulationblog.blogspot.com/2013/08/duration-dumping-and-peaking-valuations.html). On an annual basis, average weekly earnings in constant 1982-1984 dollars increased from $349.78 in 2007 to $353.66 in 2012, by 1.1 percent or at the average rate of 0.2 percent per year (data in http://www.bls.gov/data/). Annual average weekly earnings in constant dollars of $353.50 in 2010 were virtually unchanged at $353.66 in 2012. Those who still work bring back home a paycheck that buys fewer high-quality goods than a year earlier. The fractured US job market does not provide an opportunity for advancement as in past booms following recessions (Section IC and earlier http://cmpassocregulationblog.blogspot.com/2013/09/recovery-without-hiring-ten-million.html).
Table IB-5, US, Average Weekly Earnings of All Employees in Constant Dollars of 1982-1984, NSA 2007-2013
| Year | Feb | Mar | Apr | May | Jun | Jul | Aug |
| 2006 | 343.71 | 349.95 | 340.12 | 342.08 | 347.97 | 341.76 | |
| 2007 | 349.40 | 347.76 | 353.41 | 344.58 | 346.74 | 351.68 | 347.98 |
| 2008 | 346.21 | 351.70 | 344.13 | 340.93 | 343.40 | 337.06 | 340.18 |
| 2009 | 360.31 | 355.81 | 349.33 | 347.94 | 344.59 | 345.92 | 352.80 |
| 2010 | 350.51 | 349.76 | 351.99 | 356.97 | 350.13 | 352.02 | 358.90 |
| 2011 | 353.81 | 349.90 | 350.62 | 353.56 | 348.08 | 349.75 | 347.42 |
| 2012 | 352.12 | 350.19 | 356.68 | 348.65 | 349.28 | 357.26 | 348.93 |
| ∆%12M | -0.5 | 0.1 | 1.7 | -1.4 | 0.3 | 2.1 | 0.4 |
| 2013 | 352.66 | 351.59 | 353.13 | 350.59 | 357.96 | 350.93 | 352.25 |
| ∆%12M | 0.2 | 0.4 | -1.0 | 0.6 | 2.5 | -1.8 | 1.0 |
Source: US Bureau of Labor Statistics http://www.bls.gov/
Chart IB-4 provides average weekly earnings of all employees in constant dollars of 1982-1984. The same pattern emerges of sharp decline during the contraction, followed by recovery in the expansion and continuing fall with oscillations caused by carry trades from zero interest rates into commodity futures from 2010 to 2011 and into 2012 and 2013.
Chart IB-4, US, Average Weekly Earnings of All Employees in Constant Dollars of 1982-1984, SA 2006-2013
Source: US Bureau of Labor Statistics http://www.bls.gov/data/
Chart IB-5 provides 12-month percentage changes of average weekly earnings of all employees in the US in constant dollars of 1982-1984. There is the same pattern of contraction during the global recession in 2008 and then again trend of deterioration in the recovery without hiring and inflation waves in 2011 and 2012.
Chart IB-5, US, Average Weekly Earnings of All Employees NSA in Constant Dollars of 1982-1984 12-Month Percent Change, NSA 2007-2013
ESV Recovery without Hiring. Professor Edward P. Lazear (2012Jan19) at Stanford University finds that recovery of hiring in the US to peaks attained in 2007 requires an increase of hiring by 30 percent while hiring levels have increased by only 4 percent since Jan 2009. The high level of unemployment with low level of hiring reduces the statistical probability that the unemployed will find a job. According to Lazear (2012Jan19), the probability of finding a new job currently is about one third of the probability of finding a job in 2007. Improvements in labor markets have not increased the probability of finding a new job. Lazear (2012Jan19) quotes an essay coauthored with James R. Spletzer in the American Economic Review (Lazear and Spletzer 2012Mar, 2012May) on the concept of churn. A dynamic labor market occurs when a similar amount of workers is hired as those who are separated. This replacement of separated workers is called churn, which explains about two-thirds of total hiring. Typically, wage increases received in a new job are higher by 8 percent. Lazear (2012Jan19) argues that churn has declined 35 percent from the level before the recession in IVQ2007. Because of the collapse of churn, there are no opportunities in escaping falling real wages by moving to another job. As this blog argues, there are meager chances of escaping unemployment because of the collapse of hiring and those employed cannot escape falling real wages by moving to another job (Section I and earlier http://cmpassocregulationblog.blogspot.com/2013/09/twenty-eight-million-unemployed-or.html). Lazear and Spletzer (2012Mar, 1) argue that reductions of churn reduce the operational effectiveness of labor markets. Churn is part of the allocation of resources or in this case labor to occupations of higher marginal returns. The decline in churn can harm static and dynamic economic efficiency. Losses from decline of churn during recessions can affect an economy over the long-term by preventing optimal growth trajectories because resources are not used in the occupations where they provide highest marginal returns. Lazear and Spletzer (2012Mar 7-8) conclude that: “under a number of assumptions, we estimate that the loss in output during the recession [of 2007 to 2009] and its aftermath resulting from reduced churn equaled $208 billion. On an annual basis, this amounts to about .4% of GDP for a period of 3½ years.”
There are two additional facts discussed below: (1) there are about ten million fewer full-time jobs currently than before the recession of 2008 and 2009; and (2) the extremely high and rigid rate of youth unemployment is denying an early start to young people ages 16 to 24 years while unemployment of ages 45 years or over has swelled.
An important characteristic of the current fractured labor market of the US is the closing of the avenue for exiting unemployment and underemployment normally available through dynamic hiring. Another avenue that is closed is the opportunity for advancement in moving to new jobs that pay better salaries and benefits again because of the collapse of hiring in the United States. Those who are unemployed or underemployed cannot find a new job even accepting lower wages and no benefits. The employed cannot escape declining inflation-adjusted earnings because there is no hiring. The objective of this section is to analyze hiring and labor underutilization in the United States.
Blanchard and Katz (1997, 53 consider an appropriate measure of job stress:
“The right measure of the state of the labor market is the exit rate from unemployment, defined as the number of hires divided by the number unemployed, rather than the unemployment rate itself. What matters to the unemployed is not how many of them there are, but how many of them there are in relation to the number of hires by firms.”
The natural rate of unemployment and the similar NAIRU are quite difficult to estimate in practice (Ibid; see Ball and Mankiw 2002).
The Bureau of Labor Statistics (BLS) created the Job Openings and Labor Turnover Survey (JOLTS) with the purpose that (http://www.bls.gov/jlt/jltover.htm#purpose):
“These data serve as demand-side indicators of labor shortages at the national level. Prior to JOLTS, there was no economic indicator of the unmet demand for labor with which to assess the presence or extent of labor shortages in the United States. The availability of unfilled jobs—the jobs opening rate—is an important measure of tightness of job markets, parallel to existing measures of unemployment.”
The BLS collects data from about 16,000 US business establishments in nonagricultural industries through the 50 states and DC. The data are released monthly and constitute an important complement to other data provided by the BLS (see also Lazear and Spletzer 2012Mar, 6-7).
Hiring in the nonfarm sector (HNF) has declined from 63.8 million in 2006 to 52.0 million in 2012 or by 11.8 million while hiring in the private sector (HP) has declined from 59.5 million in 2006 to 48.5 million in 2012 or by 11.0 million, as shown in Table I-1. The ratio of nonfarm hiring to employment (RNF) has fallen from 47.2 in 2005 to 38.9 in 2012 and in the private sector (RHP) from 53.1 in 2005 to 43.4 in 2012. Hiring has not recovered as in previous cyclical expansions because of the low rate of economic growth in the current cyclical expansion. Long-term economic performance in the United States consisted of trend growth of GDP at 3 percent per year and of per capita GDP at 2 percent per year as measured for 1870 to 2010 by Robert E Lucas (2011May). The economy returned to trend growth after adverse events such as wars and recessions. The key characteristic of adversities such as recessions was much higher rates of growth in expansion periods that permitted the economy to recover output, income and employment losses that occurred during the contractions. Over the business cycle, the economy compensated the losses of contractions with higher growth in expansions to maintain trend growth of GDP of 3 percent and of GDP per capita of 2 percent. US economic growth has been at only 2.2 percent on average in the cyclical expansion in the 16 quarters from IIIQ2009 to IIQ2013. Boskin (2010Sep) measures that the US economy grew at 6.2 percent in the first four quarters and 4.5 percent in the first 12 quarters after the trough in the second quarter of 1975; and at 7.7 percent in the first four quarters and 5.8 percent in the first 12 quarters after the trough in the first quarter of 1983 (Professor Michael J. Boskin, Summer of Discontent, Wall Street Journal, Sep 2, 2010 http://professional.wsj.com/article/SB10001424052748703882304575465462926649950.html). There are new calculations using the revision of US GDP and personal income data since 1929 by the Bureau of Economic Analysis (BEA) (http://bea.gov/iTable/index_nipa.cfm http://bea.gov/newsreleases/national/gdp/2013/pdf/gdp2q13_adv.pdf http://bea.gov/newsreleases/national/pi/2013/pdf/pi0613.pdf) and the second estimate of GDP for IIQ2013 (http://www.bea.gov/newsreleases/national/gdp/2013/pdf/gdp2q13_3rd.pdf). The average of 7.7 percent in the first four quarters of major cyclical expansions is in contrast with the rate of growth in the first four quarters of the expansion from IIIQ2009 to IIQ2010 of only 2.7 percent obtained by diving GDP of $14,738.0 billion in IIQ2010 by GDP of $14,356.9 billion in IIQ2009 {[$14,738.0/$14,356.9 -1]100 = 2.7%], or accumulating the quarter on quarter growth rates (http://cmpassocregulationblog.blogspot.com/2013/09/mediocre-and-decelerating-united-states.html and earlier http://cmpassocregulationblog.blogspot.com/2013/09/increasing-interest-rate-risk.html). The expansion from IQ1983 to IVQ1985 was at the average annual growth rate of 5.7 percent and at 7.8 percent from IQ1983 to IVQ1983 (http://cmpassocregulationblog.blogspot.com/2013/09/mediocre-and-decelerating-united-states.html and earlier http://cmpassocregulationblog.blogspot.com/2013/09/increasing-interest-rate-risk.html). As a result, there are 28.1 million unemployed or underemployed in the United States for an effective unemployment rate of 17.3 percent (Section I and earlier http://cmpassocregulationblog.blogspot.com/2013/09/twenty-eight-million-unemployed-or.html). Zero interest rates and quantitative easing have not provided the impulse for growth and were not required in past successful cyclical expansions.
Table I-1, US, Annual Total Nonfarm Hiring (HNF) and Total Private Hiring (HP) in the US and Percentage of Total Employment
| HNF | Rate RNF | HP | Rate HP | |
| 2001 | 62,948 | 47.8 | 58,825 | 53.1 |
| 2002 | 58,583 | 44.9 | 54,759 | 50.3 |
| 2003 | 56,451 | 43.4 | 53,056 | 48.9 |
| 2004 | 60,367 | 45.9 | 56,617 | 51.6 |
| 2005 | 63,150 | 47.2 | 59,372 | 53.1 |
| 2006 | 63,773 | 46.9 | 59,494 | 52.1 |
| 2007 | 62,421 | 45.4 | 58,035 | 50.3 |
| 2008 | 55,128 | 40.3 | 51,591 | 45.1 |
| 2009 | 46,357 | 35.4 | 43,031 | 39.8 |
| 2010 | 48,607 | 37.4 | 44,788 | 41.7 |
| 2011 | 49,675 | 37.8 | 46,552 | 42.5 |
| 2012 | 51,991 | 38.9 | 48,493 | 43.4 |
Source: Bureau of Labor Statistics http://www.bls.gov/jlt/
Chart I-1 shows the annual level of total nonfarm hiring (HNF) that collapsed during the global recession after 2007 in contrast with milder decline in the shallow recession of 2001. Nonfarm hiring has not been recovered, remaining at a depressed level.
Chart I-1, US, Level Total Nonfarm Hiring (HNF), Annual, 2001-2012
Source: US Bureau of Labor Statistics
Chart I-2 shows the ratio or rate of nonfarm hiring to employment (RNF) that also fell much more in the recession of 2007 to 2009 than in the shallow recession of 2001. Recovery is weak.
Table I-2, US, Annual Total Nonfarm Hiring (HNF), Annual Percentage Change, 2002-2012.
Chart I-2, US, Rate Total Nonfarm Hiring (HNF), Annual, 2001-2012
Source: US Bureau of Labor Statistics
Yearly percentage changes of total nonfarm hiring (HNF) are provided in Table I-2. There were much milder declines in 2002 of 6.9 percent and 3.6 percent in 2003 followed by strong rebounds of 6.9 percent in 2004 and 4.6 percent in 2005. In contrast, the contractions of nonfarm hiring in the recession after 2007 were much sharper in percentage points: 2.1 in 2007, 11.7 in 2008 and 15.9 percent in 2009. On a yearly basis, nonfarm hiring grew 4.9 percent in 2010 relative to 2009, 2.2 percent in 2011 and 4.7 percent in 2012.
Table I-2, US, Annual Total Nonfarm Hiring (HNF), Annual Percentage Change, 2002-2012
| Year | Annual |
| 2002 | -6.9 |
| 2003 | -3.6 |
| 2004 | 6.9 |
| 2005 | 4.6 |
| 2006 | 1.0 |
| 2007 | -2.1 |
| 2008 | -11.7 |
| 2009 | -15.9 |
| 2010 | 4.9 |
| 2011 | 2.2 |
| 2012 | 4.7 |
Source: US Bureau of Labor Statistics
Total private hiring (HP) yearly data are provided in Chart I-4. There has been sharp contraction of total private hiring in the US and only milder recovery from 2010 to 2012.
Chart I-4, US, Total Private Hiring Level, Annual, 2001-2012
Source: Bureau of Labor Statistics
Chart I-5 plots the rate of total private hiring relative to employment (RHP). The rate collapsed during the global recession after 2007 with insufficient recovery.
Chart I-5, US, Total Private Hiring, Annual, 2001-2013
Source: Bureau of Labor Statistics
Total nonfarm hiring (HNF), total private hiring (HP) and their respective rates are provided for the month of Aug in the years from 2001 to 2013 in Table I-3. Hiring numbers are in thousands. There is meager recovery in HNF from 4202 thousand (or 4.2 million) in Aug 2009 to 4285 thousand in Aug 2010, 4621 thousand in Aug 2011, 4907 thousand in Aug 2012 and 4993 thousand in Aug 2013 for cumulative gain of 18.8 percent. HP rose from 3731 thousand in Aug 2009 to 3885 thousand in Aug 2010, 4173 in Aug 2011, 4346 thousand in Aug 2012 and 4482 in Aug 2013 for cumulative gain of 20.1 percent. HNF has fallen from 5735 in Aug 2006 to 4993 in Aug 2013 or by 12.9 percent. HP has fallen from 5387 in Aug 2005 to 4482 in Aug 2013 or by 16.8 percent. The civilian noninstitutional population of the US rose from 228.815 million in 2006 to 243.284 million in 2012 or by 14.469 million and the civilian labor force from 151.428 million in 2006 to 154.975 million in 2012 or by 3.547 million (http://www.bls.gov/data/). The number of nonfarm hires in the US fell from 63.773 million in 2006 to 51.991 million in 2012 or by 11.782 million and the number of private hires fell from 59.494 million in 2006 to 48.493 million in 2012 or by 11 million (http://www.bls.gov/jlt/). The labor market continues to be fractured, failing to provide an opportunity to exit from unemployment/underemployment or to find an opportunity for advancement away from declining inflation-adjusted earnings.
Table I-3, US, Total Nonfarm Hiring (HNF) and Total Private Hiring (HP) in the US in
Thousands and in Percentage of Total Employment Not Seasonally Adjusted
| HNF | Rate RNF | HP | Rate HP | |
| 2001 Aug | 5450 | 4.1 | 4894 | 4.4 |
| 2002 Aug | 5198 | 4.0 | 4677 | 4.3 |
| 2003 Aug | 4948 | 3.8 | 4589 | 4.2 |
| 2004 Aug | 5501 | 4.2 | 5019 | 4.5 |
| 2005 Aug | 5881 | 4.4 | 5387 | 4.8 |
| 2006 Aug | 5735 | 4.2 | 5119 | 4.4 |
| 2007 Aug | 5662 | 4.1 | 5020 | 4.3 |
| 2008 Aug | 5018 | 3.7 | 4550 | 3.9 |
| 2009 Aug | 4202 | 3.2 | 3731 | 3.4 |
| 2010 Aug | 4285 | 3.3 | 3885 | 3.6 |
| 2011 Aug | 4621 | 3.5 | 4173 | 3.8 |
| 2012 Aug | 4907 | 3.7 | 4346 | 3.8 |
| 2013 Aug | 4993 | 3.7 | 4482 | 3.9 |
Source: Bureau of Labor Statistics http://www.bls.gov/jlt/
Chart I-6 provides total nonfarm hiring on a monthly basis from 2001 to 2013. Nonfarm hiring rebounded in early 2010 but then fell and stabilized at a lower level than the early peak not-seasonally adjusted (NSA) of 4774 in May 2010 until it surpassed it with 4883 in Jun 2011 but declined to 3013 in Dec 2012. Nonfarm hiring fell in Dec 2011 to 2990 from 3827 in Nov and to revised 3683 in Feb 2012, increasing to 4210 in Mar 2012, 3013 in Dec 2012 and 4128 in Jan 2013 and declining to 3661 in Feb 2013. Nonfarm hires not seasonally adjusted increased to 4993 in Aug 2013. Chart I-6 provides seasonally adjusted (SA) monthly data. The number of seasonally-adjusted hires in Aug 2011 was 4187 thousand, increasing to revised 4489 thousand in Feb 2012, or 7.2 percent, moving to 4195 in Dec 2012 for cumulative increase of 0.5 percent from 4174 in Dec 2011 and 4488 in Aug 2013 for increase of 7.0 percent relative to 4195 in Dec 2012. The number of hires not seasonally adjusted was 4883 in Jun 2011, falling to 2990 in Dec 2011 but increasing to 4013 in Jan 2012 and declining to 3013 in Dec 2012. The number of nonfarm hiring not seasonally adjusted fell by 38.8 percent from 4883 in Jun 2011 to 2990 in Dec 2011 and fell 41.3 percent from 5130 in Jun 2012 to 3013 in Dec 2012 in a yearly-repeated seasonal pattern.
Chart I-6, US, Total Nonfarm Hiring (HNF), 2001-2013 Month SA
Source: Bureau of Labor Statistics
Similar behavior occurs in the rate of nonfarm hiring in Chart I-7. Recovery in early 2010 was followed by decline and stabilization at a lower level but with stability in monthly SA estimates of 3.2 in Aug 2011 to 3.2 in Jan 2012, increasing to 3.4 in May 2012 and falling to 3.3 in Jun 2012. The rate fell to 3.1 in Jul 2012, increasing to 3.3 in Aug 2012 but falling to 3.1 in Dec 2012 and 3.3 in Aug 2013. The rate not seasonally adjusted fell from 3.7 in Jun 2011 to 2.2 in Dec 2012, climbing to 3.8 in Jun 2012 but falling to 2.2 in Dec 2012 and 3.7 in Aug 2013. Rates of nonfarm hiring NSA were in the range of 2.8 (Dec) to 4.5 (Jun) in 2006.
Chart I-7, US, Rate Total Nonfarm Hiring, Month SA 2001-2013
Source: Bureau of Labor Statistics
There is only milder improvement in total private hiring shown in Chart I-8. Hiring private (HP) rose in 2010 with stability and renewed increase in 2011 followed by almost stationary series in 2012. The number of private hiring seasonally adjusted fell from 4026 thousand in Sep 2011 to 3876 in Dec 2011 or by 3.7 percent, increasing to 3915 in Jan 2012 or decline by 2.8 percent relative to the level in Sep 2011. The rate fell to 3934 in Sep 2012 or lower by 2.3 percent relative to Sep 2011, decreasing to 3915 in Dec 2012 for change of 0.0 percent relative to 3915 in Jan 2012. The number of private hiring not seasonally adjusted fell from 4504 in Jun 2011 to 2809 in Dec 2011 or by 37.6 percent, reaching 3749 in Jan 2012 or decline of 16.8 percent relative to Jun 2011 and moving to 2842 in Dec 2012 or 39.8 percent lower relative to 4724 in Jun 2012. Companies do not hire in the latter part of the year that explains the high seasonality in year-end employment data. For example, NSA private hiring fell from 5661 in Jun 2006 to 3635 in Dec 2006 or by 35.8 percent. Private hiring NSA data are useful in showing the huge declines from the period before the global recession. In Jul 2006, private hiring NSA was 5555, declining to 4245 in Jul 2011 or by 23.6 percent and to 4277 in Jul 2012 or lower by 23.0 percent relative to Jul 2006. Private hiring NSA fell from 5215 in Sep 2005 to 4005 in Sep 2012 or 23.2 percent and fell from 3635 in Dec 2006 to 2842 in Dec 2012 or 21.8 percent. The conclusion is that private hiring in the US is around 20 percent below the hiring before the global recession. The main problem in recovery of the US labor market has been the low rate of GDP growth. Long-term economic performance in the United States consisted of trend growth of GDP at 3 percent per year and of per capita GDP at 2 percent per year as measured for 1870 to 2010 by Robert E Lucas (2011May). The economy returned to trend growth after adverse events such as wars and recessions. The key characteristic of adversities such as recessions was much higher rates of growth in expansion periods that permitted the economy to recover output, income and employment losses that occurred during the contractions. Over the business cycle, the economy compensated the losses of contractions with higher growth in expansions to maintain trend growth of GDP of 3 percent and of GDP per capita of 2 percent. US economic growth has been at only 2.2 percent on average in the cyclical expansion in the 16 quarters from IIIQ2009 to IIQ2013. Boskin (2010Sep) measures that the US economy grew at 6.2 percent in the first four quarters and 4.5 percent in the first 12 quarters after the trough in the second quarter of 1975; and at 7.7 percent in the first four quarters and 5.8 percent in the first 12 quarters after the trough in the first quarter of 1983 (Professor Michael J. Boskin, Summer of Discontent, Wall Street Journal, Sep 2, 2010 http://professional.wsj.com/article/SB10001424052748703882304575465462926649950.html). There are new calculations using the revision of US GDP and personal income data since 1929 by the Bureau of Economic Analysis (BEA) (http://bea.gov/iTable/index_nipa.cfm http://bea.gov/newsreleases/national/gdp/2013/pdf/gdp2q13_adv.pdf http://bea.gov/newsreleases/national/pi/2013/pdf/pi0613.pdf) and the second estimate of GDP for IIQ2013 (http://www.bea.gov/newsreleases/national/gdp/2013/pdf/gdp2q13_3rd.pdf). The average of 7.7 percent in the first four quarters of major cyclical expansions is in contrast with the rate of growth in the first four quarters of the expansion from IIIQ2009 to IIQ2010 of only 2.7 percent obtained by diving GDP of $14,738.0 billion in IIQ2010 by GDP of $14,356.9 billion in IIQ2009 {[$14,738.0/$14,356.9 -1]100 = 2.7%], or accumulating the quarter on quarter growth rates (http://cmpassocregulationblog.blogspot.com/2013/09/mediocre-and-decelerating-united-states.html and earlier http://cmpassocregulationblog.blogspot.com/2013/09/increasing-interest-rate-risk.html). The expansion from IQ1983 to IVQ1985 was at the average annual growth rate of 5.7 percent and at 7.8 percent from IQ1983 to IVQ1983 (http://cmpassocregulationblog.blogspot.com/2013/09/mediocre-and-decelerating-united-states.html and earlier http://cmpassocregulationblog.blogspot.com/2013/09/increasing-interest-rate-risk.html). As a result, there are 28.1 million unemployed or underemployed in the United States for an effective unemployment rate of 17.3 percent (Section I and earlier http://cmpassocregulationblog.blogspot.com/2013/09/twenty-eight-million-unemployed-or.html). Zero interest rates and quantitative easing have not provided the impulse for growth and were not required in past successful cyclical expansions. The US missed the opportunity to recover employment as in past cyclical expansions from contractions.
Chart I-8, US, Total Private Hiring Month SA 2001-2013
Source: Bureau of Labor Statistics
Chart I-9 shows similar behavior in the rate of private hiring. The rate in 2011 in monthly SA data did not rise significantly above the peak in 2010. The rate seasonally adjusted fell from 3.7 in Sep 2011 to 3.5 in Dec 2011 and reached 3.5 in Dec 2012 and 3.7 in Aug 2013. The rate not seasonally adjusted (NSA) fell from 3.7 in Sep 2011 to 2.5 in Dec 2011, increasing to 3.8 in Oct 2012 but falling to 2.5 in Dec 2012 and 3.4 in Mar 2013. The NSA rate of private hiring fell from 4.8 in Jul 2006 to 3.4 in Aug 2009 but recovery was insufficient to only 3.8 in Aug 2012, 2.5 in Dec 2012 and 3.9 in Aug 2013.
Chart I-9, US, Rate Total Private Hiring Month SA 2001-2013
Source: Bureau of Labor Statistics
ESVI Ten Million Fewer Full-time Jobs. There is strong seasonality in US labor markets around the end of the year. The number employed part-time for economic reasons because they could not find full-time employment fell from 9.101 million in Sep 2011 to 7.664 million in Mar 2012, seasonally adjusted, or decline of 1.437 million in six months, as shown in Table I-9. The number employed part-time for economic reasons rebounded to 8.607 million in Sep 2012 for increase of 564,000 in one month from Aug to Sep 2012. The number employed part-time for economic reasons declined to 8.286 million in Oct 2012 or by 321,000 again in one month, further declining to 8.138 million in Nov 2012 for another major one-month decline of 148,000 and 7.918 million in Dec 2012 or fewer 220,000 in just one month. The number employed part-time for economic reasons increased to 7.973 million in Jan 2013 or 55,000 more than in Dec 2012 and to 7,988 million in Feb 2013, declining to 7.904 million in May 2013 but increasing to 8.245 million in Jul 2013. The number employed part-time for economic reasons fell to 7.911 million in Aug 2013 for decline of 334.000 in one month from 8.245 million in Jul 2013. The number employed part-time for economic reasons increased 15,000 from 7.911 million in Aug 2013 to 7.926 million in Sep 2013. There is an increase of 243,000 in part-time for economic reasons from Aug 2012 to Oct 2012 and of 95,000 from Aug 2012 to Nov 2012. The number employed full-time increased from 112.871 million in Oct 2011 to 115.145 million in Mar 2012 or 2.274 million but then fell to 114.300 million in May 2012 or 0.845 million fewer full-time employed than in Mar 2012. The number employed full-time increased from 114.492 million in Aug 2012 to 115.469 million in Oct 2012 or increase of 0.977 million full-time jobs in two months and further to 115.918 million in Jan 2013 or increase of 1.426 million more full-time jobs in five months from Aug 2012 to Jan 2013. The number of full time jobs decreased slightly to 115.841 in Feb 2013, increasing to 116.238 million in May 2013 and 115.998 million in Jun 2013. Then number of full-time jobs increased to 116.090 million in Jul 2013, 116.208 million in Aug 2013 and 116.899 million in Sep 2013. Benchmark and seasonality-factors adjustments at the turn of every year could affect comparability of labor market indicators (http://cmpassocregulationblog.blogspot.com/2013/02/thirty-one-million-unemployed-or.html http://cmpassocregulationblog.blogspot.com/2013/03/thirty-one-million-unemployed-or.html). The number of employed part-time for economic reasons actually increased without seasonal adjustment from 8.271 million in Nov 2011 to 8.428 million in Dec 2011 or by 157,000 and then to 8.918 million in Jan 2012 or by an additional 490,000 for cumulative increase from Nov 2011 to Jan 2012 of 647,000. The level of employed part-time for economic reasons then fell from 8.918 million in Jan 2012 to 7.867 million in Mar 2012 or by 1.0151 million and to 7.694 million in Apr 2012 or 1.224 million fewer relative to Jan 2012. In Aug 2012, the number employed part-time for economic reasons reached 7.842 million NSA or 148,000 more than in Apr 2012. The number employed part-time for economic reasons increased from 7.842 million in Aug 2012 to 8.110 million in Sep 2012 or by 3.4 percent. The number part-time for economic reasons fell from 8.110 million in Sep 2012 to 7.870 million in Oct 2012 or by 240.000 in one month. The number employed part-time for economic reasons NSA increased to 8.628 million in Jan 2013 or 758,000 more than in Oct 2012. The number employed part-time for economic reasons fell to 8.298 million in Feb 2013, which is lower by 330,000 relative to 8.628 million in Jan 2013 but higher by 428,000 relative to 7.870 million in Oct 2012. The number employed part time for economic reasons fell to 7.734 million in Mar 2013 or 564,000 less than in Feb 2013 and fell to 7.709 million in Apr 2013. The number employed part-time for economic reasons reached 7.618 million in May 2013. The number employed part-time for economic reasons jumped from 7.618 million in May 2013 to 8.440 million in Jun 2013 or 822,000 in one month. The number employed part-time for economic reasons fell to 8.324 million in Jul 2013 and 7.690 million in Aug 2013. The number employed part-time for economic reasons NSA fell to 7.522 million in Sep 2013. The number employed full time without seasonal adjustment fell from 113.138 million in Nov 2011 to 113.050 million in Dec 2011 or by 88,000 and fell further to 111.879 in Jan 2012 for cumulative decrease of 1.259 million. The number employed full-time not seasonally adjusted fell from 113.138 million in Nov 2011 to 112.587 million in Feb 2012 or by 551.000 but increased to 116.214 million in Aug 2012 or 3.076 million more full-time jobs than in Nov 2011. The number employed full-time not seasonally adjusted decreased from 116.214 million in Aug 2012 to 115.678 million in Sep 2012 for loss of 536,000 full-time jobs and rose to 116.045 million in Oct 2012 or by 367,000 full-time jobs in one month relative to Sep 2012. The number employed full-time NSA fell from 116.045 million in Oct 2012 to 115.515 million in Nov 2012 or decline of 530.000 in one month. The number employed full-time fell from 115.515 in Nov 2012 to 115.079 million in Dec 2012 or decline by 436,000 in one month. The number employed full time fell from 115.079 million in Dec 2012 to 113.868 million in Jan 2013 or decline of 1.211 million in one month. The number of full time jobs increased to 114.191 in Feb 2012 or by 323,000 in one month and increased to 114.796 million in Mar 2013 for cumulative increase from Jan by 928,000 full-time jobs but decrease of 283,000 from Dec 2012. The number employed full time reached 117.400 million in Jun 2013 and increased to 117.688 in Jul 2013 or by 288,000. The number employed full-time reached 117.868 million in Aug 2013 for increase of 180,000 in one month relative to Jul 2013. The number employed full-time fell to 117.308 million in Sep 2013 or by 560,000. Comparisons over long periods require use of NSA data. The number with full-time jobs fell from a high of 123.219 million in Jul 2007 to 108.777 million in Jan 2010 or by 14.442 million. The number with full-time jobs in Sep 2013 is 117.308 million, which is lower by 5.911 million relative to the peak of 123.219 million in Jul 2007. The magnitude of the stress in US labor markets is magnified by the increase in the civilian noninstitutional population of the United States from 231.958 million in Jul 2007 to 246.168 million in Sep 2013 or by 14.210 million (http://www.bls.gov/data/) while in the same period the number of full-time jobs fell 5.911 million. The ratio of full-time jobs of 123.219 million Jul 2007 to civilian noninstitutional population of 231.958 million was 53.1 percent. If that ratio had remained the same, there would be 130.715 million full-time jobs with population of 246.168 million in Sep 2013 or 13.407 million fewer full-time jobs than actual 117.308 million. There appear to be around 10 million fewer full-time jobs in the US than before the global recession while population increased around 14 million. Mediocre GDP growth is the main culprit of the fractured US labor market. Long-term economic performance in the United States consisted of trend growth of GDP at 3 percent per year and of per capita GDP at 2 percent per year as measured for 1870 to 2010 by Robert E Lucas (2011May). The economy returned to trend growth after adverse events such as wars and recessions. The key characteristic of adversities such as recessions was much higher rates of growth in expansion periods that permitted the economy to recover output, income and employment losses that occurred during the contractions. Over the business cycle, the economy compensated the losses of contractions with higher growth in expansions to maintain trend growth of GDP of 3 percent and of GDP per capita of 2 percent. US economic growth has been at only 2.2 percent on average in the cyclical expansion in the 16 quarters from IIIQ2009 to IIQ2013. Boskin (2010Sep) measures that the US economy grew at 6.2 percent in the first four quarters and 4.5 percent in the first 12 quarters after the trough in the second quarter of 1975; and at 7.7 percent in the first four quarters and 5.8 percent in the first 12 quarters after the trough in the first quarter of 1983 (Professor Michael J. Boskin, Summer of Discontent, Wall Street Journal, Sep 2, 2010 http://professional.wsj.com/article/SB10001424052748703882304575465462926649950.html). There are new calculations using the revision of US GDP and personal income data since 1929 by the Bureau of Economic Analysis (BEA) (http://bea.gov/iTable/index_nipa.cfm http://bea.gov/newsreleases/national/gdp/2013/pdf/gdp2q13_adv.pdf http://bea.gov/newsreleases/national/pi/2013/pdf/pi0613.pdf) and the second estimate of GDP for IIQ2013 (http://www.bea.gov/newsreleases/national/gdp/2013/pdf/gdp2q13_3rd.pdf). The average of 7.7 percent in the first four quarters of major cyclical expansions is in contrast with the rate of growth in the first four quarters of the expansion from IIIQ2009 to IIQ2010 of only 2.7 percent obtained by diving GDP of $14,738.0 billion in IIQ2010 by GDP of $14,356.9 billion in IIQ2009 {[$14,738.0/$14,356.9 -1]100 = 2.7%], or accumulating the quarter on quarter growth rates (http://cmpassocregulationblog.blogspot.com/2013/09/mediocre-and-decelerating-united-states.html and earlier http://cmpassocregulationblog.blogspot.com/2013/09/increasing-interest-rate-risk.html). The expansion from IQ1983 to IVQ1985 was at the average annual growth rate of 5.7 percent and at 7.8 percent from IQ1983 to IVQ1983 (http://cmpassocregulationblog.blogspot.com/2013/09/mediocre-and-decelerating-united-states.html and earlier http://cmpassocregulationblog.blogspot.com/2013/09/increasing-interest-rate-risk.html). As a result, there are 28.1 million unemployed or underemployed in the United States for an effective unemployment rate of 17.3 percent (Section I and earlier http://cmpassocregulationblog.blogspot.com/2013/09/twenty-eight-million-unemployed-or.html). Zero interest rates and quantitative easing have not provided the impulse for growth and were not required in past successful cyclical expansions. The US missed the opportunity to recover employment as in past cyclical expansions from contractions.
Table I-9, US, Employed Part-time for Economic Reasons, Thousands, and Full-time, Millions
| Part-time Thousands | Full-time Millions | |
| Seasonally Adjusted | ||
| Sep 2013 | 7,926 | 116.899 |
| Aug 2013 | 7,911 | 116.208 |
| Jul 2013 | 8,245 | 116.090 |
| Jun 2013 | 8,226 | 115.998 |
| May 2013 | 7,904 | 116.238 |
| Apr 2013 | 7,916 | 116.053 |
| Mar 2013 | 7,638 | 115.903 |
| Feb 2013 | 7,988 | 115.841 |
| Jan 2013 | 7,973 | 115.918 |
| Dec 2012 | 7,918 | 115.868 |
| Nov 2012 | 8,138 | 115.665 |
| Oct 2012 | 8,286 | 115.469 |
| Sep 2012 | 8,607 | 115.259 |
| Aug 2012 | 8,043 | 114.492 |
| Jul 2012 | 8,245 | 114.478 |
| Jun 2012 | 8,210 | 114.606 |
| May 2012 | 8,116 | 114.300 |
| Apr 2012 | 7,896 | 114.441 |
| Mar 2012 | 7,664 | 115.145 |
| Feb 2012 | 8,127 | 114.263 |
| Jan 2012 | 8,220 | 113.833 |
| Dec 2011 | 8,168 | 113.820 |
| Nov 2011 | 8,436 | 113.217 |
| Oct 2011 | 8,726 | 112.871 |
| Sep 2011 | 9,101 | 112.541 |
| Aug 2011 | 8,816 | 112.555 |
| Jul 2011 | 8,416 | 112.141 |
| Not Seasonally Adjusted | ||
| Sep 2013 | 7,522 | 117.308 |
| Aug 2013 | 7,690 | 117.868 |
| Jul 2013 | 8,324 | 117.688 |
| Jun 2013 | 8,440 | 117.400 |
| May 2013 | 7,618 | 116.643 |
| Apr 2013 | 7,709 | 115.674 |
| Mar 2013 | 7,734 | 114.796 |
| Feb 2013 | 8,298 | 114.191 |
| Jan 2013 | 8,628 | 113.868 |
| Dec 2012 | 8,166 | 115.079 |
| Nov 2012 | 7,994 | 115.515 |
| Oct 2012 | 7,870 | 116.045 |
| Sep 2012 | 8,110 | 115.678 |
| Aug 2012 | 7,842 | 116.214 |
| Jul 2012 | 8,316 | 116.131 |
| Jun 2012 | 8,394 | 116.024 |
| May 2012 | 7,837 | 114.634 |
| Apr 2012 | 7,694 | 113.999 |
| Mar 2012 | 7,867 | 113.916 |
| Feb 2012 | 8,455 | 112.587 |
| Jan 2012 | 8,918 | 111.879 |
| Dec 2011 | 8,428 | 113.050 |
| Nov 2011 | 8,271 | 113.138 |
| Oct 2011 | 8,258 | 113.456 |
| Sep 2011 | 8,541 | 112.980 |
| Aug 2011 | 8,604 | 114.286 |
| Jul 2011 | 8,514 | 113.759 |
| Jun 2011 | 8,738 | 113.255 |
| May 2011 | 8,270 | 112.618 |
| Apr 2011 | 8,425 | 111.844 |
| Mar 2011 | 8,737 | 111.186 |
| Feb 2011 | 8,749 | 110.731 |
| Jan 2011 | 9,187 | 110.373 |
| Dec 2010 | 9,205 | 111.207 |
| Nov 2010 | 8,670 | 111.348 |
| Oct 2010 | 8,408 | 112.342 |
| Sep 2010 | 8,628 | 112.385 |
| Aug 2010 | 8,628 | 113.508 |
| Jul 2010 | 8,737 | 113.974 |
| Jun 2010 | 8,867 | 113.856 |
| May 2010 | 8,513 | 112.809 |
| Apr 2010 | 8,921 | 111.391 |
| Mar 2010 | 9,343 | 109.877 |
| Feb 2010 | 9,282 | 109.100 |
| Jan 2010 | 9,290 | 108.777 (low) |
| Dec 2009 | 9,354 (high) | 109.875 |
| Nov 2009 | 8,894 | 111.274 |
| Oct 2009 | 8,474 | 111.599 |
| Sep 2009 | 8,255 | 111.991 |
| Aug 2009 | 8,835 | 113.863 |
| Jul 2009 | 9,103 | 114.184 |
| Jun 2009 | 9,301 | 114.014 |
| May 2009 | 8,785 | 113.083 |
| Apr 2009 | 8,648 | 112.746 |
| Mar 2009 | 9,305 | 112.215 |
| Feb 2009 | 9,170 | 112.947 |
| Jan 2009 | 8,829 | 113.815 |
| Dec 2008 | 8,250 | 116.422 |
| Nov 2008 | 7,135 | 118.432 |
| Oct 2008 | 6,267 | 120.020 |
| Sep 2008 | 5,701 | 120.213 |
| Aug 2008 | 5,736 | 121.556 |
| Jul 2008 | 6,054 | 122.378 |
| Jun 2008 | 5,697 | 121.845 |
| May 2008 | 5,096 | 120.809 |
| Apr 2008 | 5,071 | 120.027 |
| Mar 2008 | 5,038 | 119.875 |
| Feb 2008 | 5,114 | 119.452 |
| Jan 2008 | 5,340 | 119.332 |
| Dec 2007 | 4,750 | 121.042 |
| Nov 2007 | 4,374 | 121.846 |
| Oct 2007 | 4,028 | 122.006 |
| Sep 2007 | 4,137 | 121.728 |
| Aug 2007 | 4,494 | 122.870 |
| Jul 2007 | 4,516 | 123.219 (high) |
| Jun 2007 | 4,469 | 122.150 |
| May 2007 | 4,315 | 120.846 |
| Apr 2007 | 4,205 | 119.609 |
| Mar 2007 | 4,384 | 119.640 |
| Feb 2007 | 4,417 | 119.041 |
| Jan 2007 | 4,726 | 119.094 |
| Dec 2006 | 4,281 | 120.371 |
| Nov 2006 | 4,054 | 120.507 |
| Oct 2006 | 4,010 | 121.199 |
| Sep 2006 | 3,735 (low) | 120.780 |
| Aug 2006 | 4,104 | 121.979 |
| Jul 2006 | 4,450 | 121.951 |
| Jun 2006 | 4,456 | 121.070 |
| May 2006 | 3,968 | 118.925 |
| Apr 2006 | 3,787 | 118.559 |
| Mar 2006 | 4,097 | 117.693 |
| Feb 2006 | 4,403 | 116.823 |
| Jan 2006 | 4,597 | 116.395 |
Source: US Bureau of Labor Statistics http://www.bls.gov/
People lose their marketable job skills after prolonged unemployment and face increasing difficulty in finding another job. Chart I-18 shows the sharp rise in unemployed over 27 weeks and stabilization at an extremely high level.
Chart I-18, US, Number Unemployed for 27 Weeks or Over, Thousands SA Month 2001-2013
Sources: US Bureau of Labor Statistics
Another segment of U6 consists of people marginally attached to the labor force who continue to seek employment but less frequently on the frustration there may not be a job for them. Chart I-19 shows the sharp rise in people marginally attached to the labor force after 2007 and subsequent stabilization.
![clip_image013[1]](file:///C:\Users\cmpelaez\AppData\Local\Temp\WindowsLiveWriter393614076\supfiles1D0AAD8\image40.png "clip_image013[1]")
Chart I-19, US, Marginally Attached to the Labor Force, NSA Month 2001-2013
Sources: US Bureau of Labor Statistics
Chart I-20 reveals the fracture in the US labor market. The number of workers with full-time jobs not-seasonally-adjusted rose with fluctuations from 2002 to a peak in 2007, collapsing during the global recession. The terrible state of the job market is shown in the segment from 2009 to 2013 with fluctuations around the typical behavior of a stationary series: there is no improvement in the United States in creating full-time jobs. The magnitude of the stress in US labor markets is magnified by the increase in the civilian noninstitutional population of the United States from 231.958 million in Jul 2007 to 246.168 million in Sep 2013 or by 14.210 million (http://www.bls.gov/data/) while in the same period the number of full-time jobs fell 5.911 million. The ratio of full-time jobs of 123.219 million Jul 2007 to civilian noninstitutional population of 231.958 million was 53.1 percent. If that ratio had remained the same, there would be 130.715 million full-time jobs with population of 246.168 million in Sep 2013 or 13.407 million fewer full-time jobs than actual 117.308 million. There appear to be around 10 million fewer full-time jobs in the US than before the global recession while population increased around 14 million.
Chart I-20, US, Full-time Employed, Thousands, NSA, 2001-2013
Sources: US Bureau of Labor Statistics
Chart I-20A provides the noninstitutional civilian population of the United States from 2001 to 2013. There is clear trend of increase of the population while the number of full-time jobs collapsed after 2008 without sufficient recovery as shown in the preceding Chart I-20.
Chart I-20A, US, Noninstitutional Civilian Population, 2001-2013
Sources: US Bureau of Labor Statistics
Chart I-20B provides number of full-time jobs in the US from 1968 to 2013. There were multiple recessions followed by expansions without contraction of full-time jobs and without recovery as during the period after 2008.
Chart I-20B, US, Full-time Employed, Thousands, NSA, 1968-2013
Sources: US Bureau of Labor Statistics
Chart I-20C provides the noninstitutional civilian population of the United States from 1968 to 2013. Population expanded at a relatively constant rate of increase with the assurance of creation of full-time jobs that has been broken since 2008.
Chart I-20C, US, Noninstitutional Civilian Population, 1968-2013
Sources: US Bureau of Labor Statistics
ESVII Youth Unemployment and Middle-Aged Unemployment. The United States is experiencing high youth unemployment as in European economies. Table I-10 provides the employment level for ages 16 to 24 years of age estimated by the Bureau of Labor Statistics. On an annual basis, youth employment fell from 20.041 million in 2006 to 17.362 million in 2011 or 2.679 million fewer youth jobs and to 17.834 million in 2012 or 2.207 million fewer jobs. During the seasonal peak months of youth employment in the summer from Jun to Aug, youth employment has fallen by more than two million jobs relative to 21.914 million in Jul 2006 with 19.684 million in Jul 2013 for 2.230 million fewer youth jobs. The number of jobs ages 16 to 24 years fell from 21.167 million in Aug 2006 to 18.636 million in Aug 2013 or by 2.531 million. The number of youth jobs fell from 19.604 million in Sep 2006 to 18.043 million in Sep 2013 or 1.561 million fewer youth jobs. The civilian noninstitutional population ages 16 to 24 years increased from 37.443 million in Jul 2007 to 38.861 million in Jul 2013 or by 1.418 million while the number of jobs for ages 16 to 24 years fell by 2.230 million from 21.914 million in Jul 2007 to 19.684 million in Jul 2013. The civilian noninstitutional population for ages 16 to 24 years increased from 37.455 million in Aug 2007 to 38.841 million in Aug 2013 or by 1.386 million while the number of full-time jobs fell by 2.531 million. The civilian noninstitutional population increased from 37.467 million in Sep 2007 to 38.822 million in Sep 2013 or by 1.415 million while the number of full-time youth jobs fell by 1.561 million. There are two hardships behind these data. First, young people cannot find employment after finishing high school and college, reducing prospects for achievement in older age. Second, students with more modest means cannot find employment to keep them in college.
Table I-10, US, Employment Level 16-24 Years, Thousands, NSA
| Year | May | Jun | Jul | Aug | Sep | Annual |
| 2001 | 19648 | 21212 | 22042 | 20529 | 19706 | 20088 |
| 2002 | 19484 | 20828 | 21501 | 20653 | 19466 | 19683 |
| 2003 | 19032 | 20432 | 20950 | 20181 | 18909 | 19351 |
| 2004 | 19237 | 20587 | 21447 | 20660 | 19158 | 19630 |
| 2005 | 19356 | 20949 | 21749 | 20814 | 19503 | 19770 |
| 2006 | 19769 | 21268 | 21914 | 21167 | 19604 | 20041 |
| 2007 | 19457 | 21098 | 21717 | 20413 | 19498 | 19875 |
| 2008 | 19254 | 20466 | 21021 | 20096 | 18818 | 19202 |
| 2009 | 17588 | 18726 | 19304 | 18270 | 16972 | 17601 |
| 2010 | 17039 | 17920 | 18564 | 18061 | 16874 | 17077 |
| 2011 | 17045 | 18180 | 18632 | 18067 | 17238 | 17362 |
| 2012 | 17681 | 18907 | 19461 | 18171 | 17687 | 17834 |
| 2013 | 17704 | 19125 | 19684 | 18636 | 18043 |
Sources: US Bureau of Labor Statistics
Chart I-21 provides US employment level ages 16 to 24 years from 2002 to 2013. Employment level is sharply lower in Jun 2013 relative to the peak in 2007.
Chart I-21, US, Employment Level 16-24 Years, Thousands SA, 2001-2013
Source: US Bureau of Labor Statistics http://www.bls.gov/data/
Chart I-21A provides the US civilian noninstitutional population ages 16 to 24 years not seasonally adjusted from 2001 to 2013. The civilian noninstitutional population ages 16 to 24 years increased from 37.443 million in Jul 2007 to 38.861 million in Jul 2013, by 1.418 million or 3.8 percent, while the number of jobs for ages 16 to 24 years fell by 2.230 million from 21.914 million in Jul 2007 to 19.684 million in Jul 2013 or decline by 10.2 percent. The civilian noninstitutional population for ages 16 to 24 years increased from 37.455 million in Aug 2007 to 38.841 million in Aug 2013, by 1.386 million or 3.7 percent, while the number of full-time jobs fell from 21.167 million in Aug 2006 to 18.636 million in Aug 2013, by 2.531 million or 12.0 percent. The civilian noninstitutional population increased from 37.467 million in Sep 2007 to 38.822 million in Sep 2013 or by 1.415 million while the number of full-time youth jobs fell by 1.561 million.
Chart I-21A, US, Civilian Noninstitutional Population Ages 16 to 24 Years, Thousands NSA, 2001-2013
Source: US Bureau of Labor Statistics http://www.bls.gov/data/
Chart I-21B provides the civilian labor force of the US ages 16 to 24 years NSA from 2001 to 2013. The US civilian labor force ages 16 to 24 years fell from 24.339 million in Jul 2007 to 23.506 million in Jul 2013, by 0.833 million or decline of 3.4 percent, while the civilian noninstitutional population NSA increased from 37.443 million in Jul 2007 to 38.861 million in Jul 2013, by 1.418 million or 3.8 percent. The US civilian labor force ages 16 to 24 fell from 22.801 million in Aug 2007 to 22.089 million in Aug 2013, by 0.712 million or 3.1 percent, while the noninstitutional population for ages 16 to 24 years increased from 37.455 million in Aug 2007 to 38.841 million in Aug 2013, by 1.386 million or 3.7 percent. The US civilian labor force ages 16 to 24 years fell from 21.917 million in Sep 2007 to 21.183 million in Sep 2013, by 0.734 million or 3.3 percent while the civilian noninstitutional youth population increased from 37.467 million in Sep 2007 to 38.822 million in Sep 2013 by 1.355 million or 3.6 percent. Youth in the US abandoned their participation in the labor force because of the frustration that there are no jobs available for them.
Chart I-21B, US, Civilian Labor Force Ages 16 to 24 Years, Thousands NSA, 2001-2013
Source: US Bureau of Labor Statistics http://www.bls.gov/data/
Chart I-21C provides the ratio of labor force to noninstitutional population or labor force participation of ages 16 to 24 years not seasonally adjusted. The US labor force participation rates for ages 16 to 24 years fell from 66.7 in Jul 2006 to 60.5 in Jul 2013 because of the frustration of young people who believe there may not be jobs available for them. The US labor force participation rate of young people fell from 63.9 in Aug 2006 to 56.9 in Aug 2013. The US labor force participation rate of young people fell from 59.1 percent in Sep 2006 to 54.6 percent in Sep 2013. Many young people abandoned searches for employment, dropping from the labor force.
Chart I-21C, US, Labor Force Participation Rate Ages 16 to 24 Years, NSA, 2001-2013
Source: US Bureau of Labor Statistics http://www.bls.gov/data/
An important measure of the job market is the number of people with jobs relative to population available for work or civilian noninstitutional population or employment/population ratio. Chart I-21D provides the employment population ratio for ages 16 to 24 years. The US employment/population ratio NSA for ages 16 to 24 years collapsed from 59.2 in Jul 2006 to 50.7 in Jul 2013. The employment population ratio for ages 16 to 24 years dropped from 57.2 in Aug 2006 to 48.0 in Aug 2013. The employment population ratio for ages to 16 to 24 years declined from 52.9 in Sep 2006 to 46.5 in Sep 2013. The Chart I-21D shows vertical drop during the global recession without recovery.
Chart I-21D, US, Employment Population Ratio Ages 16 to 24 Years, Thousands NSA, 2001-2013
Source: US Bureau of Labor Statistics http://www.bls.gov/data/
Table I-11 provides US unemployment level ages 16 to 24 years. The number unemployed ages 16 to 24 years increased from 2342 thousand in 2007 to 3634 thousand in 2011 or by 1.292 million and 3451 thousand in 2012 or by 1.109 million. The unemployment level ages 16 to 24 years rose from 2.419 million in Sep 2007 to 3.139 million in Sep 2013 or by 0.720 million. This situation may persist for many years.
Table I-11, US, Unemployment Level 16-24 Years, Thousands
| Year | Apr | May | Jun | Jul | Aug | Sep | Annual |
| 2001 | 2095 | 2171 | 2775 | 2585 | 2461 | 2301 | 2371 |
| 2002 | 2515 | 2568 | 3167 | 3034 | 2688 | 2506 | 2683 |
| 2003 | 2572 | 2838 | 3542 | 3200 | 2724 | 2698 | 2746 |
| 2004 | 2387 | 2684 | 3191 | 3018 | 2585 | 2493 | 2638 |
| 2005 | 2398 | 2619 | 3010 | 2688 | 2519 | 2339 | 2521 |
| 2006 | 2092 | 2254 | 2860 | 2750 | 2467 | 2297 | 2353 |
| 2007 | 2074 | 2203 | 2883 | 2622 | 2388 | 2419 | 2342 |
| 2008 | 2196 | 2952 | 3450 | 3408 | 2990 | 2904 | 2830 |
| 2009 | 3321 | 3851 | 4653 | 4387 | 4004 | 3774 | 3760 |
| 2010 | 3803 | 3854 | 4481 | 4374 | 3903 | 3604 | 3857 |
| 2011 | 3365 | 3628 | 4248 | 4110 | 3820 | 3541 | 3634 |
| 2012 | 3175 | 3438 | 4180 | 4011 | 3672 | 3174 | 3451 |
| 2013 | 3129 | 3478 | 4198 | 3821 | 3453 | 3139 |
Source: US Bureau of Labor Statistics http://www.bls.gov/data/
Chart I-22 provides the unemployment level for ages 16 to 24 from 2001 to 2012. The level rose sharply from 2007 to 2010 with tepid improvement into 2012 and deterioration into 2013 with recent marginal improvement.
Chart I-22, US, Unemployment Level 16-24 Years, Thousands SA, 2001-2013
Source: US Bureau of Labor Statistics http://www.bls.gov/data/
Table I-12 provides the rate of unemployment of young peoples in ages 16 to 24 years. The annual rate jumped from 10.5 percent in 2007 to 18.4 percent in 2010, 17.3 percent in 2011 and 16.2 percent in 2012. During the seasonal peak in Jul, the rate of youth unemployed was 18.1 percent in Jul 2011, 17.1 percent in Jul 2012 and 16.3 percent in Jul 2013 compared with 10.8 percent in Jul 2007. The rate of youth unemployment rose from 11.2 in Jun 2006 to 16.3 percent in Jul 2013 and likely higher if adding those who ceased searching for a job in frustration none may be available. The rate of youth unemployment increased from 10.5 percent in Sep 2006 to 14.8 percent in Sep 2013. The actual rate is higher because of the difficulty in counting those dropping from the labor force because they believe there are no jobs available for them.
Table I-12, US, Unemployment Rate 16-24 Years, Thousands, NSA
| Year | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Annual |
| 2001 | 10.3 | 10.2 | 9.6 | 10.0 | 11.6 | 10.5 | 10.7 | 10.5 | 10.6 |
| 2002 | 12.5 | 12.9 | 11.6 | 11.6 | 13.2 | 12.4 | 11.5 | 11.4 | 12.0 |
| 2003 | 12.7 | 12.2 | 12.0 | 13.0 | 14.8 | 13.3 | 11.9 | 12.5 | 12.4 |
| 2004 | 12.3 | 12.1 | 11.1 | 12.2 | 13.4 | 12.3 | 11.1 | 11.5 | 11.8 |
| 2005 | 13.0 | 11.7 | 11.2 | 11.9 | 12.6 | 11.0 | 10.8 | 10.7 | 11.3 |
| 2006 | 11.3 | 10.3 | 9.7 | 10.2 | 11.9 | 11.2 | 10.4 | 10.5 | 10.5 |
| 2007 | 10.3 | 9.7 | 9.7 | 10.2 | 12.0 | 10.8 | 10.5 | 11.0 | 10.5 |
| 2008 | 11.8 | 11.1 | 10.3 | 13.3 | 14.4 | 14.0 | 13.0 | 13.4 | 12.8 |
| 2009 | 16.4 | 16.1 | 15.8 | 18.0 | 19.9 | 18.5 | 18.0 | 18.2 | 17.6 |
| 2010 | 19.2 | 18.4 | 18.5 | 18.4 | 20.0 | 19.1 | 17.8 | 17.6 | 18.4 |
| 2011 | 18.2 | 17.2 | 16.5 | 17.5 | 18.9 | 18.1 | 17.5 | 17.0 | 17.3 |
| 2012 | 17.0 | 16.0 | 15.4 | 16.3 | 18.1 | 17.1 | 16.8 | 15.2 | 16.2 |
| 2013 | 16.7 | 15.9 | 15.1 | 16.4 | 18.0 | 16.3 | 15.6 | 14.8 |
Source: US Bureau of Labor Statistics http://www.bls.gov/data/
Chart I-23 provides the BLS estimate of the not-seasonally-adjusted rate of youth unemployment for ages 16 to 24 years from 2001 to 2013. The rate of youth unemployment increased sharply during the global recession of 2008 and 2009 but has failed to drop to earlier lower levels because of low growth of GDP. Long-term economic performance in the United States consisted of trend growth of GDP at 3 percent per year and of per capita GDP at 2 percent per year as measured for 1870 to 2010 by Robert E Lucas (2011May). The economy returned to trend growth after adverse events such as wars and recessions. The key characteristic of adversities such as recessions was much higher rates of growth in expansion periods that permitted the economy to recover output, income and employment losses that occurred during the contractions. Over the business cycle, the economy compensated the losses of contractions with higher growth in expansions to maintain trend growth of GDP of 3 percent and of GDP per capita of 2 percent. US economic growth has been at only 2.2 percent on average in the cyclical expansion in the 16 quarters from IIIQ2009 to IIQ2013. Boskin (2010Sep) measures that the US economy grew at 6.2 percent in the first four quarters and 4.5 percent in the first 12 quarters after the trough in the second quarter of 1975; and at 7.7 percent in the first four quarters and 5.8 percent in the first 12 quarters after the trough in the first quarter of 1983 (Professor Michael J. Boskin, Summer of Discontent, Wall Street Journal, Sep 2, 2010 http://professional.wsj.com/article/SB10001424052748703882304575465462926649950.html). There are new calculations using the revision of US GDP and personal income data since 1929 by the Bureau of Economic Analysis (BEA) (http://bea.gov/iTable/index_nipa.cfm http://bea.gov/newsreleases/national/gdp/2013/pdf/gdp2q13_adv.pdf http://bea.gov/newsreleases/national/pi/2013/pdf/pi0613.pdf) and the second estimate of GDP for IIQ2013 (http://www.bea.gov/newsreleases/national/gdp/2013/pdf/gdp2q13_3rd.pdf). The average of 7.7 percent in the first four quarters of major cyclical expansions is in contrast with the rate of growth in the first four quarters of the expansion from IIIQ2009 to IIQ2010 of only 2.7 percent obtained by diving GDP of $14,738.0 billion in IIQ2010 by GDP of $14,356.9 billion in IIQ2009 {[$14,738.0/$14,356.9 -1]100 = 2.7%], or accumulating the quarter on quarter growth rates (http://cmpassocregulationblog.blogspot.com/2013/09/mediocre-and-decelerating-united-states.html and earlier http://cmpassocregulationblog.blogspot.com/2013/09/increasing-interest-rate-risk.html). The expansion from IQ1983 to IVQ1985 was at the average annual growth rate of 5.7 percent and at 7.8 percent from IQ1983 to IVQ1983 (http://cmpassocregulationblog.blogspot.com/2013/09/mediocre-and-decelerating-united-states.html and earlier http://cmpassocregulationblog.blogspot.com/2013/09/increasing-interest-rate-risk.html). As a result, there are 28.1 million unemployed or underemployed in the United States for an effective unemployment rate of 17.3 percent (Section I and earlier http://cmpassocregulationblog.blogspot.com/2013/09/twenty-eight-million-unemployed-or.html). Zero interest rates and quantitative easing have not provided the impulse for growth and were not required in past successful cyclical expansions. The US missed the opportunity to recover employment as in past cyclical expansions from contractions.
Chart I-23, US, Unemployment Rate 16-24 Years, Percent, NSA, 2001-2013
Source: US Bureau of Labor Statistics http://www.bls.gov/data/
Chart I-24 provides longer perspective with the rate of youth unemployment in ages 16 to 24 years from 1948 to 2013. The rate of youth unemployment rose to 20 percent during the contractions of the early 1980s and also during the contraction of the global recession in 2008 and 2009. The data illustrate again the argument in this blog that the contractions of the early 1980s are the valid framework for comparison with the global recession of 2008 and 2009 instead of misleading comparisons with the 1930s. During the initial phase of recovery, the rate of youth unemployment 16 to 24 years NSA fell from 18.9 percent in Jun 1983 to 14.5 percent in Jun 1984. In contrast, the rate of youth unemployment 16 to 24 years was nearly the same during the expansion after IIIQ2009: 17.5 percent in Dec 2009, 16.7 percent in Dec 2010, 15.5 percent in Dec 2011, 15.2 percent in Dec 2012, 17.6 percent in Jan 2013, 16.7 percent in Feb 2013, 15.9 percent in Mar 2013, 15.1 percent in Apr 2013, 16.4 percent in May 2013, 18.0 percent in Jun 2013, 16.3 percent in Jul 2013 and 15.6 percent in Aug 2013. In Sep 2006, the rate of youth unemployment was 10.5 percent, increasing to 14.8 percent in Sep 2013. The difference originates in the vigorous seasonally-adjusted annual equivalent average rate of GDP growth of 5.7 percent during the recovery from IQ1983 to IVQ1985 compared with 2.2 percent on average during the first sixteen quarters of expansion from IIIQ2009 to IIQ2013 (http://cmpassocregulationblog.blogspot.com/2013/09/mediocre-and-decelerating-united-states.html). The fractured US labor market denies an early start for young people.
Chart I-24, US, Unemployment Rate 16-24 Years, Percent NSA, 1948-2013
Source: US Bureau of Labor Statistics http://www.bls.gov/data/
It is more difficult to move to other jobs after a certain age because of fewer available opportunities for mature individuals than for new entrants into the labor force. Middle-aged unemployed are less likely to find another job. Table I-13 provides the unemployment level ages 45 years and over. The number unemployed ages 45 years and over rose from 1.710 million in Sep 2006 to 4.640 million in Sep 2010 or by 171.3 percent. The number of unemployed ages 45 years and over declined to 3.899 million in Sep 2012 that is still higher by 128.0 percent than in Sep 2006. The number unemployed age 45 and over jumped from 1.794 million in Dec 2006 to 4.762 million in Dec 2010 or 165.4 percent. At 3.927 million in Dec 2012, mature unemployment is higher by 2.133 million or 118.9 percent higher than 1.794 million in Dec 2006. The level of unemployment of those aged 45 year or more of 3.535 million in Sep 2013 is higher by 1.825 million than 1.710 million in Sep 2006 or higher by 106.7 percent.
Table I-13, US, Unemployment Level 45 Years and Over, Thousands NSA
| Year | Apr | May | Jun | Jul | Aug | Sep | Annual |
| 2000 | 1062 | 1074 | 1163 | 1253 | 1339 | 1254 | 1249 |
| 2001 | 1421 | 1259 | 1371 | 1539 | 1640 | 1586 | 1576 |
| 2002 | 2101 | 1999 | 2190 | 2173 | 2114 | 1966 | 2114 |
| 2003 | 2287 | 2112 | 2212 | 2281 | 2301 | 2157 | 2253 |
| 2004 | 2160 | 2025 | 2182 | 2116 | 2082 | 1951 | 2149 |
| 2005 | 1939 | 1844 | 1868 | 2119 | 1895 | 1992 | 2009 |
| 2006 | 1843 | 1784 | 1813 | 1985 | 1869 | 1710 | 1848 |
| 2007 | 1871 | 1803 | 1805 | 2053 | 1956 | 1854 | 1966 |
| 2008 | 2104 | 2095 | 2211 | 2492 | 2695 | 2595 | 2540 |
| 2009 | 4172 | 4175 | 4505 | 4757 | 4683 | 4560 | 4500 |
| 2010 | 4770 | 4565 | 4564 | 4821 | 5128 | 4640 | 4879 |
| 2011 | 4373 | 4356 | 4559 | 4772 | 4592 | 4426 | 4537 |
| 2012 | 4037 | 4083 | 4084 | 4405 | 4179 | 3899 | 4133 |
| 2013 | 3689 | 3605 | 3648 | 3727 | 3607 | 3535 |
Source: US Bureau of Labor Statistics http://www.bls.gov/data/
Chart I-25 provides the level unemployed ages 45 years and over. There was an increase in the recessions of the 1980s, 1991 and 2001 followed by declines to earlier levels. The current expansion of the economy after IIIQ2009 has not been sufficiently vigorous to reduce significantly middle-age unemployment.
Chart I-25, US, Unemployment Level Ages 45 Years and Over, Thousands, NSA, 1976-2013
Source: US Bureau of Labor Statistics http://www.bls.gov/data/
© Carlos M. Pelaez, 2009, 2010, 2011, 2012, 2013
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