CMP Associates Regulation Blog

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 recovered, remaining at a depressed level.

Chart I-1, US, Level Total Nonfarm Hiring (HNF), Annual, 2001-2013

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 in the current environment of cyclical slow growth.

Chart I-2, US, Rate Total Nonfarm Hiring (HNF), Annual, 2001-2015

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 6.6 percent and 2.6 percent in 2003 followed by strong rebounds of 5.8 percent in 2004 and 4.5 percent in 2005. In contrast, the contractions of nonfarm hiring in the recession after 2007 were much sharper in percentage points: 1.9 in 2007, 11.8 in 2008 and 16.1 percent in 2009. On a yearly basis, nonfarm hiring grew 6.1 percent in 2010 relative to 2009, 3.2 percent in 2011, 4.1 percent in 2012 and 3.5 percent in 2013. The relatively large length of 18 quarters of the current expansion reduces the likelihood of significant recovery of hiring levels in the United States because lower rates of growth and hiring in the final phase of expansions.

Table I-2, US, Annual Total Nonfarm Hiring (HNF), Annual Percentage Change, 2002-2013

Year	Annual ∆%
2002	-6.6
2003	-2.6
2004	5.8
2005	4.5
2006	0.6
2007	-1.9
2008	-11.8
2009	-16.1
2010	6.1
2011	3.2
2012	4.1
2013	3.5

Source: US Bureau of Labor Statistics

Total private hiring (HP) 12-month percentage changes of annual 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 2013.

Chart I-4, US, Total Nonfarm Hiring Level, Annual, ∆%, 2001-2013

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

Chart I-5A 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-5A, US, Rate Total Private Hiring Level, 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 Dec in the years from 2001 to 2014 in Table I-3. Hiring numbers are in thousands. There is recovery in HNF from 2696 thousand (or 2.7 million) in Dec 2009 to 2950 thousand in Dec 2010, 3012 thousand in Dec 2011, 3084 thousand in Dec 2012, 3271 thousand in Dec 2013 and 3667 thousand in Dec 2014 for cumulative gain of 36.0 percent at average rate of 6.3 percent per year. HP rose from 2553 thousand in Dec 2009 to 2788 thousand in Dec 2010, 2883 thousand in Dec 2011, 2911 thousand in Dec 2012, 3098 thousand in Dec 2013 and 3465 thousand in Dec 2014 for cumulative gain of 35.7 percent at the average yearly rate of 6.3 percent. HNF has fallen from 3768 thousand in Dec 2006 to 3667 thousand in Dec 2014 or by 2.7 percent. HP has fallen from 3568 thousand in Dec 2006 to 3465 thousand in Dec 2014 or by 2.9 percent. The civilian noninstitutional population of the US, or those in condition of working, rose from 230.108 million in Dec 2006 to 249.027 million in Dec 2014, by 18.919 million or 8.2 percent. There is often ignored ugly fact that hiring fell by around 2.9 percent while population increased around 8.2 percent. The civilian noninstitutional population of the US, or individuals in condition to work, rose from 228.815 million in 2006 to 245.679 million in 2013 or by 16.864 million and the civilian labor force from 151.428 million in 2006 to 155.389 million in 2013 or by 3.961 million (http://www.bls.gov/data/). The number of nonfarm hires in the US fell from 63.327 million in 2006 to 54.191 million in 2013 or by 9.136 million and the number of private hires fell from 59.128 million in 2006 to 50.718 million in 2013 or by 8.410 million (http://www.bls.gov/jlt/). Private hiring of 59.128 million in 2006 was equivalent to 25.8 percent of the civilian noninstitutional population of 228.815, or those in condition of working, falling to 50.718 million in 2013 or 20.6 percent of the civilian noninstitutional population of 245.679 million in 2013. The percentage of hiring in civilian noninstitutional population of 25.8 percent in 2006 would correspond to 63.385 million of hiring in 2013, which would be 12.667 million higher than actual 50.718 million in 2013. Cyclical slow growth over the entire business cycle from IVQ2007 to the present in comparison with earlier cycles and long-term trend (http://cmpassocregulationblog.blogspot.com/2015/02/financial-and-international.html) explains the fact that there are many million fewer hires in the US than before the global recession. 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 Dec	3552	2.7	3333	3.0
2002 Dec	3679	2.8	3472	3.2
2003 Dec	3683	2.8	3476	3.2
2004 Dec	3890	2.9	3669	3.3
2005 Dec	3710	2.7	3496	3.1
2006 Dec	3768	2.7	3568	3.1
2007 Dec	3604	2.6	3383	2.9
2008 Dec	3027	2.2	2867	2.5
2009 Dec	2696	2.1	2553	2.4
2010 Dec	2950	2.2	2788	2.6
2011 Dec	3012	2.3	2833	2.5
2012 Dec	3084	2.3	2911	2.6
2013 Dec	3271	2.4	3098	2.7
2014 Dec	3667	2.6	3465	2.9

Source: Bureau of Labor Statistics

Chart I-6 provides total nonfarm hiring on a monthly basis from 2001 to 2014. Nonfarm hiring rebounded in early 2010 but then fell and stabilized at a lower level than the early peak not-seasonally adjusted (NSA) of 4841 in May 2010 until it surpassed it with 4975 in Jun 2011 but declined to 3084 in Dec 2012. Nonfarm hiring fell to 3012 in Dec 2011 from 3810 in Nov 2011 and to revised 3614 in Feb 2012, increasing to 4220 in Mar 2012, 3084 in Dec 2012 and 4223 in Jan 2013 and declining to 3861 in Feb 2014. Nonfarm hires not seasonally adjusted increased to 4165 in Nov 2013 and 3271 in Dec 2013. Nonfarm hires reached 3675 in Dec 2014. Chart I-6 provides seasonally adjusted (SA) monthly data. The number of seasonally-adjusted hires in Oct 2011 was 4237 thousand, increasing to revised 4446 thousand in Feb 2012, or 4.9 percent, moving to 4343 in Dec 2012 for cumulative increase of 2.0 percent from 4256 in Dec 2011 and 4578 in Dec 2013 for increase of 5.4 percent relative to 4343 in Dec 2012. The number of hires not seasonally adjusted was 4975 in Jun 2011, falling to 3012 in Dec 2011 but increasing to 4112 in Jan 2012 and declining to 3084 in Dec 2012. The number of nonfarm hiring not seasonally adjusted fell by 39.5 percent from 4975 in Jun 2011 to 3012 in Dec 2011 and fell 38.7 percent from 5035 in Jun 2012 to 3084 in Dec 2012 in a yearly-repeated seasonal pattern. The number of nonfarm hires not seasonally adjusted fell from 5095 in Jun 2013 to 3271 in Dec 2013, or decline of 35.8 percent, showing strong seasonality. The number of nonfarm hires not seasonally adjusted fell from 5499 in Jun 2014 to 3667 in Dec 2014 or 33.3 percent.

Chart I-6, US, Total Nonfarm Hiring (HNF), 2001-2014 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 3.3 in May 2012 and falling to 3.2 in Jun 2012. The rate stabilized at 3.2 in Jul 2012, increasing to 3.3 in Aug 2012 but falling to 3.2 in Dec 2012 and 3.3 in Dec 2013. The rate not seasonally adjusted fell from 3.7 in Jun 2011 to 2.3 in Dec 2011, climbing to 3.7 in Jun 2012 but falling to 2.3 in Dec 2012. The rate of nonfarm hires not seasonally adjusted fell from 3.7 in Jun 2013 to 2.4 in Dec 2013. The NSA rate of nonfarm hiring fell from 3.9 in Jun 2014 to 2.6 in Dec 2014. Rates of nonfarm hiring NSA were in the range of 2.7 (Dec) to 4.4 (Jun) in 2006. The rate of nonfarm hiring SA stood at 3.7 in Dec 2014 and at 2.6 NSA.

Chart I-7, US, Rate Total Nonfarm Hiring, Month SA 2001-2014

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 4057 thousand in Sep 2011 to 3962 in Dec 2011 or by 2.3 percent, decreasing to 3998 in Jan 2012 or decline by 1.5 percent relative to the level in Sep 2011. Private hiring fell to 3959 in Sep 2012 or lower by 2.4 percent relative to Sep 2011, moving to 4061 in Dec 2012 for increase of 1.6 percent relative to 3998 in Jan 2012. The number of private hiring not seasonally adjusted fell from 4600 in Jun 2011 to 2833 in Dec 2011 or by 38.4 percent, reaching 3853 in Jan 2012 or decline of 16.2 percent relative to Jun 2011 and moving to 2911 in Dec 2012 or 37.1 percent lower relative to 4629 in Jun 2012. Hires fell from 4706 in Jun 2013 to 3098 in Dec 2013. The level of private hiring NSA fell from 5103 in Jun 2014 to 3465 in Dec 2014 or 32.1 percent. Companies reduce hiring in the latter part of the year that explains the high seasonality in year-end employment data. For example, NSA private hiring fell from 5567 in Jun 2006 to 3568 in Dec 2006 or by 35.9 percent. Private hiring NSA data are useful in showing the huge declines from the period before the global recession. In Aug 2006, private hiring NSA was 5115, declining to 4199 in Aug 2011 or by 17.9 percent and to 4401 in Aug 2012 or lower by 14.0 percent relative to Aug 2006. Private hiring NSA fell from 5501 in Jul 2006 to 5120 in Jul 2014 or 6.9 percent. Private hiring fell from 3568 in Dec 2006 to 3098 in Dec 2013 or 13.2 percent and to 3465 in Dec 2014 or decline of 2.9 percent. The conclusion is that private hiring in the US is around 3 percent below the hiring before the global recession while the noninstitutional population of the United States has grown from 228.815 million in 2006 to 247.947 million in 2014, by 19.132 million or 8.4 percent. 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.

Chart I-8, US, Total Private Hiring Month SA 2001-2014

Source: Bureau of Labor Statistics

Chart I-9, US, Rate Total Private Hiring Month SA 2001-2014

Source: Bureau of Labor Statistics

The JOLTS report of the Bureau of Labor Statistics also provides total nonfarm job openings (TNF JOB), TNF JOB rate and TNF LD (layoffs and discharges) shown in Table I-4 for the month of Dec from 2001 to 2014. The final column provides annual TNF LD for the years from 2001 to 2013. Nonfarm job openings (TNF JOB) increased from a peak of 4010 in Dec 2006 to 4427 in Dec 2014 or by 10.4 percent while the rate increased from 2.8 to 3.0. This was mediocre performance because the civilian noninstitutional population or those available for work increased from 230.108 million in Dec 2006 to 249.027 million in Dec 2014, by 18.919 million or 8.2 percent. Nonfarm layoffs and discharges (TNF LD) rose from 1911 in Dec 2006 to 2740 in Dec 2008 or b7 42.4 percent. The annual data show layoffs and discharges rising from 20.9 million in 2006 to 26.4 million in 2009 or by 26.3 percent. Business pruned payroll jobs to survive the global recession but there has not been hiring because of 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. The US maintained growth at 3.0 percent on average over entire cycles with expansions at higher rates compensating for contractions. US economic growth has been at only 2.4 percent on average in the cyclical expansion in the 22 quarters from IIIQ2009 to IVQ2014. 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) and the first estimate of GDP for IVQ2014 (http://www.bea.gov/newsreleases/national/gdp/2015/pdf/gdp4q14_adv.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 $14,745.9 billion in IIQ2010 by GDP of $14,355.6 billion in IIQ2009 {[$14,745.9/$14,355.6 -1]100 = 2.7%], or accumulating the quarter on quarter growth rates (http://cmpassocregulationblog.blogspot.com/2015/02/financial-and-international.html and earlier http://cmpassocregulationblog.blogspot.com/2014/12/valuations-of-risk-financial-assets.html). The expansion from IQ1983 to IVQ1985 was at the average annual growth rate of 5.9 percent, 5.4 percent from IQ1983 to IIIQ1986, 5.2 percent from IQ1983 to IVQ1986, 5.0 percent from IQ1983 to IQ1987, 5.0 percent from IQ1983 to IIQ1987, 4.9 percent from IQ1983 to IIIQ1987, 5.0 percent from IQ1983 to IVQ1987, 4.9 percent from IQ1983 to IIQ1988 and at 7.8 percent from IQ1983 to IVQ1983 (http://cmpassocregulationblog.blogspot.com/2015/02/financial-and-international.html and earlier http://cmpassocregulationblog.blogspot.com/2014/12/valuations-of-risk-financial-assets.html). The US maintained growth at 3.0 percent on average over entire cycles with expansions at higher rates compensating for contractions. Growth at trend in the entire cycle from IVQ2007 to IVQ2014 would have accumulated to 23.0 percent. GDP in IVQ2014 would be $18,438.0 billion (in constant dollars of 2009) if the US had grown at trend, which is higher by $2,126.4 billion than actual $16,311.6 billion. There are about two trillion dollars of GDP less than at trend, explaining the 28.3 million unemployed or underemployed equivalent to actual unemployment of 17.1 percent of the effective labor force (http://cmpassocregulationblog.blogspot.com/2015/02/job-creation-and-monetary-policy-twenty.html and earlier http://cmpassocregulationblog.blogspot.com/2015/01/fluctuating-valuations-of-risk.html and earlier http://cmpassocregulationblog.blogspot.com/2014/12/financial-risks-twenty-six-million.html). US GDP in IVQ2014 is 11.5 percent lower than at trend. US GDP grew from $14,991.8 billion in IVQ2007 in constant dollars to $16,311.6 billion in IVQ2014 or 8.8 percent at the average annual equivalent rate of 1.2 percent. Cochrane (2014Jul2) estimates US GDP at more than 10 percent below trend. The US missed the opportunity to grow at higher rates during the expansion and it is difficult to catch up because growth rates in the final periods of expansions tend to decline. The US missed the opportunity for recovery of output and employment always afforded in the first four quarters of expansion from recessions. Zero interest rates and quantitative easing were not required or present in successful cyclical expansions and in secular economic growth at 3.0 percent per year and 2.0 percent per capita as measured by Lucas (2011May). There is cyclical uncommonly slow growth in the US instead of allegations of secular stagnation. There is similar behavior in manufacturing. The long-term trend is growth at average 3.3 percent per year from Jan 1919 to Dec 2014. Growth at 3.3 percent per year would raise the NSA index of manufacturing output from 99.2392 in Dec 2007 to 124.5620 in Dec 2014. The actual index NSA in Dec 2014 is 101.2840, which is 18.7 percent below trend. Manufacturing output grew at average 2.4 percent between Dec 1986 and Dec 2014, raising the index at trend to 117.1610 in Dec 2014. The output of manufacturing at 101.2840 in Dec 2014 is 13.6 percent below trend under this alternative calculation.

Table I-4, US, Total Nonfarm Job Openings and Total Nonfarm Layoffs and Discharges, Thousands NSA

	TNF JOB	TNF JOB Rate	TNF LD	TNF LD Annual
Dec 2001	3078	2.3	2037	24138
Dec 2002	2638	2.0	2147	22706
Dec 2003	2863	2.1	2125	23490
Dec 2004	3341	2.4	2198	22668
Dec 2005	3738	2.7	1926	22243
Dec 2006	4010	2.8	1911	20896
Dec 2007	3843	2.7	2013	21958
Dec 2008	2660	1.9	2740	24028
Dec 2009	2138	1.6	2285	26444
Dec 2010	2516	1.9	2048	21829
Dec 2011	3102	2.3	1923	20805
Dec 2012	3152	2.3	1793	20892
Dec 2013	3387	2.4	1885	19964
Dec 2014	4427	3.0	1923

Notes: TNF JOB: Total Nonfarm Job Openings; LD: Layoffs and Discharges

Source: Bureau of Labor Statistics

Chart I-10 shows monthly job openings rising from the trough in 2009 to a high in the beginning of 2010. Job openings then stabilized into 2011 but have surpassed the peak of 3080 seasonally adjusted in Apr 2010 with 3646 seasonally adjusted in Dec 2012, which is higher by 18.4 percent relative to Apr 2010 but lower by 2.9 percent relative to 3755 in Nov 2012 and lower by 4.7 percent than 3827 in Mar 2012. Nonfarm job openings increased from 3646 in Dec 2012 to 3914 in Dec 2013 or by 7.4 percent and to 5028 in Dec 2014 or by 28.5 percent relative to Dec 2013. The high of job openings not seasonally adjusted was 3428 in Apr 2010 that was surpassed by 3661 in Jul 2011, increasing to 3939 in Oct 2012 but declining to 3152 in Dec 2012 and decreasing to 3387 in Dec 2013. The level of job opening NSA increased to 4427 in Dec 2014. The level of job openings not seasonally adjusted fell to 3152 in Dec 2012 or by 21.3 percent relative to 4005 in Apr 2012. There is here again the strong seasonality of year-end labor data. Job openings fell from 4209 in Apr 2013 to 3387 in Dec 2013 and from 4938 in Apr 2014 to 4427 in Dec 2014, showing strong seasonal effects. The level of job openings of 4427 in Dec 2014 NSA is higher by 10.4 percent relative to 4010 in Dec 2006. This was mediocre performance because the civilian noninstitutional population or those available for work increased from 230.108 million in Dec 2006 to 249.027 million in Dec 2014, by 18.919 million or 8.2 percent. 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.

Chart I-10, US Job Openings, Thousands NSA, 2001-2014

Source: US Bureau of Labor Statistics

The rate of job openings in Chart I-11 shows similar behavior. The rate seasonally adjusted increased from 2.2 in Jan 2011 to 2.6 in Dec 2011, 2.6 in Dec 2012, 2.8 in Dec 2013 and 3.5 in Dec 2014. The rate seasonally adjusted stood at 3.5 in Dec 2014. The rate not seasonally adjusted rose from the high of 2.6 in Apr 2010 to 3.0 in Apr 2013 and 2.4 in Dec 2013. The rate of job openings NSA fell from 3.3 in Jul 2007 to 1.6 in Nov-Dec 2009, recovering to 3.0 in Dec 2014.

Chart I-11, US, Rate of Job Openings, NSA, 2001-2014

Source: US Bureau of Labor Statistics

Total separations are shown in Chart I-12. Separations are much lower in 2012-14 than before the global recession but hiring has not recovered.

Chart I-12, US, Total Nonfarm Separations, Month Thousands SA, 2001-2014

Source: US Bureau of Labor Statistics

Annual total separations are shown in Chart I-13. Separations are much lower in 2011-2014 than before the global recession but without recovery in hiring. There are still no annual data for 2014.

Chart I-13, US, Total Separations, Annual, Thousands, 2001-2013

Source: US Bureau of Labor Statistics

Table I-5 provides total nonfarm total separations from 2001 to 2013. Separations fell from 61.1 million in 2006 to 47.8 million in 2010 or by 13.3 million and 48.2 million in 2011 or by 12.9 million. Total separations increased from 48.2 million in 2011 to 51.8 million in 2013 or by 3.6 million. There are still no annual data for 2014.

Table I-5, US, Total Nonfarm Total Separations, Thousands, 2001-2013

Year	Annual
2001	64472
2002	59003
2003	56970
2004	58238
2005	60494
2006	61117
2007	60838
2008	58227
2009	51127
2010	47750
2011	48220
2012	50070
2013	51837

Source: US Bureau of Labor Statistics

Monthly data of layoffs and discharges reach a peak in early 2009, as shown in Chart I-14. Layoffs and discharges dropped sharply with the recovery of the economy in 2010 and 2011 once employers reduced their job count to what was required for cost reductions and loss of business. Weak rates of growth of GDP (http://cmpassocregulationblog.blogspot.com/2015/02/financial-and-international.html) frustrated employment recovery. 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.

Chart I-14, US, Total Nonfarm Layoffs and Discharges, Monthly Thousands SA, 2001-2014

Source: US Bureau of Labor Statistics

Layoffs and discharges in Chart I-15 rose sharply to a peak in 2009. There was pronounced drop into 2010 and 2011 with mild increase into 2012 and renewed decline into 2013. There are still no annual data for 2014.

Chart I-15, US, Total Nonfarm Layoffs and Discharges, Annual, 2001-2012

Source: US Bureau of Labor Statistics

Table I-6, US, Total Nonfarm Layoffs and Discharges, Thousands, 2001-2013

Year	Annual
2001	24138
2002	22706
2003	23490
2004	22668
2005	22243
2006	20896
2007	21958
2008	24028
2009	26444
2010	21829
2011	20805
2012	20892
2013	19964

Source: US Bureau of Labor Statistics

IA2 Labor Underutilization. The Bureau of Labor Statistics also provides alternative measures of labor underutilization shown in Table I-7. The most comprehensive measure is U6 that consists of total unemployed plus total employed part time for economic reasons plus all marginally attached workers as percent of the labor force. U6 not seasonally adjusted has risen from 8.2 percent in 2006 to 12.0 percent in Jan 2015.

Table I-7, US, Alternative Measures of Labor Underutilization NSA %

	U1	U2	U3	U4	U5	U6
2015
Jan	2.7	3.1	6.1	6.5	7.4	12.0
2014
Dec	2.5	2.8	5.4	5.8	6.7	11.1
Nov	2.7	2.7	5.5	5.9	6.8	11.0
Oct	2.7	2.6	5.5	6.0	6.8	11.1
Sep	2.7	2.7	5.7	6.2	7.1	11.3
Aug	2.8	3.0	6.3	6.7	7.5	12.0
Jul	2.8	3.1	6.5	7.0	7.8	12.6
Jun	2.8	3.0	6.3	6.7	7.5	12.4
May	3.1	3.0	6.1	6.5	7.3	11.7
Apr	3.3	3.2	5.9	6.3	7.2	11.8
Mar	3.7	3.7	6.8	7.2	8.1	12.8
Feb	3.6	3.9	7.0	7.5	8.4	13.1
Jan	3.5	4.0	7.0	7.5	8.6	13.5
2013
Dec	3.5	3.5	6.5	7.0	7.9	13.0
Nov	3.7	3.5	6.6	7.1	7.9	12.7
Oct	3.7	3.6	7.0	7.4	8.3	13.2
Sep	3.7	3.5	7.0	7.5	8.4	13.1
Aug	3.7	3.8	7.3	7.9	8.7	13.6
Jul	3.7	3.8	7.7	8.3	9.1	14.3
Jun	3.9	3.8	7.8	8.4	9.3	14.6
May	4.1	3.7	7.3	7.7	8.5	13.4
Apr	4.3	3.9	7.1	7.6	8.5	13.4
Mar	4.3	4.3	7.6	8.1	9.0	13.9
Feb	4.3	4.6	8.1	8.6	9.6	14.9
Jan	4.3	4.9	8.5	9.0	9.9	15.4
2012
Dec	4.2	4.3	7.6	8.3	9.2	14.4
Nov	4.2	3.9	7.4	7.9	8.8	13.9
Oct	4.3	3.9	7.5	8.0	9.0	13.9
Sep	4.2	4.0	7.6	8.0	9.0	14.2
Aug	4.3	4.4	8.2	8.7	9.7	14.6
Jul	4.3	4.6	8.6	9.1	10.0	15.2
Jun	4.5	4.4	8.4	8.9	9.9	15.1
May	4.7	4.3	7.9	8.4	9.3	14.3
Apr	4.8	4.3	7.7	8.3	9.1	14.1
Mar	4.9	4.8	8.4	8.9	9.7	14.8
Feb	4.9	5.1	8.7	9.3	10.2	15.6
Jan	4.9	5.4	8.8	9.4	10.5	16.2
2011
Dec	4.8	5.0	8.3	8.8	9.8	15.2
Nov	4.9	4.7	8.2	8.9	9.7	15.0
Oct	5.0	4.8	8.5	9.1	10.0	15.3
Sep	5.2	5.0	8.8	9.4	10.2	15.7
Aug	5.2	5.1	9.1	9.6	10.6	16.1
Jul	5.2	5.2	9.3	10.0	10.9	16.3
Jun	5.1	5.1	9.3	9.9	10.9	16.4
May	5.5	5.1	8.7	9.2	10.0	15.4
Apr	5.5	5.2	8.7	9.2	10.1	15.5
Mar	5.7	5.8	9.2	9.7	10.6	16.2
Feb	5.6	6.0	9.5	10.1	11.1	16.7
Jan	5.6	6.2	9.8	10.4	11.4	17.3
Dec 2010	5.4	5.9	9.1	9.9	10.7	16.6
Annual
2014	3.0	3.1	6.2	6.6	7.5	12.0
2013	3.9	3.9	7.4	7.9	8.8	13.8
2012	4.5	4.4	8.1	8.6	9.5	14.7
2011	5.3	5.3	8.9	9.5	10.4	15.9
2010	5.7	6.0	9.6	10.3	11.1	16.7
2009	4.7	5.9	9.3	9.7	10.5	16.2
2008	2.1	3.1	5.8	6.1	6.8	10.5
2007	1.5	2.3	4.6	4.9	5.5	8.3
2006	1.5	2.2	4.6	4.9	5.5	8.2
2005	1.8	2.5	5.1	5.4	6.1	8.9
2004	2.1	2.8	5.5	5.8	6.5	9.6
2003	2.3	3.3	6.0	6.3	7.0	10.1
2002	2.0	3.2	5.8	6.0	6.7	9.6
2001	1.2	2.4	4.7	4.9	5.6	8.1
2000	0.9	1.8	4.0	4.2	4.8	7.0

Note: LF: labor force; U1, persons unemployed 15 weeks % LF; U2, job losers and persons who completed temporary jobs %LF; U3, total unemployed % LF; U4, total unemployed plus discouraged workers, plus all other marginally attached workers; % LF plus discouraged workers; U5, total unemployed, plus discouraged workers, plus all other marginally attached workers % LF plus all marginally attached workers; U6, total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons % LF plus all marginally attached workers

Source: US Bureau of Labor Statistics

Monthly seasonally adjusted measures of labor underutilization are provided in Table I-8. U6 climbed from 16.1 percent in Aug 2011 to 16.3 percent in Sep 2011 and then fell to 14.5 percent in Mar 2012, reaching 11.3 percent in Jan 2015. Unemployment is an incomplete measure of the stress in US job markets. A different calculation in this blog is provided by using the participation rate in the labor force before the global recession. This calculation shows 28.3 million in job stress of unemployment/underemployment in Jan 2015, not seasonally adjusted, corresponding to 17.1 percent of the labor force (http://cmpassocregulationblog.blogspot.com/2015/02/job-creation-and-monetary-policy-twenty.html).

Table I-8, US, Alternative Measures of Labor Underutilization SA %

	U1	U2	U3	U4	U5	U6
Jan 2015	2.7	2.7	5.7	6.1	7.0	11.3
Dec 2014	2.6	2.8	5.6	6.0	6.9	11.2
Nov	2.7	2.9	5.8	6.2	7.1	11.4
Oct	2.8	2.8	5.7	6.2	7.1	11.5
Sep	2.8	2.9	5.9	6.3	7.3	11.7
Aug	2.9	3.1	6.1	6.6	7.4	12.0
July	2.9	3.1	6.2	6.6	7.5	12.2
Jun	2.9	3.1	6.1	6.5	7.3	12.0
May	3.1	3.2	6.3	6.7	7.5	12.1
Apr	3.2	3.3	6.2	6.7	7.5	12.3
Mar	3.4	3.5	6.6	7.1	7.9	12.6
Feb	3.5	3.5	6.7	7.1	8.0	12.6
Jan	3.4	3.4	6.6	7.1	8.1	12.7
Dec 2013	3.6	3.5	6.7	7.2	8.1	13.1
Nov	3.7	3.7	7.0	7.4	8.2	13.1
Oct	3.8	4.0	7.2	7.7	8.6	13.7
Sep	3.8	3.8	7.2	7.7	8.6	13.6
Aug	3.9	3.8	7.2	7.7	8.6	13.6
Jul	3.9	3.8	7.3	7.9	8.7	13.8
Jun	4.0	3.9	7.5	8.1	9.0	14.2
May	4.1	3.9	7.5	8.0	8.8	13.8
Apr	4.1	4.1	7.6	8.0	8.9	14.0
Mar	4.1	4.0	7.5	8.0	8.9	13.8
Feb	4.1	4.1	7.7	8.2	9.2	14.3
Jan	4.2	4.3	8.0	8.5	9.4	14.5
Dec 2012	4.3	4.2	7.9	8.5	9.4	14.4
Nov	4.2	4.2	7.7	8.3	9.2	14.4
Oct	4.4	4.2	7.8	8.3	9.2	14.4
Sep	4.4	4.2	7.8	8.3	9.3	14.7
Aug	4.4	4.5	8.0	8.5	9.5	14.6
Jul	4.5	4.6	8.2	8.7	9.6	14.8
Jun	4.6	4.6	8.2	8.7	9.6	14.8
May	4.6	4.5	8.2	8.7	9.6	14.8
Apr	4.6	4.4	8.2	8.7	9.6	14.6
Mar	4.6	4.5	8.2	8.7	9.6	14.5
Feb	4.7	4.6	8.3	8.9	9.8	15.0
Jan	4.8	4.7	8.3	8.9	9.9	15.2
Dec 2011	4.9	4.9	8.5	9.0	10.0	15.2
Nov	5.0	5.0	8.6	9.3	10.1	15.5
Oct	5.1	5.1	8.8	9.4	10.3	15.8
Sep	5.4	5.2	9.0	9.6	10.5	16.3
Aug	5.4	5.2	9.0	9.6	10.5	16.1
Jul	5.3	5.3	9.0	9.6	10.6	15.9
Jun	5.3	5.3	9.1	9.7	10.7	16.1
May	5.3	5.4	9.0	9.5	10.3	15.8
Apr	5.2	5.4	9.1	9.7	10.5	16.1
Mar	5.3	5.4	9.0	9.5	10.4	15.9
Feb	5.3	5.5	9.0	9.6	10.6	16.0
Jan	5.5	5.5	9.2	9.7	10.8	16.2

Source: US Bureau of Labor Statistics

Chart I-16 provides U6 on a monthly basis from 2001 to 2014. There was a steep climb from 2007 into 2009 and then this measure of unemployment and underemployment stabilized at that high level but declined into 2012. The low of U6 SA was 8.0 percent in Mar 2007 and the peak was 17.1 percent in Apr 2010. The low NSA was 7.6 percent in Oct 2006 and the peak was 18.0 percent in Jan 2010.

Chart I-16, US, U6, total unemployed, plus all marginally attached workers, plus total employed Part-Time for Economic Reasons, Month, SA, 2001-2015

Source: US Bureau of Labor Statistics

Chart I-17 provides the number employed part-time for economic reasons or who cannot find full-time employment. There are sharp declines at the end of 2009, 2010 and 2011 but an increase in 2012 followed by stability in 2013-2015.

Chart I-17, US, Working Part-time for Economic Reasons

Thousands, Month SA 2001-2015

Sources: US Bureau of Labor Statistics

ICA3 Ten Million Fewer Full-time Jobs. There is strong seasonality in US labor markets around the end of the year.

Seasonally adjusted part-time for economic reasons. The number employed part-time for economic reasons because they could not find full-time employment fell from 9.109 million in Sep 2011 to 7.808 million in Mar 2012, seasonally adjusted, or decline of 1.301 million in six months, as shown in Table I-9. The number employed part-time for economic reasons rebounded to 8.600 million in Sep 2012 for increase of 603,000 in one month from Aug to Sep 2012. The number employed part-time for economic reasons declined to 8.195 million in Oct 2012 or by 405,000 again in one month, further declining to 8.156 million in Nov 2012 for another major one-month decline of 39,000 and 7.926 million in Dec 2012 or fewer 230,000 in just one month. The number employed part-time for economic reasons increased to 8.055 million in Jan 2013 or 129,000 more than in Dec 2012 and to 8.064 million in Feb 2013, declining to 7.947 million in May 2013 but increasing to 8.124 million in Jun 2013. The number employed part-time for economic reasons fell to 7.843 million in Aug 2013 for decline of 244,000 in one month from 8.087 million in Jul 2013. The number employed part-time for economic reasons increased 96,000 from 7.843 million in Aug 2013 to 7.939 million in Sep 2013. The number part-time for economic reasons rose to 7.982 million in Oct 2013, falling by 267,000 to 7.715 million in Nov 2013. The number part-time for economic reasons increased to 7.776 million in Dec 2013, decreasing to 7.274 million in Jan 2014. The number employed part-time for economic reasons fell from 7.274 million in Jan 2014 to 7.204 million in Feb 2014. The number employed part-time for economic reasons increased to 7.449 million in Mar 2014 and 7.460 million in Apr 2014. The number employed part-time for economic reasons fell to 7.268 million in May 2014, increasing to 7.496 million in Jun 2014. The level employed part-time for economic reasons fell to 7.433 million in Jul 2014 and 7.223 million in Aug 2014. The level employed part-time for economic reasons fell to 7.058 million in Sep 2014, 7.012 million in Oct 2014 and 6.851 million in Nov 2014. The level employed part-time for economic reasons fell to 6.790 million in Dec 2014, increasing to 6.810 million in Jan 2015. There is an increase of 198,000 in part-time for economic reasons from Aug 2012 to Oct 2012 and of 159,000 from Aug 2012 to Nov 2012.
Seasonally adjusted full-time. The number employed full-time increased from 112.891 million in Oct 2011 to 115.086 million in Mar 2012 or 2.195 million but then fell to 114.245 million in May 2012 or 0.841 million fewer full-time employed than in Mar 2012. The number employed full-time increased from 114.735 million in Aug 2012 to 115.514 million in Oct 2012 or increase of 0.779 million full-time jobs in two months and further to 115.807 million in Jan 2013 or increase of 1.072 million more full-time jobs in five months from Aug 2012 to Jan 2013. The number of full time jobs decreased slightly to 115.751 million in Feb 2013, increasing to 116.244 million in May 2013 and 116.143 million in Jun 2013. Then number of full-time jobs increased to 116.147 million in Jul 2013, 116.453 million in Aug 2013 and 116.869 million in Sep 2013. The number of full-time jobs fell to 116.293 million in Oct 2013 and increased to 116.946 in Nov 2013. The level of full-time jobs fell to 117.240 million in Dec 2013, increasing to 117.650 million in Jan 2014 and 117.859 million in Feb 2014. The level of employment full-time increased to 118.062 million in Mar 2014 and 118.458 million in Apr 2014. The level of full-time employment reached 118.790 million in May 2014, decreasing to 118.252 million in Jun 2014. The level of full-time jobs increased to 118.448 million in Jul 2014 and 118.758 million in Aug 2014. The level of full-time jobs increased to 119.310 million in Sep 2014, 119.681 million in Oct 2014 and 119.507 million in Nov 2014. The level of full-time jobs increased to 119.934 million in Dec 2014 and 120.711 million in Jan 2015. Adjustments of benchmark and seasonality-factors at the turn of every year could affect comparability of labor market indicators (http://cmpassocregulationblog.blogspot.com/2015/02/job-creation-and-monetary-policy-twenty.html http://cmpassocregulationblog.blogspot.com/2014/02/financial-instability-rules.html http://cmpassocregulationblog.blogspot.com/2013/02/thirty-one-million-unemployed-or.html).
Not seasonally adjusted part-time for economic reasons. 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 1.051 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 fewer 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, increasing to 7.700 million in Oct 2013. The number employed part-time for economic reasons fell to 7.563 million in Nov 2013 and increased to 7.990 million in Dec 2013. The number employed part-time for economic reasons fell to 7.771 million in Jan 2014 and 7.397 million in Feb 2014. The level of part-time for economic reasons increased to 7.455 million in Mar 2014 and fell to 7.243 million in Apr 2014. The number of part-time for economic reasons fell to 6.960 million in May 2014, increasing to 7.805 million in Jun 2014. The level of part-time for economic reasons fell to 7.665 million in Jul 2014 and 7.083 million in Aug 2014. The level of part-time for economic reasons fell to 6.711 million in Sep 2014 and increased to 6.787 million in Oct 2014. The level of part-time for economic reasons reached 6.713 million in Nov 2014 and 6.970 million in Dec 2014, increasing to 7.269 million in Jan 2015.
Not seasonally adjusted full-time. 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. The number employed full-time fell to 116.798 million in Oct 2013 or decline of 510.000 in one month. The number employed full-time rose to 116.875 million in Nov 2013, falling to 116.661 million in Dec 2013. The number employed full-time fell to 115.744 million in Jan 2014 but increased to 116.323 million in Feb 2014. The level of full-time jobs increased to 116.985 in Mar 2014 and 118.073 million in Apr 2014. The number of full-time jobs increased to 119.179 million in May 2014, increasing to 119.472 million in Jun 2014. The level of full-time jobs increased to 119.900 million in Jul 2014. 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 Jan 2015 is 118.840 million, which is lower by 4.379 million relative to the peak of 123.219 million in Jul 2007.
Loss of 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 249.723 million in Jan 2015 or by 17.765 million (http://www.bls.gov/data/) while in the same period the number of full-time jobs fell 4.379 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 132.603 million full-time jobs with population of 249.723 million in Jan 2015 (0.531 x 249.723) or 13.763 million fewer full-time jobs relative to actual 118.840 million. There appear to be around 10 million fewer full-time jobs in the US than before the global recession while population increased around 17 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 2.4 percent on average in the cyclical expansion in the 22 quarters from IIIQ2009 to IVQ2014. 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) and the first estimate of GDP for IVQ2014 (http://www.bea.gov/newsreleases/national/gdp/2015/pdf/gdp4q14_adv.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 $14,745.9 billion in IIQ2010 by GDP of $14,355.6 billion in IIQ2009 {[$14,745.9/$14,355.6 -1]100 = 2.7%], or accumulating the quarter on quarter growth rates (http://cmpassocregulationblog.blogspot.com/2015/02/financial-and-international.html and earlier http://cmpassocregulationblog.blogspot.com/2014/12/valuations-of-risk-financial-assets.html). The expansion from IQ1983 to IVQ1985 was at the average annual growth rate of 5.9 percent, 5.4 percent from IQ1983 to IIIQ1986, 5.2 percent from IQ1983 to IVQ1986, 5.0 percent from IQ1983 to IQ1987, 5.0 percent from IQ1983 to IIQ1987, 4.9 percent from IQ1983 to IIIQ1987, 5.0 percent from IQ1983 to IVQ1987, 4.9 percent from IQ1983 to IIQ1988 and at 7.8 percent from IQ1983 to IVQ1983 (http://cmpassocregulationblog.blogspot.com/2015/02/financial-and-international.html and earlier http://cmpassocregulationblog.blogspot.com/2014/12/valuations-of-risk-financial-assets.html). The US maintained growth at 3.0 percent on average over entire cycles with expansions at higher rates compensating for contractions. Growth at trend in the entire cycle from IVQ2007 to IVQ2014 would have accumulated to 23.0 percent. GDP in IVQ2014 would be $18,438.0 billion (in constant dollars of 2009) if the US had grown at trend, which is higher by $2,126.4 billion than actual $16,311.6 billion. There are about two trillion dollars of GDP less than at trend, explaining the 28.3 million unemployed or underemployed equivalent to actual unemployment of 17.1 percent of the effective labor force (http://cmpassocregulationblog.blogspot.com/2015/02/job-creation-and-monetary-policy-twenty.html and earlier http://cmpassocregulationblog.blogspot.com/2015/01/fluctuating-valuations-of-risk.html and earlier http://cmpassocregulationblog.blogspot.com/2014/12/financial-risks-twenty-six-million.html). US GDP in IVQ2014 is 11.5 percent lower than at trend. US GDP grew from $14,991.8 billion in IVQ2007 in constant dollars to $16,311.6 billion in IVQ2014 or 8.8 percent at the average annual equivalent rate of 1.2 percent. Cochrane (2014Jul2) estimates US GDP at more than 10 percent below trend. The US missed the opportunity to grow at higher rates during the expansion and it is difficult to catch up because growth rates in the final periods of expansions tend to decline. The US missed the opportunity for recovery of output and employment always afforded in the first four quarters of expansion from recessions. Zero interest rates and quantitative easing were not required or present in successful cyclical expansions and in secular economic growth at 3.0 percent per year and 2.0 percent per capita as measured by Lucas (2011May). There is cyclical uncommonly slow growth in the US instead of allegations of secular stagnation. There is similar behavior in manufacturing. The long-term trend is growth at average 3.3 percent per year from Jan 1919 to Dec 2014. Growth at 3.3 percent per year would raise the NSA index of manufacturing output from 99.2392 in Dec 2007 to 124.5620 in Dec 2014. The actual index NSA in Dec 2014 is 101.2840, which is 18.7 percent below trend. Manufacturing output grew at average 2.4 percent between Dec 1986 and Dec 2014, raising the index at trend to 117.1610 in Dec 2014. The output of manufacturing at 101.2840 in Dec 2014 is 13.6 percent below trend under this alternative calculation.

Table I-9, US, Employed Part-time for Economic Reasons, Thousands, and Full-time, Millions

	Part-time Thousands	Full-time Millions
Seasonally Adjusted
Jan 2015	6810	120.711
Dec 2014	6790	119.934
Nov 2014	6,851	119.507
Oct 2014	7,012	119.681
Sep 2014	7,058	119.310
Aug 2014	7,223	118.758
Jul 2014	7,433	118.448
Jun 2014	7,496	118.252
May 2014	7,268	118.790
Apr 2014	7,460	118.458
Mar 2014	7,449	118.062
Feb 2014	7,204	117.859
Jan 2014	7,274	117.650
Dec 2013	7,776	117.240
Nov 2013	7,715	116.946
Oct 2013	7,982	116.293
Sep 2013	7,939	116.869
Aug 2013	7,843	116.453
Jul 2013	8,087	116.147
Jun 2013	8,124	116.143
May 2013	7,947	116.244
Apr 2013	7,933	116.018
Mar 2013	7,699	115.877
Feb 2013	8,064	115.751
Jan 2013	8,055	115.807
Dec 2012	7,926	115.724
Nov 2012	8,156	115.592
Oct 2012	8,195	115.514
Sep 2012	8,600	115.227
Aug 2012	7,997	114.735
Jul 2012	8,087	114.571
Jun 2012	8,098	114.764
May 2012	8,163	114.245
Apr 2012	7,915	114.365
Mar 2012	7,808	115.086
Feb 2012	8,193	114.186
Jan 2012	8,291	113.789
Dec 2011	8,174	113.740
Nov 2011	8,450	113.177
Oct 2011	8,637	112.891
Sep 2011	9,109	112.527
Aug 2011	8,781	112.715
Jul 2011	8,277	112.191
Not Seasonally Adjusted
Jan 2015	7,269	118.840
Dec 2014	6,970	119.394
Nov 2014	6,713	119.441
Oct 2014	6,787	120.176
Sep 2014	6,711	119.791
Aug 2014	7,083	120.110
Jul 2014	7,665	119.900
Jun 2014	7,805	119.472
May 2014	6,960	119.179
Apr 2014	7,243	118.073
Mar 2014	7,455	116.985
Feb 2014	7,397	116.323
Jan 2014	7,771	115.744
Dec 2013	7,990	116.661
Nov 2013	7,563	116.875
Oct 2013	7,700	116.798
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

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 2001-2015

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.

Chart I-19, US, Marginally Attached to the Labor Force, NSA Month, Thousands, 2001-2015

Sources: US Bureau of Labor Statistics

The number with full-time jobs in Jan 2015 is 118.840 million, which is lower by 4.379 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 249.723 million in Jan 2015 or by 17.765 million (http://www.bls.gov/data/) while in the same period the number of full-time jobs fell 4.379 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 132.603 million full-time jobs with population of 249.723 million in Jan 2015 (0.531 x 249.723) or 13.763 million fewer full-time jobs relative to actual 118.840 million. There appear to be around 10 million fewer full-time jobs in the US than before the global recession while population increased around 17 million. Mediocre GDP growth is the main culprit of the fractured US labor market.

Chart I-20 provides unadjusted full-time jobs in the US from 2001 to 2015 with sharp drop and incomplete recovery. There is current interest in past theories of “secular stagnation.” Alvin H. Hansen (1939, 4, 7; see Hansen 1938, 1941; for an early critique see Simons 1942) argues:

“Not until the problem of full employment of our productive resources from the long-run, secular standpoint was upon us, were we compelled to give serious consideration to those factors and forces in our economy which tend to make business recoveries weak and anaemic (sic) and which tend to prolong and deepen the course of depressions. This is the essence of secular stagnation-sick recoveries which die in their infancy and depressions which feed on them-selves and leave a hard and seemingly immovable core of unemployment. Now the rate of population growth must necessarily play an important role in determining the character of the output; in other words, the com-position of the flow of final goods. Thus a rapidly growing population will demand a much larger per capita volume of new residential building construction than will a stationary population. A stationary population with its larger proportion of old people may perhaps demand more personal services; and the composition of consumer demand will have an important influence on the quantity of capital required. The demand for housing calls for large capital outlays, while the demand for personal services can be met without making large investment expenditures. It is therefore not unlikely that a shift from a rapidly growing population to a stationary or declining one may so alter the composition of the final flow of consumption goods that the ratio of capital to output as a whole will tend to decline.”

Inferior performance of the US economy and labor markets, during cyclical slow growth not secular stagnation, is the critical current issue of analysis and policy design.

Chart I-20, US, Full-time Employed, Thousands, NSA, 2001-2015

Sources: US Bureau of Labor Statistics

Chart I-20A provides the noninstitutional civilian population of the United States from 2001 to 2015. 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, Thousands, 2001-2015

Sources: US Bureau of Labor Statistics

Chart I-20B provides number of full-time jobs in the US from 1968 to 2015. There were multiple recessions followed by expansions without contraction of full-time jobs and without recovery as during the period after 2008. The problem is specific of the current cycle and not secular.

Chart I-20B, US, Full-time Employed, Thousands, NSA, 1968-2015

Sources: US Bureau of Labor Statistics

Chart I-20C provides the noninstitutional civilian population of the United States from 1968 to 2015. 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, Thousands, 1968-2015

Sources: US Bureau of Labor Statistics

IA4 Theory and Reality of Secular Stagnation: Youth and Middle-Age Unemployment. Three tables support the argument that the proper comparison of the business cycle is between the recessions of the 1980s and the global recession after IVQ2007 and not as argued erroneously with the Great Depression of the 1930s. Table I-5 provides percentage change of real GDP in the United States in the 1930s, 1980s and 2000s. The recession in 1981-1982 is quite similar on its own to the 2007-2009 recession. In contrast, during the Great Depression in the four years of 1930 to 1933, GDP in constant dollars fell 26.4 percent cumulatively and fell 45.3 percent in current dollars (Pelaez and Pelaez, Financial Regulation after the Global Recession (2009a), 150-2, Pelaez and Pelaez, Globalization and the State, Vol. II (2009b), 205-7 and revisions in http://bea.gov/iTable/index_nipa.cfm). Data are available for the 1930s only on a yearly basis. US GDP fell 4.7 percent in the two recessions (1) from IQ1980 to IIIQ1980 and (2) from III1981 to IVQ1981 to IVQ1982 and 4.2 percent cumulatively in the recession from IVQ2007 to IIQ2009. It is instructive to compare the first three years of the expansions in the 1980s and the current expansion. GDP grew at 4.6 percent in 1983, 7.3 percent in 1984, 4.2 percent in 1985, 3.5 percent in 1986 and 3.5 percent in 1987. In contrast, GDP grew 2.5 percent in 2010, 1.6 percent in 2011, 2.3 percent in 2012 and 2.2 percent in 2013. Actual annual equivalent GDP growth in the four quarters of 2012, and eight quarters from IQ2013 to IVQ2014 is 2.4 percent and 2.5 percent in the four quarters ending in IVQ2014. GDP grew at 4.2 percent in 1985, 3.5 percent in 1986 and 3.5 percent in 1987 while the forecasts of the central tendency of participants of the Federal Open Market Committee (FOMC) are in the range of 2.3 to 2.4 percent in 2014 (http://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20141217.pdf) with less reliable forecast of 2.6 to 3.0 percent in 2015 (http://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20141217.pdf). Growth of GDP in the expansion from IIIQ2009 to IVQ2014 has been at average 2.4 percent in annual equivalent.

Table I-5, US, Percentage Change of GDP in the 1930s, 1980s and 2000s, ∆%

Year	GDP ∆%	Year	GDP ∆%	Year	GDP ∆%
1930	-8.5	1980	-0.2	2000	4.1
1931	-6.4	1981	2.6	2001	1.0
1932	-12.9	1982	-1.9	2002	1.8
1933	-1.3	1983	4.6	2003	2.8
1934	10.8	1984	7.3	2004	3.8
1935	8.9	1985	4.2	2005	3.3
1936	12.9	1986	3.5	2006	2.7
1937	5.1	1987	3.5	2007	1.8
1938	-3.3	1988	4.2	2008	-0.3
1930	8.0	1989	3.7	2009	-2.8
1940	8.8	1990	1.9	2010	2.5
1941	17.7	1991	-0.1	2011	1.6
1942	18.9	1992	3.6	2012	2.3
1943	17.0	1993	2.7	2013	2.2

Source: US Bureau of Economic Analysis http://www.bea.gov/iTable/index_nipa.cfm

Characteristics of the four cyclical contractions are provided in Table I-6 with the first column showing the number of quarters of contraction; the second column the cumulative percentage contraction; and the final column the average quarterly rate of contraction. There were two contractions from IQ1980 to IIIQ1980 and from IIIQ1981 to IVQ1982 separated by three quarters of expansion. The drop of output combining the declines in these two contractions is 4.7 percent, which is almost equal to the decline of 4.2 percent in the contraction from IVQ2007 to IIQ2009. In contrast, during the Great Depression in the four years of 1930 to 1933, GDP in constant dollars fell 26.4 percent cumulatively and fell 45.3 percent in current dollars (Pelaez and Pelaez, Financial Regulation after the Global Recession (2009a), 150-2, Pelaez and Pelaez, Globalization and the State, Vol. II (2009b), 205-7 and revisions in http://bea.gov/iTable/index_nipa.cfm). The comparison of the global recession after 2007 with the Great Depression is entirely misleading.

Table I-6, US, Number of Quarters, GDP Cumulative Percentage Contraction and Average Percentage Annual Equivalent Rate in Cyclical Contractions

	Number of Quarters	Cumulative Percentage Contraction	Average Percentage Rate
IIQ1953 to IIQ1954	3	-2.4	-0.8
IIIQ1957 to IIQ1958	3	-3.0	-1.0
IVQ1973 to IQ1975	5	-3.1	-0.6
IQ1980 to IIIQ1980	2	-2.2	-1.1
IIIQ1981 to IVQ1982	4	-2.5	-0.64
IVQ2007 to IIQ2009	6	-4.2	-0.72

Sources: Source: Bureau of Economic Analysis http://www.bea.gov/iTable/index_nipa.cfm

Table I-7 shows the mediocre average annual equivalent growth rate of 2.4 percent of the US economy in the twenty-two quarters of the current cyclical expansion from IIIQ2009 to IVQ2014. In sharp contrast, the average growth rate of GDP was:

5.7 percent in the first thirteen quarters of expansion from IQ1983 to IQ1986
5.4 percent in the first fifteen quarters of expansion from IQ1983 to IIIQ1986
5.2 percent in the first sixteen quarters of expansion from IQ1983 to IVQ1986
5.0 percent in the first seventeen quarters of expansion from IQ1983 to IQ1987
5.0 percent in the first eighteen quarters of expansion from IQ1983 to IIQ1987
4.9 percent in the first nineteen quarters of expansion from IQ1983 to IIIQ1987
5.0 percent in the first twenty quarters of expansion from IQ1983 to IVQ1987
4.9 percent in the first twenty-first quarters of expansion from IQ1983 to IQ1988
4.9 percent in the first twenty-two quarters of expansion from IQ1983 to IIQ1988

1. The line “average first four quarters in four expansions” provides the average growth rate of 7.7 percent with 7.8 percent from IIIQ1954 to IIQ1955, 9.2 percent from IIIQ1958 to IIQ1959, 6.1 percent from IIIQ1975 to IIQ1976 and 7.8 percent from IQ1983 to IVQ1983. The United States missed this opportunity of high growth in the initial phase of recovery. BEA data show the US economy in standstill with annual growth of 2.5 percent in 2010 decelerating to 1.6 percent annual growth in 2011, 2.3 percent in 2012, 2.2 percent in 2013 and 2.4 percent in 2014 (http://www.bea.gov/iTable/index_nipa.cfm) The expansion from IQ1983 to IQ1986 was at the average annual growth rate of 5.7 percent, 5.2 percent from IQ1983 to IVQ1986, 4.9 percent from IQ1983 to IIIQ1987, 5.0 percent from IQ1983 to IVQ1987, 4.9 percent from IQ1983 to IQ1988, 4.9 percent from IQ1983 to IIQ1988 and at 7.8 percent from IQ1983 to IVQ1983. GDP growth in the four quarters of IVQ2013 to IVQ2014 accumulated to 2.5 percent that is equivalent to 2.5 percent in a year. This is obtained by dividing GDP in IVQ2014 of $16,311.6 billion by GDP in IVQ2013 of $15,016.2 billion and compounding by 4/4: {[($16,311.6/$15,916.2)^4/4 -1]100 = 2.5 %}. The US economy grew 2.5 percent in IVQ2014 relative to the same quarter a year earlier in IVQ2013. Another important revelation of the revisions and enhancements is that GDP was flat in IVQ2012, which is in the borderline of contraction, and negative in IQ2014. US GDP fell 0.5 percent in IQ2014. The rate of growth of GDP in the revision of IIIQ2013 is 4.5 percent in seasonally adjusted annual rate (SAAR). Inventory accumulation contributed 1.49 percentage points to this rate of growth. The actual rate without this impulse of unsold inventories would have been 3.0 percent, or 0.74 percent in IIIQ2013, such that annual equivalent growth in 2013 is closer to 2.9 percent {[(1.007)(1.004)(1.0074)(1.010)^4/4-1]100 = 2.9%}, compounding the quarterly rates and converting into annual equivalent. Inventory divestment deducted 1.16 percentage points from GDP growth in IQ2014. Without this deduction of inventory divestment, GDP growth would have been minus 0.9 percent in IQ2014, such that the actual growth rates in the four quarters ending in IQ2014 is closer to 2.2 percent {[(1.004)(1.011)(1.009)(0.9977)]^4/4 -1]100 = 2.2%}.

Table I-7, US, Number of Quarters, Cumulative Growth and Average Annual Equivalent Growth Rate in Cyclical Expansions

	Number of Quarters	Cumulative Growth ∆%	Average Annual Equivalent Growth Rate
IIIQ 1954 to IQ1957	11	12.8	4.5
First Four Quarters IIIQ1954 to IIQ1955	4	7.8
IIQ1958 to IIQ1959	5	10.0	7.9
First Four Quarters IIIQ1958 to IIQ1959	4	9.2
IIQ1975 to IVQ1976	8	8.3	4.1
First Four Quarters IIIQ1975 to IIQ1976	4	6.1
IQ1983-IQ1986 IQ1983-IIIQ1986 IQ1983-IVQ1986 IQ1983-IQ1987 IQ1983-IIQ1987 IQ1983 to IIIQ1987 IQ1983 to IVQ1987 IQ1983 to IQ1988 IQ1983 to IIQ1988	13 15 16 17 18 19 20 21 22	19.9 21.6 22.3 23.1 24.5 25.6 27.7 28.4 30.1	5.7 5.4 5.2 5.0 5.0 4.9 5.0 4.9 4.9
First Four Quarters IQ1983 to IVQ1983	4	7.8
Average First Four Quarters in Four Expansions*		7.7
IIIQ2009 to IVQ2014	22	13.6	2.4
First Four Quarters IIIQ2009 to IIQ2010		2.7

*First Four Quarters: 7.8% IIIQ1954-IIQ1955; 9.2% IIIQ1958-IIQ1959; 6.1% IIIQ1975-IQ1976; 7.8% IQ1983-IVQ1983

Source: Bureau of Economic Analysis http://www.bea.gov/iTable/index_nipa.cfm

Table EMP provides the comparison between the labor market in the current whole cycle from 2007 to 2014 and the whole cycle from 1979 to 1988. In the entire cycle from 2007 to 2014, the number employed increased 0.258 million, full-time employed fell 2.373 million, part-time for economic reasons increased 2.812 million and population increased 16.080 million. The number employed increased 0.2 percent, full-time employed fell 2.0 percent, part-time for economic reasons increased 63.9 percent and population increased 6.9 percent. There is sharp contrast with the contractions of the 1980s and with most economic history of the United States. In the whole cycle from 1979 to 1988, the number employed increased 16.144 million, full-time employed increased 12.560 million, part-time for economic reasons 1.629 million and population 19.750 million. In the entire cycle from 1979 to 1988, the number employed increased 16.3 percent, full-time employed 15.2 percent, part-time for economic reasons 45.5 percent and population 12.0 percent. The difference between the 1980s and the current cycle after 2007 is in the high rate of growth after the contraction that maintained trend growth around 3.0 percent for the entire cycle and per capital growth at 2.0 percent. The evident fact is that current weakness in labor markets originates in cyclical slow growth and not in imaginary secular stagnation.

Table EMP, US, Annual Level of Employed, Full-Time Employed, Employed Part-Time for Economic Reasons and Noninstitutional Civilian Population, Millions

	Employed	Full-Time Employed	Part Time Economic Reasons	Noninstitutional Civilian Population
2000s
2000	136.891	113.846	3.227	212.577
2001	136.933	113.573	3.715	215.092
2002	136.485	112.700	4.213	217.570
2003	137.736	113.324	4.701	221.168
2004	139.252	114.518	4.567	223.357
2005	141.730	117.016	4.350	226.082
2006	144.427	119.688	4.162	228.815
2007	146.047	121.091	4.401	231.867
2008	145.362	120.030	5.875	233.788
2009	139.877	112.634	8.913	235.801
2010	139.064	111.714	8.874	237.830
2011	139.869	112.556	8.560	239.618
2012	142.469	114.809	8.122	243.284
2013	143.929	116.314	7.935	245.679
2014	146.305	118.718	7.213	247.947
∆2007-2014	0.258	-2,373	2.812	16.080
∆% 2007-2013	0.2	-2.0	63.9	6.9
1980s
1979	98.824	82.654	3.577	164.863
1980	99.303	82.562	4.321	167.745
1981	100.397	83.243	4.768	170.130
1982	99.526	81.421	6.170	172.271
1983	100.834	82.322	6.266	174.215
1984	105.005	86.544	5.744	176.383
1985	107.150	88.534	5.590	178.206
1986	109.597	90.529	5.588	180.587
1987	112.440	92.957	5.401	182.753
1988	114.968	95.214	5.206	184.613
1989	117.342	97.369	4.894	186.393
∆1979-1988	16.144	12.560	1.629	19.750
∆% 1979-88	16.3	15.2	45.5	12.0

Source: Bureau of Labor Statistics

There is current interest in past theories of “secular stagnation.” Alvin H. Hansen (1939, 4, 7; see Hansen 1938, 1941; for an early critique see Simons 1942) argues:

The argument that anemic population growth causes “secular stagnation” in the US (Hansen 1938, 1939, 1941) is as misplaced currently as in the late 1930s (for early dissent see Simons 1942). Youth workers would obtain employment at a premium in an economy with declining population. In fact, there is currently population growth in the ages of 16 to 24 years but not enough job creation and discouragement of job searches for all ages. This is merely another case of theory without reality with dubious policy proposals. Inferior performance of the US economy and labor markets is the critical current issue of analysis and policy design.

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 s_i of a demographic group in an industry i and unemployment rate y_i of that demographic group (Lazear and Spletzer 2012JHJul22, 5-6):

Y = ∑_is_iy_i (1)

This equation can be decomposed for analysis as (Lazear and Spletzer 2012JHJul22, 6):

∆Y = ∑_i∆s_iy*_i+ ∑_i∆y_is*_i (2)

The first term in (2) captures changes in the demographic and industrial composition of the economy ∆s_i 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 ∆y_i, 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.”

The theory of secular stagnation cannot explain sudden collapse of the US economy and labor markets. There are accentuated cyclic factors for both the entire population and the young population of ages 16 to 24 years. Table Summary Total provides the total noninstitutional population (ICP) of the US, full-time employment level (FTE), employment level (EMP), civilian labor force (CLF), civilian labor force participation rate (CLFP), employment/population ratio (EPOP) and unemployment level (UNE). Secular stagnation would spread over long periods instead of immediately. All indicators of the labor market weakened sharply during the contraction and did not recover. Population continued to grow but all other variables collapsed and did not recover. The theory of secular stagnation departs from an aggregate production function in which output grows with the use of labor, capital and technology (see Pelaez and Pelaez, Globalization and the State, Vol. I (2008a), 11-16). Hansen (1938, 1939) finds secular stagnation in lower growth of an aging population. In the current US economy, Table Summary shows that population is dynamic while the labor market is fractured. There is key explanation in the behavior of the civilian labor force participation rate (CLFP) and the employment population ratio (EPOP) that collapsed during the global recession with inadequate recovery. Abandoning job searches are difficult to capture in labor statistics but likely explain the decline in the participation of the population in the labor force. Allowing for abandoning job searches, the total number of people unemployed or underemployed is 28.3 million or 17.1 percent of the effective labor force (http://cmpassocregulationblog.blogspot.com/2015/02/job-creation-and-monetary-policy-twenty.html).

Table Summary Total, US, Total Noninstitutional Civilian Population, Full-time Employment, Employment, Civilian Labor Force, Civilian Labor Force Participation Rate, Employment Population Ratio, Unemployment, NSA, Millions and Percent

	ICP	FTE	EMP	CLF	CLFP	EPOP	UNE
2006	228.8	119.7	144.4	151.4	66.2	63.1	7.0
2009	235.8	112.6	139.9	154.1	65.4	59.3	14.3
2012	243.3	114.8	142.5	155.0	63.7	58.6	12.5
2013	245.7	116.3	143.9	155.4	63.2	58.6	11.5
2014	247.9	118.7	146.3	155.9	62.9	59.0	9.6
12/07	233.2	121.0	146.3	153.7	65.9	62.8	7.4
9/09	236.3	112.0	139.1	153.6	65.0	58.9	14.5
1/15	249.0	118.8	146.6	156.1	62.5	58.7	9.5

ICP: Total Noninstitutional Civilian Population; FT: Full-time Employment Level, EMP: Total Employment Level; CLF: Civilian Labor Force; CLFP: Civilian Labor Force Participation Rate; EPOP: Employment Population Ratio; UNE: Unemployment

Source: Bureau of Labor Statistics

The same situation is present in the labor market for young people in ages 16 to 24 years with data in Table Summary Youth. The youth noninstitutional civilian population (ICP) continued to increase during and after the global recession. There is the same disastrous labor market with decline for young people in employment (EMP), civilian labor force (CLF), civilian labor force participation rate (CLFP) and employment population ratio (EPOP). There are only increases for unemployment of young people (UNE) and youth unemployment rate (UNER). If aging were a factor of secular stagnation, growth of population of young people would attract a premium in remuneration in labor markets. The sad fact is that young people are also facing tough labor markets. The application of the theory of secular stagnation to the US economy and labor markets is void of reality in the form of key facts, which are best explained by accentuated cyclic factors analyzed by Lazear and Spletzer (2012JHJul22).

Table Summary Youth, US, Youth, Ages 16 to 24 Years, Noninstitutional Civilian Population, Full-time Employment, Employment, Civilian Labor Force, Civilian Labor Force Participation Rate, Employment Population Ratio, Unemployment, NSA, Millions and Percent

	ICP	EMP	CLF	CLFP	EPOP	UNE	UNER
2006	36.9	20.0	22.4	60.6	54.2	2.4	10.5
2009	37.6	17.6	21.4	56.9	46.9	3.8	17.6
2012	38.8	17.8	21.3	54.9	46.0	3.5	16.2
2013	38.8	18.1	21.4	55.0	46.5	3.3	15.5
2014	38.7	18.4	21.3	55.0	47.6	2.9	13.4
12/07	37.5	19.4	21.7	57.8	51.6	2.3	10.7
9/09	37.6	17.0	20.7	55.2	45.1	3.8	18.2
1/15	38.7	17.9	20.6	53.1	46.2	2.6	12.9

ICP: Youth Noninstitutional Civilian Population; EMP: Youth Employment Level; CLF: Youth Civilian Labor Force; CLFP: Youth Civilian Labor Force Participation Rate; EPOP: Youth Employment Population Ratio; UNE: Unemployment; UNER: Youth Unemployment Rate

Source: Bureau of Labor Statistics

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. Youth employment fell from 20.041 million in 2006 to 18.057 million in 2013 or 1.984 million fewer jobs. Youth employment fell from 20.041 million in 2006 to 18.442 million in 2014 or 1.599 million. The level of youth jobs fell from 20.129 million in Dec 2006 to 18.347 million in Dec 2014 for 1.782 million fewer youth jobs. The level of youth jobs fell from 19.003 million in Jan 2006 to 17.912 million in Jan 2015 or 1.091 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 21.167 million in Aug 2006 to 18.972 million in Aug 2014 for 2.195 million fewer jobs. Youth employment fell from 21.914 million in Jul 2006 to 20.085 million in Jul 2014 for 1.829 million fewer youth jobs. The number of youth jobs fell from 21.268 million in Jun 2006 million to 19.421 million in Jun 2014 or 1.847 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 number of youth jobs fell from 20.129 million in Dec 2006 to 18.106 million in Dec 2013 or 2.023 million fewer 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 2006 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 youth jobs fell by 1.777 million. The civilian noninstitutional population increased from 37.467 million in Sep 2007 to 38.822 million in Sep 2013 or by 1.355 million while the number of youth jobs fell by 1.455 million. The civilian noninstitutional population increased from 37.480 million in Oct 2007 to 38.804 million in Oct 2013 or by 1.324 million while the number of youth jobs decreased 1.877 million from Oct 2006 to Oct 2013. The civilian noninstitutional population increased from 37.076 million in Nov 2006 to 38.798 million in Nov 2013 or by 1.722 million while the number of youth jobs fell 1.799 million. The civilian noninstitutional population increased from 37.518 million in Dec 2007 to 38.790 million in Dec 2013 or by 1.272 million while the number of youth jobs fell 2.023 million from Dec 2006 to Dec 2013. The youth civilian noninstitutional population increased 1.488 million from 37.282 million in in Jan 2007 to 38.770 million in Jan 2014 while the number of youth jobs fell 2.035 million. The youth civilian noninstitutional population increased 1.464 million from 37.302 in Feb 2007 to 38.766 million in Feb 2014 while the number of youth jobs decreased 2.058 million. The civilian noninstitutional population increased 1.437 million from 37.324 million in Mar 2007 to 38.761 million in Mar 2014 while jobs for ages 16 to 24 years decreased 1.599 million from 19.538 million in Mar 2007 to 17.939 million in Mar 2014. The civilian noninstitutional population ages 16 to 24 years increased 1.410 million from 37.349 million in Apr 2007 to 38.759 million in Apr 2014 while the number of youth jobs fell 1.347 million. The civilian noninstitutional population increased 1.370 million from 37.379 million in May 2007 to 38.749 million in May 2014 while the number of youth jobs decreased 1.128 million. The civilian noninstitutional population increased 1.330 million from 37.410 million in Jun 2007 to 38.740 million in Jun 2014 while the number of youth jobs fell 1.847 million from 21.268 million in Jun 2006 to 19.421 million in Jun 2014. The youth civilian noninstitutional population increased by 1.292 million from 37.443 million in Jul 2007 to 38.735 million in Jul 2014 while the number of youth jobs fell 1.632 million. The youth civilian noninstitutional population increased from 37.445 million in Aug 2007 to 38.706 million in Aug 2014 or 1.251 million while the number of youth jobs fell 1.441 million. The youth civilian noninstitutional population increased 1.652 million from 37.027 million in Sep 2006 to 38.679 million in Sep 2014 while the number of youth jobs fell 1.500 million. The youth civilian noninstitutional population increased from 37.047 million in Oct 2006 to 38.650 million in Oct 2014 or 1.603 million while the number of youth jobs fell 1.072 million. The youth civilian noninstitutional population increased from 37.076 million in Nov 2006 to 38.628 million in Nov 2014 or 1.552 million while the number of youth jobs fell 1.327 million. The civilian noninstitutional population increased from 37.100 million in Dec 2006 to 38.606 million in Dec 2014 or 1.506 million while the number of youth jobs fell 1.782 million. The civilian noninstitutional population increased 1.971 million from 36.761 million in Jan 2006 to 38.732 million in Jan 2015 while the number of youth jobs fell 1.091 million. The hardship does not originate in low growth of population but in underperformance of the economy in the expansion from the business cycle. 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	Jan	Aug	Sep	Oct	Nov	Dec
2001	19678	20529	19706	19694	19675	19547
2002	18653	20653	19466	19542	19397	19394
2003	18811	20181	18909	19139	19163	19136
2004	18852	20660	19158	19609	19615	19619
2005	18858	20814	19503	19794	19750	19733
2006	19003	21167	19604	19853	19903	20129
2007	19407	20413	19498	19564	19660	19361
2008	18724	20096	18818	18757	18454	18378
2009	17467	18270	16972	16671	16689	16615
2010	16166	18061	16874	16867	16946	16727
2011	16512	18067	17238	17532	17402	17234
2012	16944	18171	17687	17842	17877	17604
2013	17183	18636	18043	17976	18104	18106
2014	17372	18972	18104	18781	18576	18347
2015	17912

Source: US Bureau of Labor Statistics http://www.bls.gov/data/

Chart I-21 provides US employment level ages 16 to 24 years from 2002 to 2015. Employment level is sharply lower in Jan 2015 relative to the peak in 2007. The following Chart I-21A relates youth employment and youth civilian noninstitutional population.

Chart I-21, US, Employment Level 16-24 Years, Thousands SA, 2001-2015

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 2015. 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 2006 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 youth jobs fell by 1.777 million. The civilian noninstitutional population increased from 37.467 million in Sep 2007 to 38.822 million in Sep 2013 or by 1.355 million while the number of youth jobs fell by 1.455 million. The civilian noninstitutional population increased from 37.480 million in Oct 2007 to 38.804 million in Oct 2013 or by 1.324 million while the number of youth jobs decreased 1.877 million from Oct 2006 to Oct 2013. The civilian noninstitutional population increased from 37.076 million in Nov 2006 to 38.798 million in Nov 2013 or by 1.722 million while the number of youth jobs fell 1.799 million. The civilian noninstitutional population increased from 37.518 million in Dec 2007 to 38.790 million in Dec 2013 or by 1.272 million while the number of youth jobs fell 2.023 million from Dec 2006 to Dec 2013. The youth civilian noninstitutional population increased 1.488 million from 37.282 million in in Jan 2007 to 38.770 million in Jan 2014 while the number of youth jobs fell 2.035 million. The youth civilian noninstitutional population increased 1.464 million from 37.302 in Feb 2007 to 38.766 million in Feb 2014 while the number of youth jobs decreased 2.058 million. The civilian noninstitutional population increased 1.437 million from 37.324 million in Mar 2007 to 38.761 million in Mar 2014 while jobs for ages 16 to 24 years decreased 1.599 million from 19.538 million in Mar 2007 to 17.939 million in Mar 2014. The civilian noninstitutional population ages 16 to 24 years increased 1.410 million from 37.349 million in Apr 2007 to 38.759 million in Apr 2014 while the number of youth jobs fell 1.347 million. The civilian noninstitutional population increased 1.370 million from 37.379 million in May 2007 to 38.749 million in May 2014 while the number of youth jobs decreased 1.128 million. The civilian noninstitutional population increased 1.330 million from 37.410 million in Jun 2007 to 38.740 million in Jun 2014 while the number of youth jobs fell 1.847 million from 21.268 million in Jun 2006 to 19.421 million in Jun 2014. The youth civilian noninstitutional population increased by 1.292 million from 37.443 million in Jul 2007 to 38.735 million in Jul 2014 while the number of youth jobs fell 1.632 million. The youth civilian noninstitutional population increased from 37.445 million in Aug 2007 to 38.706 million in Aug 2014 or 1.251 million while the number of youth jobs fell 1.441 million. The youth civilian noninstitutional population increased 1.652 million from 37.027 million in Sep 2006 to 38.679 million in Sep 2014 while the number of youth jobs fell 1.500 million. The youth civilian noninstitutional population increased from 37.047 million in Oct 2006 to 38.650 million in Oct 2014 or 1.603 million while the number of youth jobs fell 1.072 million. The youth civilian noninstitutional population increased from 37.076 million in Nov 2006 to 38.628 million in Nov 2014 or 1.552 million while the number of youth jobs fell 1.327 million. The civilian noninstitutional population increased from 37.100 million in Dec 2006 to 38.606 million in Dec 2014 or 1.506 million while the number of youth jobs fell 1.782 million. The civilian noninstitutional population increased 1.971 million from 36.761 million in Jan 2006 to 38.732 million in Jan 2015 while the number of youth jobs fell 1.091 million. The hardship does not originate in low growth of population but in underperformance of the economy in the expansion from the business cycle. 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.

Chart I-21A, US, Civilian Noninstitutional Population Ages 16 to 24 Years, Thousands NSA, 2001-2015

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 2015. 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. The US civilian labor force fell from 21.821 million in Oct 2007 to 21.003 million in Oct 2013, by 0.818 million or 3.7 percent while the noninstitutional youth population increased from 37.480 million in Oct 2007 to 38.804 million in Oct 2013, by 1.324 million or 3.5 percent. The US youth civilian labor force fell from 21.909 million in Nov 2007 to 20.825 million in Nov 2013, by 1.084 million or 4.9 percent while the civilian noninstitutional youth population increased from 37.076 million in Nov 2006 to 38.798 million in Nov 2013 or by 1.722 million. The US youth civilian labor force fell from 21.684 million in Dec 2007 to 20.642 million in Dec 2013, by 1.042 million or 4.8 percent, while the civilian noninstitutional population increased from 37.518 million in Dec 2007 to 38.790 million in Dec 2013, by 1.272 million or 3.4 percent. The youth civilian labor force of the US fell from 21.770 million in Jan 2007 to 20.423 million in Jan 2014, by 1.347 million or 6.2 percent while the youth civilian noninstitutional population increased 37.282 million in Jan 2007 to 38.770 million in Jan 2014, by 1.488 million or 4.0 percent. The youth civilian labor force of the US fell 1.255 million from 21.645 million in Feb 2007 to 20.390 million in Feb 2014 while the youth civilian noninstitutional population increased 1.464 million from 37.302 million in Feb 2007 to 38.766 million in Feb 2014. The youth civilian labor force of the US fell 0.693 million from 21.634 million in Mar 2007 to 20.941 million in Mar 2014 or 3.2 person while the youth noninstitutional civilian population 1.437 million from 37.324 million in Mar 2007 to 38.761 million in Mar 2014 or 3.9 percent. The US youth civilian labor force fell 981 thousand from 21.442 million in Apr 2007 to 20.461 million in Apr 2014 while the youth civilian noninstitutional population increased from 37.349 million in Apr 2007 to 38.759 million in Apr 2014 by 1.410 thousand or 3.8 percent. The youth civilian labor force decreased from 21.659 million in May 2007 to 21.160 million in May 2014 by 499 thousand or 2.3 percent while the youth civilian noninstitutional population increased 1.370 million from 37.739 million in May 2007 to 38.749 million in May 2007 or by 2.7 percent. The youth civilian labor force decreased from 24.128 million in Jun 2006 to 22.851 million in Jun 2014 by 1.277 million or 5.3 percent while the civilian noninstitutional population increased from 36.943 million in Jun 2006 to 38.740 million in Jun 2014 by 1.797 million or 4.9 percent. The youth civilian labor force fell from 24.664 million in Jul 2006 to 23.437 million in Jul 2014 while the civilian noninstitutional population increased from 36.989 million in Jul 2006 to 38.735 million in Jul 2014. The youth civilian labor force fell 1.818 million from 23.634 million in Aug 2006 to 21.816 million in Aug 2014 while the civilian noninstitutional population increased from 37.008 million in Aug 2006 to 38.706 million in Aug 2914 or 1.698 million. The youth civilian labor force fell 0.942 million from 21.901 million in Sep 2006 to 20.959 million in Sep 2014 while the noninstitutional population increased 1.652 million from 37.027 million in Sep 2006 to 38.679 million in Sep 2014. The youth civilian labor force decreased 0.702 million from 22.105 million in Oct 2006 to 21.403 million in Oct 2014 while the youth civilian noninstitutional population increased from 37.047 million in Oct 2006 to 38.650 million in Oct 2014 or 1.603 million. The youth civilian labor force decreased 1.111 million from 22.145 million in Nov 2006 to 21.034 million in Nov 2014 while the youth civilian noninstitutional population increased from 37.076 million in Nov 2006 to 38.628 million in Nov 2014 or 1.552 million. The youth civilian labor force decreased 1.472 million from 22.136 million in Dec 2006 to 20.664 million in Dec 2014 while the youth civilian noninstitutional population increased from 37.100 million in Dec 2006 to 38.606 million in Dec 2014 or 1.506 million. The youth civilian labor force decreased 0.831 million from 21.368 million in Jan 2006 to 20.555 million in Jan 2015 while the youth noninstitutional population increased from 36.761 million in Jan 2006 to 38.732 million in Jan 2015 or 1.971 million. 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, 2001-2015

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. The US labor force participation rate of young people fell from 59.7 percent in Oct 2006 to 54.1 in Oct 2013. The US labor force participation rate of young people fell from 59.7 percent in Nov 2006 to 53.7 percent in Nov 2013. The US labor force participation rate fell from 57.8 in Dec 2007 to 53.2 in Dec 2013. The youth labor force participation rate fell from 58.4 in Jan 2007 to 52.7 in Jan 2014. The US youth labor force participation rate fell from 58.0 percent in Feb 2007 to 52.6 percent in Feb 2013. The labor force participation rate of ages 16 to 24 years fell from 58.0 in Mar 2007 to 54.0 in Mar 2014. The labor force participation rate of ages 16 to 24 years fell from 57.4 in Apr 2007 to 52.8 in Apr 2014. The labor force participation rate of ages 16 to 24 years fell from 57.9 in May 2007 to 54.6 in May 2014. The labor force participation rate of ages 16 to 24 years fell from 65.3 in Jun 2006 to 59.0 in Jun 2014. The labor force participation rate ages 16 to 24 years fell from 66.7 in Jul 2006 to 60.5 in Jul 2014. The labor force participation rate ages 16 to 24 years fell from 63.9 in Aug 2006 to 56.4 in Aug 2014. The labor force participation rate ages 16 to 24 years fell from 59.1 in Sep 2006 to 54.2 in Sep 2014. The labor force participation rate ages 16 to 24 years fell from 59.7 in Oct 2006 to 55.4 in Oct 2014. The labor force participation rate ages 16 to 24 years fell from 59.7 in Nov 2006 to 54.5 in Nov 2014. The labor force participation rate ages 16 to 24 fell from 59.7 in Dec 2006 to 53.5 in Dec 2014. The labor force participation rate ages 16 to 24 fell from 58.1 in Jan 2006 to 53.1 in Jan 2015. 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, 2001-2015

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 (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 employment population ratio for ages 16 to 24 years fell from 53.6 in Oct 2006 to 46.3 in Oct 2013. The employment population ratio for ages 16 to 24 years fell from 53.7 in Nov 2007 to 46.7 in Nov 2013. The US employment population ratio for ages 16 to 24 years fell from 51.6 in Dec 2007 to 46.7 in Dec 2013. The US employment population ratio fell from 52.1 in Jan 2007 to 44.8 in Jan 2014. The US employment population ratio for ages 16 to 24 fell from 52.0 in Feb 2007 to 44.8 in Feb 2014. The US employment population ratio for ages 16 to 24 years fell from 52.3 in Mar 2007 to 46.3 in Mar 2014. The US employment population ratio for ages 16 to 24 years fell from 51.9 in Apr 2007 to 46.5 in Apr 2014. The US employment population ratio for ages 16 to 24 years fell from 52.1 in May 2007 to 47.3 in May 2014. The US employment population ratio for ages 16 to 24 years fell from 57.6 in Jun 2006 to 50.1 in Jun 2014. The US employment population ratio for ages 16 to 24 years fell from 59.2 in Jul 2006 to 50.1 in Jul 2014. The employment population ratio for ages 16 to 24 years fell from 57.2 in Aug 2006 to 49.0 in Aug 2014. The employment population ratio for ages 16 to 24 fell from 52.9 in Sep 2006 to 46.8 in Sep 2014. The employment population ratio for ages 16 to 24 fell from 53.6 in Oct 2006 to 48.6 in Oct 2014. The employment population ratio for ages 16 to 24 fell from 53.7 in Nov 2006 to 48.1 in Nov 2014. The employment population ration for ages 16 to 24 fell from 54.3 in Dec 2006 to 47.5 in Dec 2014. The employment population ration for ages 16 to 24 years fell from 51.7 in Jan 2006 to 46.2 in Jan 2015. 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, 2001-2015

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 increased from 2342 in 2007 to 3324 thousand in 2013 or by 0.982 million. The unemployment level ages 16 to 24 years increased from 2342 thousand to 2853 thousand in 2014 or by 0.511 million. The unemployment level ages 16 to 24 years stabilized from 2.363 million in Jan 2007 to 2.644 million in Jan 2015 or increase by 0.281 million. This situation may persist for many years.

Table I-11, US, Unemployment Level 16-24 Years, NSA, Thousands

Year	Jan	Aug	Sep	Oct	Nov	Dec	Annual
2001	2250	2461	2301	2424	2470	2412	2371
2002	2754	2688	2506	2468	2570	2374	2683
2003	2748	2724	2698	2522	2522	2248	2746
2004	2767	2585	2493	2572	2448	2294	2638
2005	2661	2519	2339	2285	2369	2055	2521
2006	2366	2467	2297	2252	2242	2007	2353
2007	2363	2388	2419	2258	2250	2323	2342
2008	2633	2990	2904	2842	2833	2928	2830
2009	3278	4004	3774	3789	3699	3532	3760
2010	3983	3903	3604	3731	3561	3352	3857
2011	3851	3820	3541	3386	3287	3161	3634
2012	3416	3672	3174	3285	3102	3153	3451
2013	3674	3453	3139	3028	2721	2536	3324
2014	3051	2844	2854	2622	2458	2317	2853
2015	2644

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 2015. The level rose sharply from 2007 to 2010 with tepid improvement into 2012 and deterioration into 2013-2014 with recent marginal improvement alternating with deterioration.

Chart I-22, US, Unemployment Level 16-24 Years, Thousands SA, 2001-2015

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. The rate of youth unemployment fell marginally to 15.5 percent in 2013. 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 percent in Jul 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 rose from 10.8 in Jul 2007 to 14.3 in Jul 2014. The rate of youth unemployment increased from 9.1 percent in Dec 2006 to 12.3 percent in Dec 2013. The rate of youth unemployment increased from 10.9 percent in Jan 2007 to 14.9 percent in Jan and Feb 2014. The rate of youth unemployment increased from 9.7 percent in Mar 2007 to 14.3 percent in Mar 2014. The rate of youth unemployment increased from 9.7 percent in Apr 2007 to 11.9 percent in Apr 2014. The rate of youth unemployment increased from 10.2 percent in May 2007 to 13.4 percent in May 2014. The rate of youth unemployment increased from 12.0 percent in Jun 2007 to 15.0 percent in Jun 2014. The rate of youth unemployment increased from 10.8 in Jul 2007 to 14.3 in Jul 2014. The rate of youth unemployment increased from 10.5 in Aug 2007 to 13.0 in Aug 2014. The rate of youth unemployment increased from 11.0 in Sep 2007 to 13.6 in Sep 2014. The rate of youth unemployment increased from 10.3 in Oct 2007 to 12.2 in Oct 2014. The rate of youth unemployment increased from 10.3 in Nov 2007 to 11.7 in Nov 2014. The rate of youth unemployment increased from 10.7 in Dec 2007 to 11.2 in Dec 2014. The rate of youth unemployment increased from 10.9 in Jan 2007 to 12.9 in Jan 2015. 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	Jan	Feb	Mar	Jul	Aug	Sep	Oct	Nov	Dec	Annual
2001	10.3	10.3	10.2	10.5	10.7	10.5	11.0	11.2	11.0	10.6
2002	12.9	12.5	12.9	12.4	11.5	11.4	11.2	11.7	10.9	12.0
2003	12.7	12.7	12.2	13.3	11.9	12.5	11.6	11.6	10.5	12.4
2004	12.8	12.3	12.1	12.3	11.1	11.5	11.6	11.1	10.5	11.8
2005	12.4	13.0	11.7	11.0	10.8	10.7	10.3	10.7	9.4	11.3
2006	11.1	11.3	10.3	11.2	10.4	10.5	10.2	10.1	9.1	10.5
2007	10.9	10.3	9.7	10.8	10.5	11.0	10.3	10.3	10.7	10.5
2008	12.3	11.8	11.1	14.0	13.0	13.4	13.2	13.3	13.7	12.8
2009	15.8	16.4	16.1	18.5	18.0	18.2	18.5	18.1	17.5	17.6
2010	19.8	19.2	18.4	19.1	17.8	17.6	18.1	17.4	16.7	18.4
2011	18.9	18.2	17.2	18.1	17.5	17.0	16.2	15.9	15.5	17.3
2012	16.8	17.0	16.0	17.1	16.8	15.2	15.5	14.8	15.2	16.2
2013	17.6	16.7	15.9	16.3	15.6	14.8	14.4	13.1	12.3	15.5
2014	14.9	14.9	14.3	14.3	13.0	13.6	12.2	11.7	11.2	13.4
2015	12.9

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 2015. 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.

Chart I-23, US, Unemployment Rate 16-24 Years, Percent, NSA, 2001-2015

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 2015. 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. The rate of youth unemployment was 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 rate of youth unemployment was 10.3 in Oct 2007, increasing to 14.4 percent in Oct 2013. The rate of youth unemployment was 10.3 percent in Nov 2007, increasing to 13.1 percent in Nov 2013. The rate of youth unemployment was 10.7 percent in Dec 2013, increasing to 12.3 percent in Dec 2013. The rate of youth unemployment was 10.9 percent in Jan 2007, increasing to 14.9 percent in Jan 2014. The rate of youth unemployment was 10.3 percent in Feb 2007, increasing to 14.9 percent in Feb 2014. The rate of youth unemployment was 9.7 percent in Mar 2007, increasing to 14.3 percent in Mar 2014. The rate of youth unemployment was 9.7 percent in Apr 2007, increasing to 11.9 percent in Apr 2014. The rate of youth unemployment was 10.2 percent in May 2007, increasing to 13.4 percent in May 2014. The rate of youth unemployment was 12.0 percent in Jun 2007, increasing to 15.0 percent in Jun 2014. The rate of youth unemployment was 10.8 percent in Jul 2007, increasing to 14.3 percent in Jul 2014. The rate of youth unemployment was 10.5 percent in Aug 2007, increasing to 13.0 percent in Aug 2014. The rate of youth unemployment was 11.0 percent in Sep 2007, increasing to 13.6 percent in Sep 2014. The rate of youth unemployment increased from 10.3 in Oct 2007 to 12.2 in Oct 2014. The rate of youth unemployment increased from 10.3 percent in Nov 2007 to 11.7 percent in Nov 2014. The rate of youth unemployment increased from 10.7 in Dec 2007 to 11.2 in Dec 2014. The rate of youth unemployment increased from 10.9 in Jan 2007 to 12.9 in 2015. 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. The difference originates in the vigorous seasonally-adjusted annual equivalent average rate of GDP growth of 5.9 percent during the recovery from IQ1983 to IVQ1985 and 4.9 percent from IQ1983 to IIQ1988 compared with 2.4 percent on average during the first 22 quarters of expansion from IIIQ2009 to IVQ2014 (http://cmpassocregulationblog.blogspot.com/2015/02/financial-and-international.html). US economic growth has been at only 2.4 percent on average in the cyclical expansion in the 22 quarters from IIIQ2009 to IVQ2014. 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) and the first estimate of GDP for IVQ2014 (http://www.bea.gov/newsreleases/national/gdp/2015/pdf/gdp4q14_adv.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 $14,745.9 billion in IIQ2010 by GDP of $14,355.6 billion in IIQ2009 {[$14,745.9/$14,355.6 -1]100 = 2.7%], or accumulating the quarter on quarter growth rates (http://cmpassocregulationblog.blogspot.com/2015/02/financial-and-international.html and earlier http://cmpassocregulationblog.blogspot.com/2014/12/valuations-of-risk-financial-assets.html). The expansion from IQ1983 to IVQ1985 was at the average annual growth rate of 5.9 percent, 5.4 percent from IQ1983 to IIIQ1986, 5.2 percent from IQ1983 to IVQ1986, 5.0 percent from IQ1983 to IQ1987, 5.0 percent from IQ1983 to IIQ1987, 4.9 percent from IQ1983 to IIIQ1987, 5.0 percent from IQ1983 to IVQ1987, 4.9 percent from IQ1983 to IIQ1988 and at 7.8 percent from IQ1983 to IVQ1983 (http://cmpassocregulationblog.blogspot.com/2015/02/financial-and-international.html and earlier http://cmpassocregulationblog.blogspot.com/2014/12/valuations-of-risk-financial-assets.html). The US maintained growth at 3.0 percent on average over entire cycles with expansions at higher rates compensating for contractions. Growth at trend in the entire cycle from IVQ2007 to IVQ2014 would have accumulated to 23.0 percent. GDP in IVQ2014 would be $18,438.0 billion (in constant dollars of 2009) if the US had grown at trend, which is higher by $2,126.4 billion than actual $16,311.6 billion. There are about two trillion dollars of GDP less than at trend, explaining the 28.3 million unemployed or underemployed equivalent to actual unemployment of 17.1 percent of the effective labor force (http://cmpassocregulationblog.blogspot.com/2015/02/job-creation-and-monetary-policy-twenty.html and earlier http://cmpassocregulationblog.blogspot.com/2015/01/fluctuating-valuations-of-risk.html and earlier http://cmpassocregulationblog.blogspot.com/2014/12/financial-risks-twenty-six-million.html). US GDP in IVQ2014 is 11.5 percent lower than at trend. US GDP grew from $14,991.8 billion in IVQ2007 in constant dollars to $16,311.6 billion in IVQ2014 or 8.8 percent at the average annual equivalent rate of 1.2 percent. Cochrane (2014Jul2) estimates US GDP at more than 10 percent below trend. The US missed the opportunity to grow at higher rates during the expansion and it is difficult to catch up because growth rates in the final periods of expansions tend to decline. The US missed the opportunity for recovery of output and employment always afforded in the first four quarters of expansion from recessions. Zero interest rates and quantitative easing were not required or present in successful cyclical expansions and in secular economic growth at 3.0 percent per year and 2.0 percent per capita as measured by Lucas (2011May). There is cyclical uncommonly slow growth in the US instead of allegations of secular stagnation. There is similar behavior in manufacturing. The long-term trend is growth at average 3.3 percent per year from Jan 1919 to Dec 2014. Growth at 3.3 percent per year would raise the NSA index of manufacturing output from 99.2392 in Dec 2007 to 124.5620 in Dec 2014. The actual index NSA in Dec 2014 is 101.2840, which is 18.7 percent below trend. Manufacturing output grew at average 2.4 percent between Dec 1986 and Dec 2014, raising the index at trend to 117.1610 in Dec 2014. The output of manufacturing at 101.2840 in Dec 2014 is 13.6 percent below trend under this alternative calculation.

Chart I-24, US, Unemployment Rate 16-24 Years, Percent NSA, 1948-2015

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 1.607 million in Oct 2006 to 4.576 million in Oct 2010 or by 184.8 percent. The number of unemployed ages 45 years and over declined to 3.800 million in Oct 2012 that is still higher by 136.5 percent than in Oct 2006. The number unemployed age 45 and over increased from 1.704 million in Nov 2006 to 3.861 million in Nov 2012, or 126.6 percent. The number unemployed age 45 and over is still higher by 98.5 percent at 3.383 million in Nov 2013 than 1.704 million in Nov 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 3.632 million in Oct 2013 is higher by 2.025 million than 1.607 million in Oct 2006 or higher by 126.0 percent. The number of unemployed 45 years and over increased from 1.794 million in Dec 2006 to 3.378 million in Nov 2013 or 88.3 percent. The annual number of unemployed 45 years and over increased from 1.848 million in 2006 to 3.719 million in 2013 or 101.2 percent. The number of unemployed 45 years and over increased from 2.126 million in Jan 2006 to 4.394 million in Jan 2013, by 2.618 million or 106.7 percent. The number of unemployed 45 years and over rose from 2.126 million in Jan 2006 to 3.508 million in Jan 2014, by 1.382 million or 65.0 percent. The level of unemployed 45 years or older increased 2.051 million or 99.8 percent from 2.056 million in Feb 2006 to 4.107 million in Feb 2013 and at 3.490 million in Feb 2014 is higher by 69.7 percent than in Feb 2006. The number of unemployed 45 years and over increased 2.048 million or 108.9 percent from 1.881 million in Mar 2006 to 3.929 million in Mar 2013 and at 3.394 million in Mar 2014 is higher by 80.4 percent than in Mar 2006. The number of unemployed 45 years and over increased 1.846 million or 100.2 percent from 1.843 million in Apr 2006 to 3.689 million in Apr 2013 and at 3.006 million in Apr 2014 is higher by 1.163 million or 63.1 percent. The number of unemployed ages 45 years and over increased 102.1 percent from 1.784 million in May 2006 to 3.605 million in May 2014 and at 2.913 million in May 2014 is higher by 63.3 percent than in May 2007.

The number of unemployed ages 45 years and over increased 102.1 percent from 1.805 million in Jun 2007 to 3.648 million in Jun 2013 and at 2.832 million in Jun 2014 is higher by 56.9 percent than in Jun 2007. The number of unemployed ages 45 years and over increased 81.5 percent from 2.053 million in Jul 2007 to 3.727 million in Jul 2013 and at 3.083 million in Jul 2014 is higher by 50.2 percent than in Jul 2007. The level unemployed ages 45 years and over increased 84.4 percent from 1.956 million in Aug 2007 to 3.607 million in Aug 2013 and at 3.037 million in Aug 2014 is 55.2 percent higher than in Aug 2007. The level unemployed ages 45 years and over increased 90.7 percent from 1.854 million in Sep 2007 to 3.535 million in Sep 2013 and at 2.640 million in Sep 2014 is 42.4 percent higher than in Sep 2007. The level unemployed ages 45 years and over increased 1.747 million from 1.885 million in Oct 2007 to 3.632 million in Oct 2013 and at 2.606 million in Oct 2014 is 38.2 percent higher than in Oct 2007. The level unemployed ages 45 years and over increased 1.458 million from 1.925 million in Nov 2007 to 3.383 million in Nov 2013 and at 2.829 million in Nov 2014 is 47.0 percent higher than in Nov 2007. The level of unemployed ages 45 years and over increased 1.258 million from Dec 2007 to Dec 2013 and at 2.667 million in Dec 2014 is 25.8 higher than in Dec 2007. The level unemployed ages 45 years and over increased 1.353 million from Jan 2007 to Jan 2015 and at 3.077 million in Jan 2015 is 42.8 percent higher than in Jan 2007. The actual number unemployed is likely much higher because many are not accounted who abandoned job searches in frustration there may not be a job for them. Recent improvements may be illusory.

Table I-13, US, Unemployment Level 45 Years and Over, Thousands NSA

Year	Jan	Feb	Mar	Jul	Aug	Sep	Oct	Nov	Dec	Annual
2000	1498	1392	1291	1253	1339	1254	1202	1242	1217	1249
2001	1572	1587	1533	1539	1640	1586	1722	1786	1901	1576
2002	2235	2280	2138	2173	2114	1966	1945	2013	2210	2114
2003	2495	2415	2485	2281	2301	2157	2032	2132	2130	2253
2004	2453	2397	2354	2116	2082	1951	1931	2053	2086	2149
2005	2286	2286	2126	2119	1895	1992	1875	1920	1963	2009
2006	2126	2056	1881	1985	1869	1710	1607	1704	1794	1848
2007	2155	2138	2031	2053	1956	1854	1885	1925	2120	1966
2008	2336	2336	2326	2492	2695	2595	2728	3078	3485	2540
2009	4138	4380	4518	4757	4683	4560	4492	4655	4960	4500
2010	5314	5307	5194	4821	5128	4640	4576	4909	4762	4879
2011	5027	4837	4748	4772	4592	4426	4375	4195	4182	4537
2012	4458	4472	4390	4405	4179	3899	3800	3861	3927	4133
2013	4394	4107	3929	3727	3607	3535	3632	3383	3378	3719
2014	3508	3490	3394	3083	3037	2640	2606	2829	2667	3000
2015	3077

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. Recent improvements could be illusory because many abandoned job searches in frustration that there may not be jobs for them and are not counted as unemployed.

Chart I-25, US, Unemployment Level Ages 45 Years and Over, Thousands, NSA, 1976-2015

Source: US Bureau of Labor Statistics http://www.bls.gov/data/

IIA United States Import and Export Prices. Chart IIA2-1 provides prices of total US imports 2001-2015. Prices fell during the contraction of 2001. Import price inflation accelerated after unconventional monetary policy of near zero interest rates in 2003-2004 and quantitative easing by withdrawing supply with the suspension of 30-year Treasury bond auctions. Slow pace of adjusting fed funds rates from 1 percent by increments of 25 basis points in 17 consecutive meetings of the Federal Open Market Committee (FOMC) between Jun 2004 and Jun 2006 continued to give impetus to carry trades. The reduction of fed funds rates toward zero in 2008 fueled a spectacular global hunt for yields that caused commodity price inflation in the middle of a global recession. After risk aversion in 2009 because of the announcement of TARP (Troubled Asset Relief Program) creating anxiety on “toxic assets” in bank balance sheets (see Cochrane and Zingales 2009), prices collapsed because of unwinding carry trades. Renewed price increases returned with zero interest rates and quantitative easing. Monetary policy impulses in massive doses have driven inflation and valuation of risk financial assets in wide fluctuations over a decade.

Chart IIA2-1, US, Prices of Total US Imports 2001=100, 2001-2015

Source: Bureau of Labor Statistics

Chart IIA2-2 provides 12-month percentage changes of prices of total US imports from 2001 to 2015. The only plausible explanation for the wide oscillations is by the carry trade originating in unconventional monetary policy. Import prices jumped in 2008 during deep and protracted global recession driven by carry trades from zero interest rates to long, leveraged positions in commodity futures. Carry trades were unwound during the financial panic in the final quarter of 2008 that resulted in flight to government obligations. Import prices jumped again in 2009 with subdued risk aversion because US banks did not have unsustainable toxic assets. Import prices then fluctuated as carry trades were resumed during periods of risk appetite and unwound during risk aversion resulting from the European debt crisis.

Chart IIA2-2, US, Prices of Total US Imports, 12-Month Percentage Changes, 2001-2015

Source: Bureau of Labor Statistics http://www.bls.gov/mxp/data.htm

Chart IIA2-3 provides prices of US imports from 1982 to 2015. There is no similar episode to that of the increase of commodity prices in 2008 during a protracted and deep global recession with subsequent collapse during a flight into government obligations. Carry trades created by unconventional monetary policy in the past decade have driven trade prices.

Chart IIA2-3, US, Prices of Total US Imports, 2001=100, 1982-2015

Source: Bureau of Labor Statistics

Chart IIA2-4 provides 12-month percentage changes of US total imports from 1982 to 2015. There have not been wide consecutive oscillations as the ones during the global recession of IVQ2007 to IIQ2009.

Chart IIA2-4, US, Prices of Total US Imports, 12-Month Percentage Changes, 1982-2015

Source: Bureau of Labor Statistics http://www.bls.gov/mxp/data.htm

Chart IIA2-5 provides the index of US export prices from 2001 to 2015. Impulses of unconventional monetary policy in massive doses have driven import and export prices. The most recent segment in Chart IIA2-5 shows declining trend resulting from a combination of the world economic slowdown and the decline of commodity prices as carry trade exposures are unwound because of risk aversion to the sovereign debt crisis in Europe and slowdown in the world economy.

Chart IIA2-5, US, Prices of Total US Exports, 2001=100, 2001-2015

Source: Bureau of Labor Statistics http://www.bls.gov/mxp/data.htm

Chart IIA2-6 provides prices of US total exports from 1982 to 2015. The rise before the global recession from 2003 to 2008, driven by carry trades, is also unique in the series and is followed by another steep increase after risk aversion moderated in IQ2009.

Chart IIA2-6, US, Prices of Total US Exports, 2001=100, 1982-2015

Source: Bureau of Labor Statistics http://www.bls.gov/mxp/data.htm

Chart IIA2-7 provides 12-month percentage changes of total US exports from 1982 to 2015. The uniqueness of the oscillations around the global recession of IVQ2007 to IIQ2009 is clearly revealed.

Chart IIA2-7, US, Prices of Total US Exports, 12-Month Percentage Changes, 1982-2015

Source: Bureau of Labor Statistics http://www.bls.gov/mxp/data.htm

Twelve-month percentage changes of US prices of exports and imports are provided in Table IIA2-1. Import prices have been driven since 2003 by unconventional monetary policy of near zero interest rates influencing commodity prices according to moods of risk aversion and portfolio reallocations. In a global recession without risk aversion until the panic of Sep 2008 with flight to government obligations, import prices increased 21.4 percent in the 12 months ending in Jul 2008, 18.1 percent in the 12 months ending in Aug 2008, 13.1 percent in the 12 months ending in Sep 2008, 4.9 percent in the twelve months ending in Oct 2008. Import prices fell 10.1 percent in the 12 months ending in Dec 2008 when risk aversion developed in 2008 until mid 2009 (http://www.bls.gov/mxp/data.htm). Import prices rose again sharply in Dec 2009 by 8.6 percent and in Dec 2010 by 5.3 percent in the presence of zero interest rates with relaxed mood of risk aversion. Carry trades were unwound in May 2011 and following months as shown by decrease of import prices by 2.0 percent in the 12 months ending in Dec 2012 and 1.1 percent in Dec 2013. Import prices increased 16.9 percent in the 12 months ending in Apr 2008, fell 16.4 percent in the 12 months ending in Apr 2009 and increased 11.2 percent in the 12 months ending in Apr 2010. Fluctuations are much sharper in imports because of the high content of oil that as all commodities futures contracts increases sharply with zero interest rates and risk appetite, contracting under risk aversion. There is similar behavior of prices of imports ex fuels, exports and exports ex agricultural goods but less pronounced than for commodity-rich prices dominated by carry trades from zero interest rates. A critical event resulting from unconventional monetary policy driving higher commodity prices by carry trades is the deterioration of the terms of trade, or export prices relative to import prices, that has adversely affected US real income growth relative to what it would have been in the absence of unconventional monetary policy. Europe, Japan and other advanced economies have experienced similar deterioration of their terms of trade. Because of unwinding carry trades of commodity futures resulting from risk aversion and portfolio reallocations, import prices decreased 8.0 percent in the 12 months ending in Jan 2015, export prices decreased 5.4 percent and prices of nonagricultural exports decreased 5.3 percent. Imports excluding fuel decreased 0.9 percent in the 12 months ending in Jan 2015. At the margin, price changes over the year in world exports and imports are decreasing or increasing moderately because of unwinding carry trades in a temporary mood of risk aversion and relative allocation of asset classes toward equities that reverses exposures in commodity futures.

Table IIA2-1, US, Twelve-Month Percentage Rates of Change of Prices of Exports and Imports

	Imports	Imports Ex Fuels	Exports	Exports Non-Ag
Jan 2015	-8.0	-0.9	-5.4	-5.3
Jan 2014	-1.3	-1.1	-1.0	-0.5
Jan 2013	-1.5	0.0	1.2	0.0
Jan 2012	6.9	2.9	2.6	3.2
Jan 2011	5.6	3.4	7.0	5.4
Jan 2010	11.4	1.3	3.5	3.3
Jan 2009	-12.5	-0.3	-3.4	-2.7
Jan 2008	13.6	3.5	6.8	4.9
Jan 2007	0.0	2.8	4.1	3.3
Jan 2006	8.7	0.9	2.7	2.6
Jan 2005	5.7	3.0	4.0	5.1
Jan 2004	2.2	1.5	2.6	1.6
Jan 2003	5.8	0.1	1.4	1.0
Jan 2002	-8.9	NA	-2.8	-2.9
Jan 2001	2.8	NA	1.1	0.9

Source: Bureau of Labor Statistics http://www.bls.gov/mxp/data.htm

Table IIA2-2 provides 12-month percentage changes of the import price index all commodities from 2001 to 2015. Interest rates moving toward zero during unconventional monetary policy in 2008 induced carry trades into highly leveraged commodity derivatives positions that caused increases in 12-month percentage changes of import prices of around 20 percent. The flight into dollars and Treasury securities by fears of toxic assets in banks in the proposal of TARP (Cochrane and Zingales 2009) caused reversion of carry trades and collapse of commodity futures explaining sharp declines in trade prices in 2009. Twelve-month percentage changes of import prices at the end of 2012 and into 2013 occurred during another bout of risk aversion and portfolio reallocation. There is a new shock of risk aversion in late 2013 with marginally increasing exposures in commodities followed by reversals of exposures into 2014 and 2015.

Table IIA2-2, US, Twelve-Month Percentage Changes of Import Price Index All Commodities, 2001-2015

Year	Jan	Feb	Mar	Apr	May	Aug	Sep	Oct	Nov	Dec
2001	2.8	0.2	-1.6	-0.7	-0.8	-4.4	-5.6	-7.4	-8.8	-9.1
2002	-8.9	-8.3	-5.6	-3.6	-3.7	-1.3	-0.4	1.9	2.5	4.2
2003	5.8	7.5	6.8	1.8	1.0	2.0	0.7	0.8	2.3	2.4
2004	2.2	0.9	1.1	4.6	6.9	7.1	8.2	9.9	9.0	6.7
2005	5.7	6.1	7.6	8.4	5.9	8.2	9.9	8.2	6.4	8.0
2006	8.7	6.9	4.5	5.8	8.6	6.0	1.6	-1.0	1.3	2.5
2007	0.0	1.2	2.8	2.1	1.2	1.9	4.8	9.1	12.0	10.6
2008	13.6	13.5	15.2	16.9	19.1	18.1	13.1	4.9	-5.9	-10.1
2009	-12.5	-12.7	-14.9	-16.4	-17.3	-15.3	-12.0	-5.6	3.4	8.6
2010	11.4	11.3	11.2	11.2	8.5	3.8	3.6	3.9	4.1	5.3
2011	5.6	7.6	10.3	11.9	12.9	12.9	12.7	11.1	10.1	8.5
2012	6.9	5.1	3.5	0.8	-0.8	-1.8	-0.6	0.0	-1.4	-2.0
2013	-1.5	-0.6	-2.1	-2.7	-1.8	0.0	-0.7	-1.6	-1.8	-1.1
2014	-1.3	-1.1	-0.5	-0.4	0.5	-0.3	-1.4	-2.1	-3.1	-5.0
2015	-8.0

Source: Bureau of Labor Statistics http://www.bls.gov/mxp/data.htm

There is finer detail in one-month percentage changes of imports of the US in Table IIA2-3. Carry trades into commodity futures induced by interest rates moving to zero in unconventional monetary policy caused sharp monthly increases in import prices for cumulative increase of 13.8 percent from Mar to Jul 2008 at average rate of 2.6 percent per month or annual equivalent in five months of 36.4 percent (3.1 percent in Mar 2008, 2.8 percent in Apr 2008, 2.8 percent in May 2008, 3.0 percent in Jun 2008 and 1.4 percent in Jul 2008, data from http://www.bls.gov/mxp/data.htm). There is no other explanation for increases in import prices during sharp global recession and contracting world trade. Import prices then fell 23.4 percent from Aug 2008 to Jan 2009 or at the annual equivalent rate of minus 41.4 percent in the flight to US government securities in fear of the need to buy toxic assets from banks in the TARP program (Cochrane and Zingales 2009). Risk aversion during the first sovereign debt crisis of the euro area in May-Jun 2010 caused decline of US import prices at the annual equivalent rate of 11.4 percent. US import prices have been driven by combinations of carry trades induced by unconventional monetary policy and bouts of risk aversion and portfolio reallocation (http://cmpassocregulationblog.blogspot.com/2015/01/competitive-currency-conflicts-world.html). US import prices increased 0.5 percent in Jan 2013 and 0.9 percent in Feb 2013 for annual equivalent rate of 8.7 percent, similar to those in national price indexes worldwide, originating in carry trades from zero interest rates to commodity futures. Import prices fell 0.1 percent in Mar 2013, 0.7 percent in Apr 2013, 0.6 percent in May 2013 and 0.4 percent in Jun 2013. Import prices changed 0.1 percent in Jul 2013, increased 0.4 percent in Aug 2013 and increased 0.3 percent in Sep 2013. Portfolio reallocations into asset classes other than commodities explains declines of import prices by 0.6 percent in Oct 2013 and 0.9 percent in Nov 2013. Import prices increased 0.1 percent in Dec 2013, 0.4 percent in Jan 2014, 1.1 percent in Feb 2014 and 0.5 percent in Mar 2014. Import prices fell 0.6 percent in Apr 2014 and increased 0.3 percent in May 2014. Import prices increased 0.3 percent in Jun 2014 and contracted 0.3 percent in Jul 2014. Import prices fell 0.8 percent in Aug 2014 and fell 0.8 percent in Sep 2014. Import prices fell 1.4 percent in Oct 2014, 1.8 percent in Nov 2014 and 1.9 percent in Dec 2014 during sharp contraction of commodity prices. Import prices fell 2.8 percent in Jan 2015 during acceleration in decline of commodityprices.

Table IIA2-3, US, One-Month Percentage Changes of Import Price Index All Commodities, 2001-2015

Year	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
2001	0.0	-0.6	-1.6	-0.5	0.2	-0.4	-1.5	-0.1	-0.1	-2.3	-1.5	-1.0
2002	0.2	0.0	1.3	1.6	0.1	-0.3	0.4	0.3	0.7	0.0	-0.9	0.6
2003	1.8	1.7	0.6	-3.1	-0.7	0.9	0.5	0.0	-0.5	0.1	0.5	0.7
2004	1.5	0.4	0.8	0.2	1.5	-0.2	0.4	1.5	0.5	1.6	-0.3	-1.4
2005	0.6	0.9	2.2	0.9	-0.8	1.2	1.2	1.4	2.1	0.1	-1.9	0.0
2006	1.2	-0.8	-0.1	2.1	1.8	0.1	0.8	0.5	-2.2	-2.5	0.4	1.1
2007	-1.2	0.4	1.6	1.4	0.9	1.2	1.3	-0.3	0.6	1.5	3.2	-0.2
2008	1.5	0.2	3.1	2.8	2.8	3.0	1.4	-3.1	-3.6	-6.0	-7.4	-4.6
2009	-1.3	0.0	0.5	1.1	1.7	2.7	-0.6	1.5	0.2	0.8	1.5	0.2
2010	1.2	-0.1	0.4	1.1	-0.8	-1.2	0.0	0.4	0.0	1.1	1.7	1.4
2011	1.5	1.7	3.0	2.6	0.1	-0.6	0.1	-0.4	-0.1	-0.4	0.7	0.0
2012	0.0	0.0	1.4	-0.1	-1.5	-2.3	-0.7	1.2	1.0	0.3	-0.7	-0.6
2013	0.5	0.9	-0.1	-0.7	-0.6	-0.4	0.1	0.4	0.3	-0.6	-0.9	0.1
2014	0.4	1.1	0.5	-0.6	0.3	0.3	-0.3	-0.8	-0.8	-1.4	-1.8	-1.9
2015	-2.8

Source: Bureau of Labor Statistics http://www.bls.gov/mxp/data.htm

Chart IIA2-8 shows the US monthly import price index of all commodities excluding fuels from 2001 to 2015. All curves of nominal values follow the same behavior under the influence of unconventional monetary policy. Zero interest rates without risk aversion result in jumps of nominal values while under strong risk aversion even with zero interest rates there are declines of nominal values.

Chart IIA2-8, US, Import Price Index All Commodities Excluding Fuels, 2001=100, 2001-2015

Source: US Bureau of Labor Statistics

Chart IIA2-9 provides 12-month percentage changes of the US import price index excluding fuels between 2001 and 2015. There is the same behavior of carry trades driving up without risk aversion and down with risk aversion prices of raw materials, commodities and food in international trade during the global recession of IVQ2007 to IIQ2009 and in previous and subsequent periods.

Chart IIA2-9, US, Import Price Index All Commodities Excluding Fuels, 12-Month Percentage Changes, 2002-2015

Source: US Bureau of Labor Statistics

Chart IIA2-10 provides the monthly US import price index ex petroleum from 2001 to 2015. Prices including or excluding commodities follow the same fluctuations and trends originating in impulses of unconventional monetary policy of zero interest rates.

Chart IIA2-10, US, Import Price Index ex Petroleum, 2001=100, 2000-2015

Source: US Bureau of Labor Statistics

Chart IIA2-11 provides the US import price index ex petroleum from 1985 to 2015. There is the same unique hump in 2008 caused by carry trades from zero interest rates to prices of commodities and raw materials.

Chart IIA2-11, US, Import Price Index ex Petroleum, 2001=100, 1985-2015

Source: US Bureau of Labor Statistics

Chart IIA2-12 provides 12-month percentage changes of the import price index ex petroleum from 1986 to 2015. The oscillations caused by the carry trade in increasing prices of commodities and raw materials without risk aversion and subsequently decreasing them during risk aversion are unique.

Chart IIA2-12, US, Import Price Index ex Petroleum, 12-Month Percentage Changes, 1986-2015

Source: US Bureau of Labor Statistics

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=RCLC1&f=D

Chart IIA2-13 of the US Energy Information Administration shows the price of WTI crude oil since the 1980s. Chart IA2-13 captures commodity price shocks during the past decade. The costly mirage of deflation was caused by the decline in oil prices during the recession of 2001. The upward trend after 2003 was promoted by the carry trade from near zero interest rates. The jump above $140/barrel during the global recession in 2008 at $145.29/barrel on Jul 3, 2008, can only be explained by the carry trade promoted by monetary policy of zero fed funds rate. After moderation of risk aversion, the carry trade returned with resulting sharp upward trend of crude prices. Risk aversion resulted in another drop in recent weeks followed by some recovery and renewed sharp deterioration.

Chart IIA2-13, US, Crude Oil Futures Contract

Source: US Energy Information Administration

The price index of US imports of petroleum and petroleum products in shown in Chart IIA2-14. There is similar behavior of the curves all driven by the same impulses of monetary policy.

Chart IIA2-14, US, Import Price Index of Petroleum and Petroleum Products, 2001=100, 2001-2015

Source: US Bureau of Labor Statistics

Chart IIA2-15 provides the price index of petroleum and petroleum products from 1982 to 2015. The rise in prices during the global recession in 2008 and the decline after the flight to government obligations is unique in the history of the series. Increases in prices of trade in petroleum and petroleum products were induced by carry trades and declines by unwinding carry trades in flight to government obligations.

Chart IIA2-15, US, Import Price Index of Petroleum and Petroleum Products, 2001=100, 1982-2015

Source: US Bureau of Labor Statistics

Chart IIA2-16 provides 12-month percentage changes of the price index of US imports of petroleum and petroleum products from 1982 to 2015. There were wider oscillations in this index from 1999 to 2001 (see Barsky and Killian 2004 for an explanation).

Chart IIA2-16, US, Import Price Index of Petroleum and Petroleum Products, 12-Month Percentage Changes, 1982-2015

Source: US Bureau of Labor Statistics

The price index of US exports of agricultural commodities is in Chart IIA2-17 from 2001 to 2015. There are similar fluctuations and trends as in all other price index originating in unconventional monetary policy repeated over a decade. The most recent segment in 2011 has declining trend in a new flight from risk resulting from the sovereign debt crisis in Europe followed by declines in Jun 2012 and Nov 2012 with stability/decline in Dec 2012 into 2013. Prices rebounded into 2014 followed by decline.

Chart IIA2-17, US, Exports Price Index of Agricultural Commodities, 2001=100, 2001-2015

Source: US Bureau of Labor Statistics

Chart IIA2-18 provides the price index of US exports of agricultural commodities from 1982 to 2015. The increase in 2008 in the middle of deep, protracted contraction was induced by unconventional monetary policy. The decline from 2008 into 2009 was caused by unwinding carry trades in a flight to government obligations. The increase into 2011 and current pause with marginal rebound were also induced by unconventional monetary policy in waves of increases during relaxed risk aversion and declines during unwinding of positions because of aversion to financial risk.

Chart IIA2-18, US, Exports Price Index of Agricultural Commodities, 2001=100, 1982-2015

Source: US Bureau of Labor Statistics

Chart IIA2-19 provides 12-month percentage changes of the index of US exports of agricultural commodities from 1986 to 2015. The wide swings in 2008, 2009 and 2011 are only explained by unconventional monetary policy inducing carry trades from zero interest rates to commodity futures and reversals during risk aversion.

Chart IIA2-19, US, Exports Price Index of Agricultural Commodities, 12-Month Percentage Changes, 1986-2015

Source: US Bureau of Labor Statistics

Chart IIA2-20 shows the export price index of nonagricultural commodities from 2001 to 2015. Unconventional monetary policy of zero interest rates drove price behavior during the past decade. Policy has been based on the myth of stimulating the economy by climbing the negative slope of an imaginary short-term Phillips curve.

Chart IIA2-20, US, Exports Price Index of Nonagricultural Commodities, 2001=100, 2001-2015

Source: US Bureau of Labor Statistics

Chart IIA2-21 provides a longer perspective of the price index of US nonagricultural commodities from 1982 to 2015. Increases and decreases around the global contraction after 2007 were caused by carry trade induced by unconventional monetary policy.

Chart IIA2-21, US, Exports Price Index of Nonagricultural Commodities, 2001=100, 1982-2015

Source: US Bureau of Labor Statistics

Finally, Chart IIA2-22 provides 12-month percentage changes of the price index of US exports of nonagricultural commodities from 1986 to 2015. The wide swings before, during and after the global recession beginning in 2007 were caused by carry trades induced by unconventional monetary policy.

Chart IIA2-22, US, Exports Price Index of Nonagricultural Commodities, 12-Month Percentage Changes, 1986-2015

Source: US Bureau of Labor Statistics