“Quite High” Equity Valuations and “Potential Dangers” in Bonds, Twenty Six Million Unemployed or Underemployed, Stagnating Real Wages, Rules, Discretionary Authorities and Slow Productivity Growth, United States International Trade, World Cyclical Slow Growth and Global Recession Risk: Part II

 

“Quite High” Equity Valuations and “Potential Dangers” in Bonds, Twenty Six Million Unemployed or Underemployed, Stagnating Real Wages, Rules, Discretionary Authorities and Slow Productivity Growth, United States International Trade, World Cyclical Slow Growth and Global Recession Risk

Carlos M. Pelaez

© Carlos M. Pelaez, 2009, 2010, 2011, 2012, 2013, 2014, 2015

I Twenty Six Million Unemployed or Underemployed

IA1 Summary of the Employment Situation

IA2 Number of People in Job Stress

IA3 Long-term and Cyclical Comparison of Employment

IA4 Job Creation

IB Stagnating Real Wages

IIA Rules, Discretionary Authorities and Slow Productivity Growth

IIB United States International Trade

III World Financial Turbulence

IIIA Financial Risks

IIIE Appendix Euro Zone Survival Risk

IIIF Appendix on Sovereign Bond Valuation

IV Global Inflation

V World Economic Slowdown

VA United States

VB Japan

VC China

VD Euro Area

VE Germany

VF France

VG Italy

VH United Kingdom

VI Valuation of Risk Financial Assets

VII Economic Indicators

VIII Interest Rates

IX Conclusion

References

Appendixes

Appendix I The Great Inflation

IIIB Appendix on Safe Haven Currencies

IIIC Appendix on Fiscal Compact

IIID Appendix on European Central Bank Large Scale Lender of Last Resort

IIIG Appendix on Deficit Financing of Growth and the Debt Crisis

IIIGA Monetary Policy with Deficit Financing of Economic Growth

IIIGB Adjustment during the Debt Crisis of the 1980s

I Twenty Six Million Unemployed or Underemployed. This section analyzes the employment situation report of the United States of the Bureau of Labor Statistics (BLS). There are four subsections: IA1 Summary of the Employment Situation; IA2 Number of People in Job Stress; IA3 Long-term and Cyclical Comparison of Employment; and IA4 Job Creation.

IA1 Summary of the Employment Situation. Table I-1 provides summary statistics of the employment situation report of the BLS. The first four rows provide the data from the establishment report of creation of nonfarm payroll jobs and remuneration of workers (for analysis of the differences in employment between the establishment report and the household survey see Abraham, Haltiwanger, Sandusky and Spletzer 2009). Total nonfarm payroll employment seasonally adjusted (SA) increased 223,000 in Apr 2015 and private payroll employment increased 213,000. The average monthly number of nonfarm jobs created from Apr 2013 to Apr 2014 was 206,333 using seasonally adjusted data, while the average number of nonfarm jobs created from Apr 2014 to Apr 2015 was 248,500, or increase by 20.4 percent. The average number of private jobs created in the US from Apr 2013 to Apr 2014 was 208,000, using seasonally adjusted data, while the average from Apr 2014 to Apr 2015 was 243,167, or increase by 16.9 percent. This blog calculates the effective labor force of the US at 165.676 million in Apr 2014 and 163.805 million in Apr 2015 (Table I-4), for growth of 1.871 million at average 155,917 per month. The difference between the average increase of 243,167 new private nonfarm jobs per month in the US from Apr 2014 to Apr 2015 and the 155,917 average monthly increase in the labor force from Apr 2014 to Apr 2015 is 87,250 monthly new jobs net of absorption of new entrants in the labor force. There are 25.559 million in job stress in the US currently. Creation of 87,250 new jobs per month net of absorption of new entrants in the labor force would require 293 months to provide jobs for the unemployed and underemployed (25.559 million divided by 87,250) or 24 years (293 divided by 12). The civilian labor force of the US in Apr 2015 not seasonally adjusted stood at 156.554 million with 7.966 million unemployed or effectively 17.088 million unemployed in this blog’s calculation by inferring those who are not searching because they believe there is no job for them for effective labor force of 165.676 million. Reduction of one million unemployed at the current rate of job creation without adding more unemployment requires 0.96 years (1 million divided by product of 87,250 by 12, which is 1,047,000). Reduction of the rate of unemployment to 5 percent of the labor force would be equivalent to unemployment of only 7.828 million (0.05 times labor force of 156.554 million). New net job creation would be 0.138 million (7.966 million unemployed minus 7.828 million unemployed at rate of 5 percent) that at the current rate would take 0.13 years (0.138 million divided by 1.047). Under the calculation in this blog, there are 17.088 million unemployed by including those who ceased searching because they believe there is no job for them and effective labor force of 165.676 million. Reduction of the rate of unemployment to 5 percent of the labor force would require creating 8.804 million jobs net of labor force growth that at the current rate would take 8.4 years (17.088 million minus 0.05(165.676 million) = 9.639 million divided by 1.047, using LF PART 66.2% and Total UEM in Table I-4). These calculations assume that there are no more recessions, defying United States economic history with periodic contractions of economic activity when unemployment increases sharply. The number employed in Apr 2015 was 148.587 million (NSA) or 1.272 million more people with jobs relative to the peak of 147.315 million in Jul 2007 while the civilian noninstitutional population of ages 16 years and over increased from 231.958 million in Jul 2007 to 250.266 million in Apr 2015 or by 18.308 million. The number employed increased 0.9 percent from Jul 2007 to Apr 2015 while the noninstitutional civilian population of ages of 16 years and over, or those available for work, increased 7.9 percent. The ratio of employment to population in Jul 2007 was 63.5 percent (147.315 million employment as percent of population of 231.958 million). The same ratio in Apr 2015 would result in 158.919 million jobs (0.635 multiplied by noninstitutional civilian population of 250.266 million). There are effectively 10.332 million fewer jobs in Apr 2015 than in Jul 2007, or 158.919 million minus 148.587 million. There is actually not sufficient job creation in merely absorbing new entrants in the labor force because of those dropping from job searches, worsening the stock of unemployed or underemployed in involuntary part-time jobs.

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.”

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). 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 (http://cmpassocregulationblog.blogspot.com/2015/04/dollar-revaluation-recovery-without.html). The proper explanation is not in secular stagnation but in cyclically slow growth. Secular stagnation is merely another case of theory without reality with dubious policy proposals. Subsection IA4 Job Creation analyzes the types of jobs created, which are lower paying than earlier. Average hourly earnings in Apr 2015 were $24.87 seasonally adjusted (SA), increasing 2.1 percent not seasonally adjusted (NSA) relative to Mar 2014 and increasing 0.1 percent relative to Mar 2015 seasonally adjusted. In Mar 2015, average hourly earnings seasonally adjusted were $24.84, increasing 2.1 percent relative to Mar 2014 not seasonally adjusted and increasing 0.2 percent seasonally adjusted relative to Feb 2015. These are nominal changes in workers’ wages. The following row “average hourly earnings in constant dollars” provides hourly wages in constant dollars calculated by the BLS or what is called “real wages” adjusted for inflation. Data are not available for Apr 2015 because the prices indexes of the BLS for Mar 2015 will only be released on May 22, 2015 (http://www.bls.gov/cpi/), which will be covered in this blog’s comment on May 24, 2015, together with world inflation. The second column provides changes in real wages for Mar 2015. Average hourly earnings adjusted for inflation or in constant dollars increased 2.2 percent in Mar 2015 relative to Mar 2014 but have been decreasing during multiple months. World inflation waves in bouts of risk aversion (http://cmpassocregulationblog.blogspot.com/2015/04/global-portfolio-reallocations-squeeze.html) mask declining trend of real wages. The fractured labor market of the US is characterized by high levels of unemployment and underemployment together with falling real wages or wages adjusted for inflation (Section I and earlier http://cmpassocregulationblog.blogspot.com/2015/04/volatility-of-valuations-of-financial.html). The following section IB Stagnating Real Wages provides more detailed analysis. Average weekly hours of US workers seasonally adjusted remained virtually unchanged around 34.6. Another headline number widely followed is the unemployment rate or number of people unemployed as percent of the labor force. The unemployment rate calculated in the household survey decreased from 5.5 percent in Mar 2015 to 5.4 percent in Apr 2015, seasonally adjusted. This blog provides with every employment situation report the number of people in the US in job stress or unemployed plus underemployed calculated without seasonal adjustment (NSA) at 25.6 million in Apr 2015 and 26.7 million in Mar 2015. The final row in Table I-1 provides the number in job stress as percent of the actual labor force calculated at 15.4 percent in Apr 2015 and 16.1 percent in Mar 2015. Almost one in every five workers in the US is unemployed or underemployed.

There is socio-economic stress in the combination of adverse events and cyclical performance: 

• Mediocre economic growth below potential and long-term trend, resulting in idle productive resources with GDP two trillion dollars below trend (http://cmpassocregulationblog.blogspot.com/2015/05/dollar-devaluation-and-carry-trade.html and earlier http://cmpassocregulationblog.blogspot.com/2015/03/dollar-revaluation-and-financial-risk.html). US GDP grew at the average rate of 3.3 percent per year from 1929 to 2014 with similar performance in whole cycles of contractions and expansions but only at 1.1 percent per year on average from 2007 to 2014. GDP in IQ2015 is 12.2 percent lower than what it would have been had it grown at trend of 3.0 percent
• Private fixed investment stagnating at increase of 2.7 percent in the entire cycle from IVQ2007 to IQ2015 (http://cmpassocregulationblog.blogspot.com/2015/05/dollar-devaluation-and-carry-trade.html and earlier http://cmpassocregulationblog.blogspot.com/2015/03/dollar-revaluation-and-financial-risk.html)
• Twenty six million or 15.4 percent of the effective labor force unemployed or underemployed in involuntary part-time jobs with stagnating or declining real wages (Section I and earlier http://cmpassocregulationblog.blogspot.com/2015/04/volatility-of-valuations-of-financial.html and earlier http://cmpassocregulationblog.blogspot.com/2015/03/global-competitive-devaluation-rules.html)
• Stagnating real disposable income per person or income per person after inflation and taxes (http://cmpassocregulationblog.blogspot.com/2015/05/dollar-devaluation-and-carry-trade.html and earlier http://cmpassocregulationblog.blogspot.com/2015/04/volatility-of-valuations-of-financial.html and earlier http://cmpassocregulationblog.blogspot.com/2015/03/global-competitive-devaluation-rules.html)
• Depressed hiring that does not afford an opportunity for reducing unemployment/underemployment and moving to better-paid jobs (http://cmpassocregulationblog.blogspot.com/2015/04/dollar-revaluation-recovery-without.html and earlier http://cmpassocregulationblog.blogspot.com/2015/03/global-exchange-rate-struggle-recovery.html and earlier (http://cmpassocregulationblog.blogspot.com/2015/02/g20-monetary-policy-recovery-without.html)

• Productivity growth fell from 2.2 percent per year on average from 1947 to 2014 and average 2.3 percent per year from 1947 to 2007 to 1.4 percent per year on average from 2007 to 2014, deteriorating future growth and prosperity (Section II and earlier http://cmpassocregulationblog.blogspot.com/2015/03/global-competitive-devaluation-rules.html and earlier http://cmpassocregulationblog.blogspot.com/2015/02/job-creation-and-monetary-policy-twenty.html and earlier http://cmpassocregulationblog.blogspot.com/2014/12/financial-risks-twenty-six-million.html)
• Output of manufacturing in Mar 2015 at 18.9 percent below long-term trend since 1919 and at 13.2 percent below trend since 1986 (http://cmpassocregulationblog.blogspot.com/2015/04/global-portfolio-reallocations-squeeze.html and earlier http://cmpassocregulationblog.blogspot.com/2015/03/impatience-with-monetary-policy-of.html and earlier (http://cmpassocregulationblog.blogspot.com/2015/02/world-financial-turbulence-squeeze-of.html and earlier http://cmpassocregulationblog.blogspot.com/2015/01/exchange-rate-conflicts-squeeze-of.html and earlier http://cmpassocregulationblog.blogspot.com/2014/12/patience-on-interest-rate-increases.html and earlier http://cmpassocregulationblog.blogspot.com/2014/11/squeeze-of-economic-activity-by-carry.html and earlier http://cmpassocregulationblog.blogspot.com/2014/10/imf-view-squeeze-of-economic-activity.html and earlier http://cmpassocregulationblog.blogspot.com/2014/09/world-inflation-waves-squeeze-of.html)
• Unsustainable government deficit/debt and balance of payments deficit (http://cmpassocregulationblog.blogspot.com/2015/03/impatience-with-monetary-policy-of.html and earlier http://cmpassocregulationblog.blogspot.com/2015/03/irrational-exuberance-mediocre-cyclical.html and earlier http://cmpassocregulationblog.blogspot.com/2014/12/patience-on-interest-rate-increases.html http://cmpassocregulationblog.blogspot.com/2014/09/world-inflation-waves-squeeze-of.html http://cmpassocregulationblog.blogspot.com/2014/08/monetary-policy-world-inflation-waves.html http://cmpassocregulationblog.blogspot.com/2014/06/valuation-risks-world-inflation-waves.html http://cmpassocregulationblog.blogspot.com/2014/02/theory-and-reality-of-cyclical-slow.html http://cmpassocregulationblog.blogspot.com/2014/03/interest-rate-risks-world-inflation.html http://cmpassocregulationblog.blogspot.com/2013/12/tapering-quantitative-easing-mediocre.html and earlier http://cmpassocregulationblog.blogspot.com/2013/09/duration-dumping-and-peaking-valuations.html)
• Worldwide waves of inflation (http://cmpassocregulationblog.blogspot.com/2015/04/global-portfolio-reallocations-squeeze.html and earlier http://cmpassocregulationblog.blogspot.com/2015/03/dollar-revaluation-and-financial-risk.html and earlier http://cmpassocregulationblog.blogspot.com/2015/03/irrational-exuberance-mediocre-cyclical.html and earlier http://cmpassocregulationblog.blogspot.com/2015/01/competitive-currency-conflicts-world.html and earlier http://cmpassocregulationblog.blogspot.com/2014/12/patience-on-interest-rate-increases.html and earlier (http://cmpassocregulationblog.blogspot.com/2014/11/squeeze-of-economic-activity-by-carry.html and earlier http://cmpassocregulationblog.blogspot.com/2014/10/financial-oscillations-world-inflation.html http://cmpassocregulationblog.blogspot.com/2014/09/world-inflation-waves-squeeze-of.html and earlier http://cmpassocregulationblog.blogspot.com/2014/08/monetary-policy-world-inflation-waves.html http://cmpassocregulationblog.blogspot.com/2014/07/world-inflation-waves-united-states.html)
• Deteriorating terms of trade and net revenue margins of production across countries in squeeze of economic activity by carry trades induced by zero interest rates (http://cmpassocregulationblog.blogspot.com/2015/04/global-portfolio-reallocations-squeeze.html and earlier http://cmpassocregulationblog.blogspot.com/2015/03/impatience-with-monetary-policy-of.html and earlier http://cmpassocregulationblog.blogspot.com/2015/02/world-financial-turbulence-squeeze-of.html http://cmpassocregulationblog.blogspot.com/2015/01/exchange-rate-conflicts-squeeze-of.html and earlier http://cmpassocregulationblog.blogspot.com/2014/12/patience-on-interest-rate-increases.html and earlier http://cmpassocregulationblog.blogspot.com/2014/11/squeeze-of-economic-activity-by-carry.html and earlier http://cmpassocregulationblog.blogspot.com/2014/10/imf-view-squeeze-of-economic-activity.html and earlier http://cmpassocregulationblog.blogspot.com/2014/09/world-inflation-waves-squeeze-of.html)
• Financial repression of interest rates and credit affecting the most people without means and access to sophisticated financial investments with likely adverse effects on income distribution and wealth disparity (http://cmpassocregulationblog.blogspot.com/2015/05/dollar-devaluation-and-carry-trade.html and earlier http://cmpassocregulationblog.blogspot.com/2015/04/volatility-of-valuations-of-financial.html and earlier http://cmpassocregulationblog.blogspot.com/2015/03/global-competitive-devaluation-rules.html and earlier http://cmpassocregulationblog.blogspot.com/2015/02/job-creation-and-monetary-policy-twenty.html and earlier (http://cmpassocregulationblog.blogspot.com/2014/12/valuations-of-risk-financial-assets.html and earlier http://cmpassocregulationblog.blogspot.com/2014/11/valuations-of-risk-financial-assets.html and earlier http://cmpassocregulationblog.blogspot.com/2014/11/growth-uncertainties-mediocre-cyclical.html and earlier http://cmpassocregulationblog.blogspot.com/2014/10/world-financial-turbulence-twenty-seven.html)
• 45 million in poverty and 41 million without health insurance with family income adjusted for inflation regressing to 1995 levels (http://cmpassocregulationblog.blogspot.com/2014/09/financial-volatility-mediocre-cyclical.html and earlier http://cmpassocregulationblog.blogspot.com/2013/09/duration-dumping-and-peaking-valuations.html)

Net worth of households and nonprofits organizations increasing by 11.1 percent after adjusting for inflation in the entire cycle from IVQ2007 to IVQ2014 when it would have grown over 23.8 percent at trend of 3.1 percent per year in real terms from 1945 to 2014 (http://cmpassocregulationblog.blogspot.com/2015/03/dollar-revaluation-and-financial-risk.html and earlier http://cmpassocregulationblog.blogspot.com/2014/12/valuations-of-risk-financial-assets.html and earlier http://cmpassocregulationblog.blogspot.com/2014/09/financial-volatility-mediocre-cyclical.html and earlier http://cmpassocregulationblog.blogspot.com/2014/06/financial-indecision-mediocre-cyclical.html and earlier http://cmpassocregulationblog.blogspot.com/2014/03/global-financial-risks-recovery-without.html and earlier http://cmpassocregulationblog.blogspot.com/2013/12/collapse-of-united-states-dynamism-of.html). Financial assets increased $15.0 trillion while nonfinancial assets increased $898.5 billion with likely concentration of wealth in those with access to sophisticated financial investments. Real estate assets adjusted for inflation fell 9.9 percent from 2007 to IVQ2014

Table I-1, US, Summary of the Employment Situation Report SA

	Apr 2015	Mar 2015
New Nonfarm Payroll Jobs	223,000	85,000
New Private Payroll Jobs	213,000	94,000
Average Hourly Earnings	Apr 15 $24.87 SA ∆% Apr 15/ Apr 14 NSA: 2.1 ∆% Apr 15/Mar 15 SA: 0.1	Mar 15 $24.84 SA ∆% Mar 15/Mar 14 NSA: 2.1 ∆% Mar 15/Feb 15 SA: 0.2
Average Hourly Earnings in Constant Dollars		∆% Mar 2015/Mar 2014 NSA: 2.2
Average Weekly Hours	34.5 SA 34.3 NSA	34.5 SA 34.7 NSA
Unemployment Rate Household Survey % of Labor Force SA	5.4	5.5
Number in Job Stress Unemployed and Underemployed Blog Calculation	25.6 million NSA	26.7 million NSA
In Job Stress as % Labor Force	15.4 NSA	16.1 NSA

Source: US Bureau of Labor Statistics

http://www.bls.gov/

The Bureau of Labor Statistics (BLS) of the US Department of Labor provides both seasonally adjusted (SA) and not-seasonally adjusted (NSA) or unadjusted data with important uses (Bureau of Labor Statistics 2012Feb3; 2011Feb11):

“Most series published by the Current Employment Statistics program reflect a regularly recurring seasonal movement that can be measured from past experience. By eliminating that part of the change attributable to the normal seasonal variation, it is possible to observe the cyclical and other nonseasonal movements in these series. Seasonally adjusted series are published monthly for selected employment, hours, and earnings estimates.”

Requirements of using best available information and updating seasonality factors affect the comparability over time of United States employment data. In the first month of the year, the BLS revises data for several years by adjusting benchmarks and seasonal factors (page 4 at http://www.bls.gov/news.release/pdf/empsit.pdf release of Jan 2015 at http://www.bls.gov/schedule/archives/empsit_nr.htm#2015), which is the case of the data for Jan 2015 released on Feb 6, 2015:

“In accordance with annual practice, the establishment survey data released today have been benchmarked to reflect comprehensive counts of payroll jobs for March 2014. These counts are derived principally from the Quarterly Census of Employment and Wages (QCEW), which enumerates jobs covered by the unemployment insurance tax system. The benchmark process results in revisions to not seasonally adjusted data from April 2013 forward.

Seasonally adjusted data from January 2010 forward are subject to revision. In addition, data for some series prior to 2010, both seasonally adjusted and unadjusted, incorporate revisions. The total nonfarm employment level for March 2014 was revised upward by 91,000 (+67,000 on a not seasonally adjusted basis, or less than 0.05 percent). The average benchmark revision over the past 10 years was plus or minus 0.3 percent. Table A presents revised total nonfarm employment data on a seasonally adjusted basis for January through

December 2014.

An article that discusses the benchmark and post-benchmark revisions and other technical issues can be accessed through the BLS website at www.bls.gov/web/empsit/cesbmart.pdf.

Information on the data released today also may be obtained by calling (202) 691-6555.”

There are also adjustments of population that affect comparability of labor statistics over time (page 5 at http://www.bls.gov/news.release/pdf/empsit.pdf release of Jan 2015 at http://www.bls.gov/schedule/archives/empsit_nr.htm#2015):

“Effective with data for January 2015, updated population estimates have been used in the household survey. Population estimates for the household survey are developed by the U.S. Census Bureau. Each year, the Census Bureau updates the estimates to reflect new information and assumptions about the growth of the population since the previous decennial census. The change in population reflected in the new estimates results from adjustments for net international migration, updated vital statistics and other information, and some methodological changes in the estimation process. In accordance with usual practice, BLS will not revise the official household survey estimates for December 2014 and earlier months. To show the impact of the population adjustments, however, differences in selected December 2014 labor force series based on the old and new population estimates are shown in table B.”

There are also adjustments of benchmarks and seasonality factors for establishment data that affect comparability over time (page 4 at http://www.bls.gov/news.release/pdf/empsit.pdf release of Jan 2015 at http://www.bls.gov/schedule/archives/empsit_nr.htm#2015):

“In accordance with annual practice, the establishment survey data released today [Feb 6, 2015] have been benchmarked to reflect comprehensive counts of payroll jobs for March 2014. These counts are derived principally from the Quarterly Census of Employment and Wages (QCEW), which enumerates jobs covered by the unemployment insurance tax system. The benchmark process results in revisions to not seasonally adjusted data from April 2013 forward. Seasonally adjusted data from January 2010 forward are subject to revision. In addition, data for some series prior to 2010, both seasonally adjusted and unadjusted, incorporate revisions.”

All comparisons over time are affected by yearly adjustments of benchmarks and seasonality factors. All data in this blog comment use revised data released by the BLS on Mar 6, 2015 (http://www.bls.gov/).

IA2 Number of People in Job Stress. There are two approaches to calculating the number of people in job stress. The first approach consists of calculating the number of people in job stress unemployed or underemployed with the raw data of the employment situation report as in Table I-2. The data are seasonally adjusted (SA). The first three rows provide the labor force and unemployed in millions and the unemployment rate of unemployed as percent of the labor force. There is decrease in the number unemployed from 8.705 million in Feb 2015 to 8.575 million in Mar 2015 and decrease to 8.549 million in Apr 2015. The rate of unemployment decreased from 5.4 percent in Feb 2015 to 5.5 percent in Feb 2015 and decreased to 5.4 percent in Apr 2015. An important aspect of unemployment is its persistence for more than 27 weeks with 2.525 million in Apr 2015, corresponding to 29.5 percent of the unemployed. The longer the period of unemployment the lower are the chances of finding another job with many long-term unemployed ceasing to search for a job. Another key characteristic of the current labor market is the high number of people trying to subsist with part-time jobs because they cannot find full-time employment or part-time for economic reasons. The BLS explains as follows: “these individuals were working part time because their hours had been cut back or because they were unable to find full-time work” (http://www.bls.gov/news.release/pdf/empsit.pdf 2). The number of part-time for economic reasons increased from 6.635 million in Feb 2015 to 6.705 million in Mar 2015 and decreased to 6.580 million in Apr 2015. Another important fact is the marginally attached to the labor force. The BLS explains as follows: “these individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey” (http://www.bls.gov/news.release/pdf/empsit.pdf 2). The number in job stress unemployed or underemployed of 17.244 million in Apr 2015 is composed of:

· 8.549 million unemployed (of whom 2.525 million, or 29.5 percent, unemployed for 27 weeks or more) compared with 8.575 million unemployed in Mar 2014 (of whom 2.563 million, or 29.9 percent, unemployed for 27 weeks or more),

· 6.580 million employed part-time for economic reasons in Apr 2015 (who suffered reductions in their work hours or could not find full-time employment) compared with 6.705 million in Mar 2015

· 2.115 million who were marginally attached to the labor force in Apr 2015 (who were not in the labor force but wanted and were available for work) compared with 2.055 million in Mar 2015

Table I-2, US, People in Job Stress, Millions and % SA

2014	Apr 2015	Mar 2015	Feb 2015
Labor Force Millions	157.072	156.906	157.002
Unemployed Millions	8.549	8.575	8.705
Unemployment Rate (unemployed as % labor force)	5.4	5.5	5.5
Unemployed ≥27 weeks Millions	2.525	2.563	2.709
Unemployed ≥27 weeks %	29.5	29.9	31.1
Part Time for Economic Reasons Millions	6.580	6.705	6.635
Marginally Attached to Labor Force Millions	2.115	2.055	2.159
Job Stress Millions	17.244	17,335	17.499
In Job Stress as % Labor Force	11.0	11.0	11.1

Job Stress = Unemployed + Part Time Economic Reasons + Marginally Attached Labor Force

Source: US Bureau of Labor Statistics

http://www.bls.gov/cps/

Table I-3 repeats the data in Table I-2 but including Dec and additional data. What really matters is the number of people with jobs or the total employed, representing the opportunity for exit from unemployment. The final row of Table I-3 provides people employed as percent of the population or employment to population ratio. The number has remained relatively constant around 59 percent, reaching 59.3 in Jan 2015, 59.3 in Feb 2015, 59.3 in Mar 2015 and 59.3 in Apr 2015. The employment to population ratio fell from an annual level of 63.1 percent in 2006 to 58.6 percent in 2012, 58.6 percent in 2013 and 59.0 in 2014 with the lowest level at 58.4 percent in 2011.

Table I-3, US, Unemployment and Underemployment, SA, Millions and Percent

	Apr 2015	Mar 2015	Feb 2015	Jan 2015
Labor Force	157.072	156.906	157.002	157.180
Participation Rate	62.8	62.7	62.8	62.9
Unemployed	8.549	8.575	8.705	8.979
UNE Rate %	5.4	5.5	5.5	5.7
Part Time Economic Reasons	6.580	6.705	6.635	6.810
Marginally Attached to Labor Force	2.115	2.055	2.159	2.234
In Job Stress	17.244	17.335	17.499	18.023
In Job Stress % Labor Force	11.0	11.0	11.1	11.5
Employed	148.523	148.331	148.297	148.201
Employment % Population	59.3	59.3	59.3	59.3

Job Stress = Unemployed + Part Time Economic Reasons + Marginally Attached Labor Force

Source: US Bureau of Labor Statistics

http://www.bls.gov/cps/

The balance of this section considers the second approach. Charts I-1 to I-12 explain the reasons for considering another approach to calculating job stress in the US. Chart I-1 of the Bureau of Labor Statistics provides the level of employment in the US from 2001 to 2015. There was a big drop of the number of people employed from 147.315 million at the peak in Jul 2007 (NSA) to 136.809 million at the trough in Jan 2010 (NSA) with 10.506 million fewer people employed. Recovery has been anemic compared with the shallow recession of 2001 that was followed by nearly vertical growth in jobs. The number employed in Apr 2015 was 148.587 million (NSA) or 1.272 million more people with jobs relative to the peak of 147.315 million in Jul 2007 while the civilian noninstitutional population of ages 16 years and over increased from 231.958 million in Jul 2007 to 250.266 million in Apr 2015 or by 18.308 million. The number employed increased 0.9 percent from Jul 2007 to Apr 2015 while the noninstitutional civilian population of ages of 16 years and over, or those available for work, increased 7.9 percent. The ratio of employment to population in Jul 2007 was 63.5 percent (147.315 million employment as percent of population of 231.958 million). The same ratio in Apr 2015 would result in 158.919 million jobs (0.635 multiplied by noninstitutional civilian population of 250.266 million). There are effectively 10.332 million fewer jobs in Apr 2015 than in Jul 2007, or 158.919 million minus 148.587 million. There is actually not sufficient job creation in merely absorbing new entrants in the labor force because of those dropping from job searches, worsening the stock of unemployed or underemployed in involuntary part-time jobs.

Chart I-1, US, Employed, Thousands, SA, 2001-2015

Source: Bureau of Labor Statistics

http://www.bls.gov/data/

Chart I-2 of the Bureau of Labor Statistics provides 12-month percentage changes of the number of people employed in the US from 2001 to 2015. There was recovery since 2010 but not sufficient to recover lost jobs. Many people in the US who had jobs before the global recession are not working now and many who entered the labor force cannot find employment.

Chart I-2, US, Employed, 12-Month Percentage Change NSA, 2001-2015

Source: Bureau of Labor Statistics

http://www.bls.gov/data/

The foundation of the second approach derives from Chart II-3 of the Bureau of Labor Statistics providing the level of the civilian labor force in the US. The civilian labor force consists of people who are available and willing to work and who have searched for employment recently. The labor force of the US grew 9.4 percent from 142.828 million in Jan 2001 to 156.255 million in Jul 2009 but is 0.2 percent higher at 156.554 million in Apr 2015, all numbers not seasonally adjusted. Chart I-3 shows the flattening of the curve of expansion of the labor force and its decline in 2010 and 2011. The ratio of the labor force of 154.871 million in Jul 2007 to the noninstitutional population of 231.958 million in Jul 2007 was 66.8 percent while the ratio of the labor force of 156.554 million in Apr 2015 to the noninstitutional population of 250.266 million in Apr 2015 was 62.6 percent. The labor force of the US in Apr 2015 corresponding to 66.8 percent of participation in the population would be 167.178 million (0.668 x 250.266). The difference between the measured labor force in Apr 2015 of 156.554 million and the labor force in Apr 2015 with participation rate of 66.8 percent (as in Jul 2007) of 167.178 million is 10.624 million. The level of the labor force in the US has stagnated and is 10.735 million lower than what it would have been had the same participation rate been maintained. Millions of people have abandoned their search for employment because they believe there are no jobs available for them. The key issue is whether the decline in participation of the population in the labor force is the result of people giving up on finding another job.

Chart I-3, US, Civilian Labor Force, Thousands, SA, 2001-2015

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

Chart I-4 of the Bureau of Labor Statistics provides 12-month percentage changes of the level of the labor force in the US. The rate of growth fell almost instantaneously with the global recession and became negative from 2009 to 2011. The labor force of the US collapsed and did not recover. Growth in the beginning of the summer originates in younger people looking for jobs in the summer after graduation or during school recess.

Chart I-4, US, Civilian Labor Force, Thousands, NSA, 12-month Percentage Change, 2001-2015

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

Chart I-5 of the Bureau of Labor Statistics provides the labor force participation rate in the US or labor force as percent of the population. The labor force participation rate of the US fell from 66.8 percent in Jan 2001 to 62.6 percent NSA in Apr 2015, all numbers not seasonally adjusted. The annual labor force participation rate for 1979 was 63.7 percent and also 63.7 percent in Nov 1980 during sharp economic contraction. This comparison is further elaborated below. Chart I-5 shows an evident downward trend beginning with the global recession that has continued throughout the recovery beginning in IIIQ2009. The critical issue is whether people left the workforce of the US because they believe there is no longer a job for them.

Chart I-5, Civilian Labor Force Participation Rate, Percent of Population in Labor Force SA, 2001-2014

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

Chart I-6 of the Bureau of Labor Statistics provides the level of unemployed in the US. The number unemployed rose from the trough of 6.272 million NSA in Oct 2006 to the peak of 16.147 million in Jan 2010, declining to 13.400 million in Jul 2012, 12.696 million in Aug 2012 and 11.741 million in Sep 2012. The level unemployed fell to 11.741 million in Oct 2012, 11.404 million in Nov 2012, 11.844 million in Dec 2012, 13.181 million in Jan 2013, 12.500 million in Feb 2013 and 9.984 million in Dec 2013. The level of unemployment reached 7.966 million in Apr 2015, all numbers not seasonally adjusted.

Chart I-6, US, Unemployed, Thousands, SA, 2001-2015

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

Chart I-7 of the Bureau of Labor Statistics provides the rate of unemployment in the US or unemployed as percent of the labor force. The rate of unemployment of the US rose from 4.7 percent in Jan 2001 to 6.5 percent in Jun 2003, declining to 4.1 percent in Oct 2006. The rate of unemployment jumped to 10.6 percent in Jan 2010 and declined to 7.6 percent in Dec 2012 but increased to 8.5 percent in Jan 2013 and 8.1 percent in Feb 2013, falling back to 7.3 percent in May 2013 and 7.8 percent in Jun 2013, all numbers not seasonally adjusted. The rate of unemployment not seasonally adjusted stabilized at 7.7 percent in Jul 2013 and fell to 6.5 percent in Dec 2013 and 5.4 percent in Dec 2014. The rate of unemployment NSA decreased to 5.1 percent in Apr 2015.

Chart I-7, US, Unemployment Rate, SA, 2001-2015

Source: Bureau of Labor Statistics

http://www.bls.gov/data/

Chart I-8 of the Bureau of Labor Statistics provides 12-month percentage changes of the level of unemployed. There was a jump of 81.8 percent in Apr 2009 with subsequent decline and negative rates since 2010. On an annual basis, the level of unemployed rose 59.8 percent in 2009 and 26.1 percent in 2008 with increase of 3.9 percent in 2010, decline of 7.3 percent in 2011 and decrease of 9.0 percent in 2012. The annual level of unemployment decreased 8.4 percent in 2013 and fell 16.1 percent in 2014. The level of unemployment fell 12.3 percent in Apr 2015 relative to a year earlier.

Chart I-8, US, Unemployed, 12-month Percentage Change, NSA, 2001-2015

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

Chart I-9 of the Bureau of Labor Statistics provides the number of people in part-time occupations because of economic reasons, that is, because they cannot find full-time employment. The number underemployed in part-time occupations not seasonally adjusted rose from 3.732 million in Jan 2001 to 5.270 million in Jan 2004, falling to 3.787 million in Apr 2006. The number underemployed seasonally adjusted jumped to 9.114 million in Nov 2009, falling to 8.174 million in Dec 2011 but increasing to 8.291 million in Jan 2012 and 8.193 million in Feb 2012 but then falling to 7.926 million in Dec 2012 and increasing to 8.087 million in Jul 2013. The number employed part-time for economic reasons seasonally adjusted reached 7.766 million in Dec 2013 and 6.790 million in Dec 2014. The number employed part-time for economic reasons seasonally adjusted reached 6.580 million in Apr 2015. Without seasonal adjustment, the number employed part-time for economic reasons reached 9.354 million in Dec 2009, declining to 8.918 million in Jan 2012 and 8.166 million in Dec 2012 but increasing to 8.324 million in Jul 2013. The number employed part-time for economic reasons NSA stood at 7.990 million in Dec 2013 and 6.970 million in Dec 2014. The number employed part-time for economic reasons stood at 6.356 million in Apr 2015. The longer the period in part-time jobs the lower are the chances of finding another full-time job.

Chart I-9, US, Part-Time for Economic Reasons, Thousands, SA, 2001-2015

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

Chart I-10 of the Bureau of Labor Statistics repeats the behavior of unemployment. The 12-month percentage change of the level of people at work part-time for economic reasons jumped 84.7 percent in Mar 2009 and declined subsequently. The declines have been insufficient to reduce significantly the number of people who cannot shift from part-time to full-time employment. On an annual basis, the number of part-time for economic reasons increased 33.5 percent in 2008 and 51.7 percent in 2009, declining 0.4 percent in 2010, 3.5 percent in 2011 and 5.1 percent in 2012. The annual number of part-time for economic reasons decreased 2.3 percent in 2013 and fell 9.1 percent in 2014. The number of part-time for economic reasons fell 12.2 percent in Apr 2015 relative to a year earlier.

Chart I-10, US, Part-Time for Economic Reasons NSA 12-Month Percentage Change, 2001-2015

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

Chart I-11 of the Bureau of Labor Statistics provides the same pattern of the number marginally attached to the labor force jumping to significantly higher levels during the global recession and remaining at historically high levels. The number marginally attached to the labor force not seasonally adjusted increased from 1.295 million in Jan 2001 to 1.691 million in Feb 2004. The number of marginally attached to the labor force fell to 1.299 million in Sep 2006 and increased to 2.609 million in Dec 2010 and 2.800 million in Jan 2011. The number marginally attached to the labor force was 2.540 million in Dec 2011, increasing to 2.809 million in Jan 2012, falling to 2.608 million in Feb 2012. The number marginally attached to the labor force fell to 2.352 million in Mar 2012, 2.363 million in Apr 2012, 2.423 million in May 2012, 2.483 million in Jun 2012, 2.529 million in Jul 2012 and 2.561 million in Aug 2012. The number marginally attached to the labor force fell to 2.517 million in Sep 2012, 2.433 million in Oct 2012, 2.505 million in Nov 2012 and 2.427 million in in Dec 2013. The number marginally attached to the labor force reached 2.260 million in Dec 2014. The number marginally attached to the labor force fell to 2.115 million in Apr 2015.

Chart I-11, US, Marginally Attached to the Labor Force, Thousands, NSA, 2001-2015

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

Chart I-12 provides 12-month percentage changes of the marginally attached to the labor force from 2001 to 2015. There was a jump of 56.1 percent in May 2009 during the global recession followed by declines in percentage changes but insufficient negative changes. On an annual basis, the number of marginally attached to the labor force increased in four consecutive years: 15.7 percent in 2008, 37.9 percent in 2009, 11.7 percent in 2010 and 3.5 percent in 2011. The number marginally attached to the labor force fell 2.2 percent on annual basis in 2012 but increased 2.9 percent in the 12 months ending in Dec 2012, fell 13.0 percent in the 12 months ending in Jan 2013, falling 10.7 percent in the 12 months ending in May 2013. The number marginally attached to the labor force increased 4.0 percent in the 12 months ending in Jun 2013 and fell 4.5 percent in the 12 months ending in Jul 2013 and 8.6 percent in the 12 months ending in Aug 2013. The annual number of marginally attached to the labor force fell 6.2 percent in 2013 and fell 6.5 percent in 2014. The number marginally attached to the labor force fell 7.2 percent in the 12 months ending in Dec 2013 and fell 6.9 percent in the 12 months ending in Dec 2014. The number marginally attached to the labor force fell 2.1 percent in the 12 months ending in Apr 2015

Chart I-12, US, Marginally Attached to the Labor Force 12-Month Percentage Change, NSA, 2001-2015

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

Table I-4 consists of data and additional calculations using the BLS household survey, illustrating the possibility that the actual rate of unemployment could be 10.3 percent and the number of people in job stress could be around 25.6 million, which is 15.4 percent of the effective labor force. The first column provides for 2006 the yearly average population (POP), labor force (LF), participation rate or labor force as percent of population (PART %), employment (EMP), employment population ratio (EMP/POP %), unemployment (UEM), the unemployment rate as percent of labor force (UEM/LF Rate %) and the number of people not in the labor force (NLF). All data are unadjusted or not-seasonally-adjusted (NSA). The numbers in column 2006 are averages in millions while the monthly numbers for Apr 2014, Mar 2015 and Apr 2015 are in thousands, not seasonally adjusted. The average yearly participation rate of the population in the labor force was in the range of 66.0 percent minimum to 67.1 percent maximum between 2000 and 2006 with the average of 66.4 percent (http://www.bls.gov/data/). Table I-4b provides the yearly labor force participation rate from 1979 to 2015. The objective of Table I-4 is to assess how many people could have left the labor force because they do not think they can find another job. Row “LF PART 66.2 %” applies the participation rate of 2006, almost equal to the rates for 2000 to 2006, to the noninstitutional civilian population in Apr 2014, Mar 2015 and Apr 2015 to obtain what would be the labor force of the US if the participation rate had not changed. In fact, the participation rate fell to 62.6 percent by Apr 2014 and was 62.5 percent in Mar 2015 and 62.6 percent in Apr 2015, suggesting that many people simply gave up on finding another job. Row “∆ NLF UEM” calculates the number of people not counted in the labor force because they could have given up on finding another job by subtracting from the labor force with participation rate of 66.2 percent (row “LF PART 66.2%”) the labor force estimated in the household survey (row “LF”). Total unemployed (row “Total UEM”) is obtained by adding unemployed in row “∆NLF UEM” to the unemployed of the household survey in row “UEM.” The row “Total UEM%” is the effective total unemployed “Total UEM” as percent of the effective labor force in row “LF PART 66.2%.” The results are that:

• there are an estimated 9.122 million unemployed in Apr 2015 who are not counted because they left the labor force on their belief they could not find another job (∆NLF UEM), that is, they dropped out of their job searches
• the total number of unemployed is effectively 17.088 million (Total UEM) and not 7.966 million (UEM) of whom many have been unemployed long term
• the rate of unemployment is 10.3 percent (Total UEM%) and not 5.1 percent, not seasonally adjusted, or 5.4 percent seasonally adjusted
• the number of people in job stress is close to 25.6 million by adding the 9.122 million leaving the labor force because they believe they could not find another job.

The row “In Job Stress” in Table I-4 provides the number of people in job stress not seasonally adjusted at 26.664 million in Mar 2015, adding the total number of unemployed (“Total UEM”), plus those involuntarily in part-time jobs because they cannot find anything else (“Part Time Economic Reasons”) and the marginally attached to the labor force (“Marginally attached to LF”). The final row of Table I-4 shows that the number of people in job stress is equivalent to 15.4 percent of the labor force in Apr 2015. The employment population ratio “EMP/POP %” dropped from 62.9 percent on average in 2006 to 58.9 percent in Apr 2014, 59.0 percent in Mar 2015 and 59.4 percent in Apr 2015. The number employed in Apr 2015 was 148.587 million (NSA) or 1.272 million more people with jobs relative to the peak of 147.315 million in Jul 2007 while the civilian noninstitutional population of ages 16 years and over increased from 231.958 million in Jul 2007 to 250.266 million in Apr 2015 or by 18.308 million. The number employed increased 0.9 percent from Jul 2007 to Apr 2015 while the noninstitutional civilian population of ages of 16 years and over, or those available for work, increased 7.9 percent. The ratio of employment to population in Jul 2007 was 63.5 percent (147.315 million employment as percent of population of 231.958 million). The same ratio in Apr 2015 would result in 158.919 million jobs (0.635 multiplied by noninstitutional civilian population of 250.266 million). There are effectively 10.332 million fewer jobs in Apr 2015 than in Jul 2007, or 158.919 million minus 148.587 million. There is actually not sufficient job creation in merely absorbing new entrants in the labor force because of those dropping from job searches, worsening the stock of unemployed or underemployed in involuntary part-time jobs.

The 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). 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 (http://cmpassocregulationblog.blogspot.com/2015/04/dollar-revaluation-recovery-without.html). This is merely another case of theory without reality with dubious policy proposals. The number of hiring relative to the number unemployed measures the chances of becoming employed. The number of hiring in the US economy has declined by 10 million and does not show signs of increasing in an unusual recovery without hiring (http://cmpassocregulationblog.blogspot.com/2015/04/dollar-revaluation-recovery-without.html). US economic growth has been at only 2.2 percent on average in the cyclical expansion in the 23 quarters from IIIQ2009 to IQ2015. 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 IQ2015 (http://www.bea.gov/newsreleases/national/gdp/2015/pdf/gdp1q15_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/2015/05/dollar-devaluation-and-carry-trade.html and earlier http://cmpassocregulationblog.blogspot.com/2015/03/dollar-revaluation-and-financial-risk.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, 4.8 percent from IQ1983 to IIIQ1988 and at 7.8 percent from IQ1983 to IVQ1983 (http://cmpassocregulationblog.blogspot.com/2015/05/dollar-devaluation-and-carry-trade.html and earlier http://cmpassocregulationblog.blogspot.com/2015/03/dollar-revaluation-and-financial-risk.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 IQ2015 would have accumulated to 23.9 percent. GDP in IQ2015 would be $18,574.8 billion (in constant dollars of 2009) if the US had grown at trend, which is higher by $2,270.0 billion than actual $16,304.8 billion. There are about two trillion dollars of GDP less than at trend, explaining the 25.6 million unemployed or underemployed equivalent to actual unemployment/underemployment of 15.4 percent of the effective labor force (Section I and earlier http://cmpassocregulationblog.blogspot.com/2015/04/volatility-of-valuations-of-financial.html and earlier (http://cmpassocregulationblog.blogspot.com/2015/03/global-competitive-devaluation-rules.html). US GDP in IQ2015 is 12.2 percent lower than at trend. US GDP grew from $14,991.8 billion in IVQ2007 in constant dollars to $16,304.8 billion in IQ2015 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. There is classic research on analyzing deviations of output from trend (see for example Schumpeter 1939, Hicks 1950, Lucas 1975, Sargent and Sims 1977). The long-term trend is growth at average 3.3 percent per year from Mar 1919 to Mar 2015. Growth at 3.3 percent per year would raise the NSA index of manufacturing output from 99.2392 in Dec 2007 to 125.5771 in Mar 2015. The actual index NSA in Mar 2015 is 101.8045, which is 18.9 percent below trend. Manufacturing output grew at average 2.4 percent between Dec 1986 and Dec 2014, raising the index at trend to 117.2305 in Mar 2015. The output of manufacturing at 101.8045 in Mar 2015 is 13.2 percent below trend under this alternative calculation.

Table I-4, US, Population, Labor Force and Unemployment, NSA

	2006	Apr 2014	Mar 2015	Apr 2015
POP	229	247,439	250,080	250.266
LF	151	154,845	156,318	156,554
PART%	66.2	62.6	62.5	62.6
EMP	144	145,767	147,635	148,587
EMP/POP%	62.9	58.9	59.0	59.4
UEM	7	9,079	8,682	7,966
UEM/LF Rate%	4.6	5.9	5.6	5.1
NLF	77	92,594	93,762	93,712
LF PART 66.2%		163,805	165,553	165,676
∆NLF UEM		8,960	9,235	9,122
Total UEM		18,039	17,917	17,088
Total UEM%		11.0	10.8	10.3
Part Time Economic Reasons		7,243	6,672	6,356
Marginally Attached to LF		2,160	2,055	2,115
In Job Stress		27,442	26,664	25,559
People in Job Stress as % Labor Force		16.8	16.1	15.4

Pop: population; LF: labor force; PART: participation; EMP: employed; UEM: unemployed; NLF: not in labor force; ∆NLF UEM: additional unemployed; Total UEM is UEM + ∆NLF UEM; Total UEM% is Total UEM as percent of LF PART 66.2%; In Job Stress = Total UEM + Part Time Economic Reasons + Marginally Attached to LF

Note: the first column for 2006 is in average millions; the remaining columns are in thousands; NSA: not seasonally adjusted

The labor force participation rate of 66.2% in 2006 is applied to current population to obtain LF PART 66.2%; ∆NLF UEM is obtained by subtracting the labor force with participation of 66.2 percent from the household survey labor force LF; Total UEM is household data unemployment plus ∆NLF UEM; and total UEM% is total UEM divided by LF PART 66.2%

Source: US Bureau of Labor Statistics

http://www.bls.gov/cps/

The labor force participation rate of 66.2% in 2006 is applied to current population to obtain LF PART 66.2%; ∆NLF UEM is obtained by subtracting the labor force with participation of 66.2 percent from the household survey labor force LF; Total UEM is household data unemployment plus ∆NLF UEM; and total UEM% is total UEM divided by LF PART 66.2%

Source: US Bureau of Labor Statistics

http://www.bls.gov/cps/

In the analysis of Hansen (1939, 3) of secular stagnation, economic progress consists of growth of real income per person driven by growth of productivity. The “constituent elements” of economic progress are “(a) inventions, (b) the discovery and development of new territory and new resources, and (c) the growth of population” (Hansen 1939, 3). Secular stagnation originates in decline of population growth and discouragement of inventions. According to Hansen (1939, 2), US population grew by 16 million in the 1920s but grew by one half or about 8 million in the 1930s with forecasts at the time of Hansen’s writing in 1938 of growth of around 5.3 million in the 1940s. Hansen (1939, 2) characterized demography in the US as “a drastic decline in the rate of population growth. Hansen’s plea was to adapt economic policy to stagnation of population in ensuring full employment. In the analysis of Hansen (1939, 8), population caused half of the growth of US GDP per year. Growth of output per person in the US and Europe was caused by “changes in techniques and to the exploitation of new natural resources.” In this analysis, population caused 60 percent of the growth of capital formation in the US. Declining population growth would reduce growth of capital formation. Residential construction provided an important share of growth of capital formation. Hansen (1939, 12) argues that market power of imperfect competition discourages innovation with prolonged use of obsolete capital equipment. Trade unions would oppose labor-savings innovations. The combination of stagnating and aging population with reduced innovation caused secular stagnation. Hansen (1939, 12) concludes that there is role for public investments to compensate for lack of dynamism of private investment but with tough tax/debt issues.

The current application of Hansen’s (1938, 1939, 1941) proposition argues that secular stagnation occurs because full employment equilibrium can be attained only with negative real interest rates between minus 2 and minus 3 percent. Professor Lawrence H. Summers (2013Nov8) finds that “a set of older ideas that went under the phrase secular stagnation are not profoundly important in understanding Japan’s experience in the 1990s and may not be without relevance to America’s experience today” (emphasis added). Summers (2013Nov8) argues there could be an explanation in “that the short-term real interest rate that was consistent with full employment had fallen to -2% or -3% sometime in the middle of the last decade. Then, even with artificial stimulus to demand coming from all this financial imprudence, you wouldn’t see any excess demand. And even with a relative resumption of normal credit conditions, you’d have a lot of difficulty getting back to full employment.” The US economy could be in a situation where negative real rates of interest with fed funds rates close to zero as determined by the Federal Open Market Committee (FOMC) do not move the economy to full employment or full utilization of productive resources. Summers (2013Oct8) finds need of new thinking on “how we manage an economy in which the zero nominal interest rates is a chronic and systemic inhibitor of economy activity holding our economies back to their potential.”

Former US Treasury Secretary Robert Rubin (2014Jan8) finds three major risks in prolonged unconventional monetary policy of zero interest rates and quantitative easing: (1) incentive of delaying action by political leaders; (2) “financial moral hazard” in inducing excessive exposures pursuing higher yields of risker credit classes; and (3) major risks in exiting unconventional policy. Rubin (2014Jan8) proposes reduction of deficits by structural reforms that could promote recovery by improving confidence of business attained with sound fiscal discipline.

Professor John B. Taylor (2014Jan01, 2014Jan3) provides clear thought on the lack of relevance of Hansen’s contention of secular stagnation to current economic conditions. The application of secular stagnation argues that the economy of the US has attained full-employment equilibrium since around 2000 only with negative real rates of interest of minus 2 to minus 3 percent. At low levels of inflation, the so-called full-employment equilibrium of negative interest rates of minus 2 to minus 3 percent cannot be attained and the economy stagnates. Taylor (2014Jan01) analyzes multiple contradictions with current reality in this application of the theory of secular stagnation:

• Secular stagnation would predict idle capacity, in particular in residential investment when fed fund rates were fixed at 1 percent from Jun 2003 to Jun 2004. Taylor (2014Jan01) finds unemployment at 4.4 percent with house prices jumping 7 percent from 2002 to 2003 and 14 percent from 2004 to 2005 before dropping from 2006 to 2007. GDP prices doubled from 1.7 percent to 3.4 percent when interest rates were low from 2003 to 2005.
• Taylor (2014Jan01, 2014Jan3) finds another contradiction in the application of secular stagnation based on low interest rates because of savings glut and lack of investment opportunities. Taylor (2009) shows that there was no savings glut. The savings rate of the US in the past decade is significantly lower than in the 1980s.
• Taylor (2014Jan01, 2014Jan3) finds another contradiction in the low ratio of investment to GDP currently and reduced investment and hiring by US business firms.
• Taylor (2014Jan01, 2014Jan3) argues that the financial crisis and global recession were caused by weak implementation of existing regulation and departure from rules-based policies.
• Taylor (2014Jan01, 2014Jan3) argues that the recovery from the global recession was constrained by a change in the regime of regulation and fiscal/monetary policies.

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.”

Table I-4b and Chart I-12-b provide the US labor force participation rate or percentage of the labor force in population. It is not likely that simple demographic trends caused the sharp decline during the global recession and failure to recover earlier levels. The civilian labor force participation rate dropped from the peak of 66.9 percent in Jul 2006 to 62.6 percent in Dec 2013, 62.5 percent in Dec 2014 and 62.6 percent in Apr 2015. The civilian labor force participation rate was 63.7 percent on an annual basis in 1979 and 63.4 percent in Dec 1980 and Dec 1981, reaching even 62.9 percent in both Apr and May 1979. The civilian labor force participation rate jumped with the recovery to 64.8 percent on an annual basis in 1985 and 65.9 percent in Jul 1985. Structural factors cannot explain these sudden changes vividly shown visually in the final segment of Chart I-12b. Seniors would like to delay their retiring especially because of the adversities of financial repression on their savings. Labor force statistics are capturing the disillusion of potential workers with their chances in finding a job in what Lazear and Spletzer (2012JHJul22) characterize as accentuated cyclical factors. 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). 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 (http://cmpassocregulationblog.blogspot.com/2015/04/dollar-revaluation-recovery-without.html). “Secular stagnation” would be a process over many years and not from one year to another. This is merely another case of theory without reality with dubious policy proposals.

Table I-4b, US, Labor Force Participation Rate, Percent of Labor Force in Population, NSA, 1979-2015

Year	Jan	Feb	Mar	Apr	Jul	Aug	Sep	Oct	Nov	Dec	Annual
1979	62.9	63.0	63.2	62.9	64.9	64.5	63.8	64.0	63.8	63.8	63.7
1980	63.3	63.2	63.2	63.2	65.1	64.5	63.6	63.9	63.7	63.4	63.8
1981	63.2	63.2	63.5	63.6	65.0	64.6	63.5	64.0	63.8	63.4	63.9
1982	63.0	63.2	63.4	63.3	65.3	64.9	64.0	64.1	64.1	63.8	64.0
1983	63.3	63.2	63.3	63.2	65.4	65.1	64.3	64.1	64.1	63.8	64.0
1984	63.3	63.4	63.6	63.7	65.9	65.2	64.4	64.6	64.4	64.3	64.4
1985	64.0	64.0	64.4	64.3	65.9	65.4	64.9	65.1	64.9	64.6	64.8
1986	64.2	64.4	64.6	64.6	66.6	66.1	65.3	65.5	65.4	65.0	65.3
1987	64.7	64.8	65.0	64.9	66.8	66.5	65.5	65.9	65.7	65.5	65.6
1988	65.1	65.2	65.2	65.3	67.1	66.8	65.9	66.1	66.2	65.9	65.9
1989	65.8	65.6	65.7	65.9	67.7	67.2	66.3	66.6	66.7	66.3	66.5
1990	66.0	66.0	66.2	66.1	67.7	67.1	66.4	66.5	66.3	66.1	66.5
1991	65.5	65.7	65.9	66.0	67.3	66.6	66.1	66.1	66.0	65.8	66.2
1992	65.7	65.8	66.0	66.0	67.9	67.2	66.3	66.2	66.2	66.1	66.4
1993	65.6	65.8	65.8	65.6	67.5	67.0	66.1	66.4	66.3	66.2	66.3
1994	66.0	66.2	66.1	66.0	67.5	67.2	66.5	66.8	66.7	66.5	66.6
1995	66.1	66.2	66.4	66.4	67.7	67.1	66.5	66.7	66.5	66.2	66.6
1996	65.8	66.1	66.4	66.2	67.9	67.2	66.8	67.1	67.0	66.7	66.8
1997	66.4	66.5	66.9	66.7	68.1	67.6	67.0	67.1	67.1	67.0	67.1
1998	66.6	66.7	67.0	66.6	67.9	67.3	67.0	67.1	67.1	67.0	67.1
1999	66.7	66.8	66.9	66.7	67.9	67.3	66.8	67.0	67.0	67.0	67.1
2000	66.8	67.0	67.1	67.0	67.6	67.2	66.7	66.9	66.9	67.0	67.1
2001	66.8	66.8	67.0	66.7	67.4	66.8	66.6	66.7	66.6	66.6	66.8
2002	66.2	66.6	66.6	66.4	67.2	66.8	66.6	66.6	66.3	66.2	66.6
2003	66.1	66.2	66.2	66.2	66.8	66.3	65.9	66.1	66.1	65.8	66.2
2004	65.7	65.7	65.8	65.7	66.8	66.2	65.7	66.0	66.1	65.8	66.0
2005	65.4	65.6	65.6	65.8	66.8	66.5	66.1	66.2	66.1	65.9	66.0
2006	65.5	65.7	65.8	65.8	66.9	66.5	66.1	66.4	66.4	66.3	66.2
2007	65.9	65.8	65.9	65.7	66.8	66.1	66.0	66.0	66.1	65.9	66.0
2008	65.7	65.5	65.7	65.7	66.8	66.4	65.9	66.1	65.8	65.7	66.0
2009	65.4	65.5	65.4	65.4	66.2	65.6	65.0	64.9	64.9	64.4	65.4
2010	64.6	64.6	64.8	64.9	65.3	65.0	64.6	64.4	64.4	64.1	64.7
2011	63.9	63.9	64.0	63.9	64.6	64.3	64.2	64.1	63.9	63.8	64.1
2012	63.4	63.6	63.6	63.4	64.3	63.7	63.6	63.8	63.5	63.4	63.7
2013	63.3	63.2	63.1	63.1	64.0	63.4	63.2	62.9	62.9	62.6	63.2
2014	62.5	62.7	62.9	62.6	63.5	63.0	62.8	63.0	62.8	62.5	62.9
2015	62.5	62.5	62.5	62.6

Source: US Bureau of Labor Statistics

http://www.bls.gov/cps/

Chart I-12b, US, Labor Force Participation Rate, Percent of Labor Force in Population, NSA, 1979-2015

Source: Bureau of Labor Statistics

http://www.bls.gov/cps/

Broader perspective is provided by Chart I-12c of the US Bureau of Labor Statistics. The United States civilian noninstitutional population has increased along a consistent trend since 1948 that continued through earlier recessions and the global recession from IVQ2007 to IIQ2009 and the cyclical expansion after IIIQ2009.

Chart I-12c, US, Civilian Noninstitutional Population, Thousands, NSA, 1948-2015

Sources: US Bureau of Labor Statistics

http://www.bls.gov/data/

The labor force of the United States in Chart I-12d has increased along a trend similar to that of the civilian noninstitutional population in Chart I-12c. There is an evident stagnation of the civilian labor force in the final segment of Chart I-12d during the current economic cycle. This stagnation is explained by cyclical factors similar to those analyzed by Lazear and Spletzer (2012JHJul22) that motivated an increasing population to drop out of the labor force instead of structural factors. Large segments of the potential labor force are not observed, constituting unobserved unemployment and of more permanent nature because those afflicted have been seriously discouraged from working by the lack of opportunities.

Chart I-12d, US, Labor Force, Thousands, NSA, 1948-2015

Sources: US Bureau of Labor Statistics

http://www.bls.gov/data/

The rate of labor force participation of the US is in Chart I-12E from 1948 to 2015. There is sudden decline during the global recession after 2007 without recovery explained by cyclic factors (Lazear and Spletzer 2012JHJul22) as many potential workers stopped their job searches disillusioned that there could be an opportunity for them in sharply contracted labor markets.

Chart I-12E, US, Labor Force Participation Rate, Percent of Labor Force in Population, NSA, 1948-2015

Sources: US Bureau of Labor Statistics

http://www.bls.gov/data/

IA3 Long-term and Cyclical Comparison of Employment. There is initial discussion here of long-term employment trends followed by cyclical comparison. Growth and employment creation have been mediocre in the expansion beginning in Jul IIIQ2009 from the contraction between Dec IVQ2007 and Jun IIQ2009 (http://www.nber.org/cycles.html). A series of charts from the database of the Bureau of Labor Statistics (BLS) provides significant insight. Chart I-13 provides the monthly employment level of the US from 1948 to 2015. The number of people employed has trebled. There are multiple contractions throughout the more than six decades but followed by resumption of the strong upward trend. The contraction of employment after 2007 is sharp and followed by a flatter curve of job creation. The United States missed this opportunity of high growth in the initial phase of recovery that historically eliminated unemployment and underemployment created during the contraction. Inferior performance of the US economy and labor markets is the critical current issue of analysis and policy design. Long-term economic performance in the United States consisted of trend growth of GDP at 3 percent per year and of per capita GDP at 2 percent per year as measured for 1870 to 2010 by Robert E Lucas (2011May). The economy returned to trend growth after adverse events such as wars and recessions. The key characteristic of adversities such as recessions was much higher rates of growth in expansion periods that permitted the economy to recover output, income and employment losses that occurred during the contractions. Over the business cycle, the economy compensated the losses of contractions with higher growth in expansions to maintain trend growth of GDP of 3 percent and of GDP per capita of 2 percent. 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 2.2 percent on average in the cyclical expansion in the 23 quarters from IIIQ2009 to IQ2015. 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 IQ2015 (http://www.bea.gov/newsreleases/national/gdp/2015/pdf/gdp1q15_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/2015/05/dollar-devaluation-and-carry-trade.html and earlier http://cmpassocregulationblog.blogspot.com/2015/03/dollar-revaluation-and-financial-risk.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, 4.8 percent from IQ1983 to IIIQ1988 and at 7.8 percent from IQ1983 to IVQ1983 (http://cmpassocregulationblog.blogspot.com/2015/05/dollar-devaluation-and-carry-trade.html and earlier http://cmpassocregulationblog.blogspot.com/2015/03/dollar-revaluation-and-financial-risk.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 IQ2015 would have accumulated to 23.9 percent. GDP in IQ2015 would be $18,574.8 billion (in constant dollars of 2009) if the US had grown at trend, which is higher by $2,270.0 billion than actual $16,304.8 billion. There are about two trillion dollars of GDP less than at trend, explaining the 25.6 million unemployed or underemployed equivalent to actual unemployment/underemployment of 15.4 percent of the effective labor force (Section I and earlier http://cmpassocregulationblog.blogspot.com/2015/04/volatility-of-valuations-of-financial.html and earlier (http://cmpassocregulationblog.blogspot.com/2015/03/global-competitive-devaluation-rules.html). US GDP in IQ2015 is 12.2 percent lower than at trend. US GDP grew from $14,991.8 billion in IVQ2007 in constant dollars to $16,304.8 billion in IQ2015 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. There is classic research on analyzing deviations of output from trend (see for example Schumpeter 1939, Hicks 1950, Lucas 1975, Sargent and Sims 1977). The long-term trend is growth at average 3.3 percent per year from Mar 1919 to Mar 2015. Growth at 3.3 percent per year would raise the NSA index of manufacturing output from 99.2392 in Dec 2007 to 125.5771 in Mar 2015. The actual index NSA in Mar 2015 is 101.8045, which is 18.9 percent below trend. Manufacturing output grew at average 2.4 percent between Dec 1986 and Dec 2014, raising the index at trend to 117.2305 in Mar 2015. The output of manufacturing at 101.8045 in Mar 2015 is 13.2 percent below trend under this alternative calculation.

Chart I-13, US, Employment Level, Thousands, SA, 1948-2015

Source: US Bureau of Labor Statistics

http://www.bls.gov/data/

The steep and consistent curve of growth of the US labor force is shown in Chart I-14. The contraction beginning in Dec 2007 flattened the path of the US civilian labor force and with flatter curve during the current expansion

Chart I-14, US, Civilian Labor Force, SA, 1948-2015, Thousands

Source: US Bureau of Labor Statistics

http://www.bls.gov/data/

Chart I-15 for the period from 1948 to 2015. The labor force participation rate is influenced by numerous factors such as the age of the population. There is no comparable episode in the postwar economy to the sharp collapse of the labor force participation rate in Chart I-15 during the contraction and subsequent expansion after 2007. Aging can reduce the labor force participation rate as many people retire but many may have decided to work longer as their wealth and savings have been significantly reduced. There is an important effect of many people just exiting the labor force because they believe there is no job available for them.

Chart I-15, US, Civilian Labor Force Participation Rate, SA, 1948-2015, %

Source: US Bureau of Labor Statistics

http://www.bls.gov/data/

The number of unemployed in the US jumped seasonally adjusted from 5.8 million in May 1979 to 12.1 million in Dec 1982, by 6.3 million, or 108.6 percent. The jump not seasonally adjusted was from 5.4 million in May 1979 to 12.5 million in Jan 1983, by 7.1 million or 131.5 percent. The number of unemployed seasonally adjusted jumped from 6.7 million in Mar 2007 to 15.4 million in Oct 2009, by 8.7 million, or 129.9 percent. The number of unemployed not seasonally adjusted jumped from 6.5 million in Apr 2007 to 16.1 million in Jan 2010, by 9.6 million or 147.7 percent. These are the two episodes with steepest increase in the level of unemployment in Chart I-16.

Chart I-16, US, Unemployed, SA, 1948-2015, Thousands

Source: US Bureau of Labor Statistics

http://www.bls.gov/data/

Chart I-17 provides the rate of unemployment of the US from 1948 to 2015. The peak of the series is 10.8 percent in both Nov and Dec 1982. The second highest rates are 10.0 percent in Oct 2009 and 9.9 percent in both Nov and Dec 2009. The unadjusted rate of unemployment reached 5.1 percent in Apr 2015.

Chart I-17, US, Unemployment Rate, SA, 1948-2015

Source: US Bureau of Labor Statistics

http://www.bls.gov/data/

Chart I-18 provides the number unemployed for 27 weeks and over from 1948 to 2015. The number unemployed for 27 weeks and over jumped from 510,000 in Dec 1978 to 2.885 million in Jun 1983, by 2.4 million, or 465.7 percent. The number of unemployed 27 weeks or over SA jumped from 1.132 million in May 2007 to 6.623 million in Jun 2010, by 5.491 million, or 485.1 percent.

Chart I-18, US, Unemployed for 27 Weeks or More, SA, 1948-2015, Thousands

Source: US Bureau of Labor Statistics

http://www.bls.gov/data/

The employment-population ratio in Chart I-19 is an important indicator of wellbeing in labor markets, measuring the number of people with jobs. The US employment-population ratio fell from 63.5 in Dec 2006 to 58.6 in Jul 2011 and stands at 59.4 NSA in Apr 2015. There is no comparable decline followed by stabilization during a cyclical expansion in Chart I-19.

Chart I-19, US, Employment-Population Ratio, 1948-2015

Source: US Bureau of Labor Statistics

http://www.bls.gov/data/

The number employed part-time for economic reasons in Chart I-20 increased in the recessions and declined during the expansions. In the current cycle, the number employed part-time for economic reasons increased sharply and has not returned to normal levels. Lower growth of economic activity in the expansion after IIIQ2009 failed to reduce the number desiring to work full time but finding only part-time occupations. The lack of full-time jobs is evidently cyclical and not secular.

Chart I-20, US, Part-Time for Economic Reasons, NSA, 1955-2015, Thousands

Source: US Bureau of Labor Statistics

http://www.bls.gov/data/

Characteristics of the four cyclical contractions are provided in Table I-5 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-5, 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-6 shows the mediocre average annual equivalent growth rate of 2.3 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
• 4.8 percent in the first twenty-three quarters of expansion from IQ1983 to IIIQ1988

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, 4.8 percent from IQ1983 to IIIQ1988 and at 7.8 percent from IQ1983 to IVQ1983. GDP grew 2.7 percent in the first four quarters of the expansion from IIIQ2009 to IIQ2010. GDP growth in the four quarters of 2012, the four quarters of 2013, the four quarters of 2014 and IQ2015 accumulated to 7.3 percent. This growth is equivalent to 2.2 percent per year, obtained by dividing GDP in IQ2015 of $16,304.8 billion by GDP in IVQ2011 of $15,190.3 billion and compounding by 4/13: {[($16,304.8/$15,190.3)^4/13 -1]100 = 2.2 percent.

Table I-5, 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 IQ1983 to IIIQ1988	13 15 16 17 18 19 20 21 22 23	19.9 21.6 22.3 23.1 24.5 25.6 27.7 28.4 30.1 30.9	5.7 5.4 5.2 5.0 5.0 4.9 5.0 4.9 4.9 4.8
First Four Quarters IQ1983 to IVQ1983	4	7.8
Average First Four Quarters in Four Expansions*		7.7
IIIQ2009 to IQ2015	23	13.6	2.2
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

A group of charts from the database of the Bureau of Labor Statistics facilitates the comparison of employment in the 1980s and 2000s. The long-term charts and tables from I-5 to I-7 in the discussion above confirm the view that the comparison of the current expansion should be with that in the 1980s because of similar dimensions. Chart I-21 provides the level of employment in the US between 1979 and 1989. Employment surged after the contraction and grew rapidly during the decade.

Chart I-21, US, Employed, Thousands, 1979-1989

Source: US Bureau of Labor Statistics

http://www.bls.gov/data/

Chart I-22 provides the level of employment in the US from 2001 to 2015. There is actually not sufficient job creation in merely absorbing new entrants in the labor force because of those dropping from job searches, worsening the stock of unemployed or underemployed in involuntary part-time jobs. Recovery has been anemic compared with the shallow recession of 2001 that was followed by nearly vertical growth in jobs. The number employed in Apr 2015 was 148.587 million (NSA) or 1.272 million more people with jobs relative to the peak of 147.315 million in Jul 2007 while the civilian noninstitutional population of ages 16 years and over increased from 231.958 million in Jul 2007 to 250.266 million in Apr 2015 or by 18.308 million. The number employed increased 0.9 percent from Jul 2007 to Apr 2015 while the noninstitutional civilian population of ages of 16 years and over, or those available for work, increased 7.9 percent. The ratio of employment to population in Jul 2007 was 63.5 percent (147.315 million employment as percent of population of 231.958 million). The same ratio in Apr 2015 would result in 158.919 million jobs (0.635 multiplied by noninstitutional civilian population of 250.266 million). There are effectively 10.332 million fewer jobs in Apr 2015 than in Jul 2007, or 158.919 million minus 148.587 million. There is actually not sufficient job creation in merely absorbing new entrants in the labor force because of those dropping from job searches, worsening the stock of unemployed or underemployed in involuntary part-time jobs.

Chart I-22, US, Employed, Thousands, 2001-2015

Source: US Bureau of Labor Statistics

http://www.bls.gov/data/

There was a steady upward trend in growth of the civilian labor force between 1979 and 1989 as shown in Chart I-23. There were fluctuations but strong long-term dynamism over an entire decade.

Chart I-23, US, Civilian Labor Force, Thousands, 1979-1989

Source: US Bureau of Labor Statistics

http://www.bls.gov/data/

The civilian labor force in Chart I-24 grew steadily on an upward trend in the 2000s until it contracted together with the economy after 2007. There has not been recovery during the expansion but rather decline and marginal turn of the year 2011 into expansion in 2012 followed by stability and oscillation into 2013-2015.

Chart I-24, US, Civilian Labor Force, Thousands, 2001-2015

Source: US Bureau of Labor Statistics

http://www.bls.gov/data/

The rate of participation of the labor force in population stagnated during the stagflation and conquest of inflation in the late 1970s and early 1980s, as shown in Chart I-25. Recovery was vigorous during the expansion and lasted through the remainder of the decade.

Chart I-25, US, Civilian Labor Force Participation Rate, 1979-1989, %

Source: US Bureau of Labor Statistics

http://www.bls.gov/data/

The rate of participation in the labor force declined after the recession of 2001 followed by stability until 2007, as shown in Chart I-26. The rate of participation in the labor force continued to decline both during the contraction after 2007 and the expansion after 2009 with marginal expansion at the turn of the year into 2012 followed by trend of decline and stability. Sharp decline occurred during the cycle and not secularly.

Chart I-26, US, Civilian Labor Force Participation Rate, 2001-2015, %

Source: US Bureau of Labor Statistics

http://www.bls.gov/data/

Chart I-27 provides the number unemployed during the 1980s. The number unemployed peaked at 12.051 million in Dec 1982 seasonally adjusted and 12.517 in Jan 1983 million not seasonally adjusted, declining to 8.358 million in Dec 1984 seasonally adjusted and 7.978 in Dec 1984 million not seasonally adjusted during the first two years of expansion from the contraction. The number unemployed then fell to 6.667 million in Dec 1989 seasonally adjusted and 6.300 million not seasonally adjusted.

Chart I-27, US, Unemployed Thousands 1979-1989

Source: US Bureau of Labor Statistics

http://www.bls.gov/data/

Chart I-28 provides the number unemployed from 2001 to 2015. Using seasonally adjusted data, the number unemployed rose from 6.727 million in Oct 2006 to 15.352 million in Oct 2009, declining to 13.071 million in Dec 2011 and to 8.688 million in Dec 2014 and 8.549 million in Apr 2015. Using data not seasonally adjusted, the number unemployed rose from 6.272 million in Oct 2006 to 16.147 million in Jan 2010, declining to 11.844 million in Dec 2012, increasing to 13.181 million in Jan 20013 and declining to 9.984 million in Dec 2013. The level of unemployment fell from 10.855 million in Jan 2014 to 8.331 million in Dec 2014. The level of unemployment was 7.966 million in Apr 2015.

Chart I-28, US, Unemployed Thousands 2001-2015

Source: US Bureau of Labor Statistics

http://www.bls.gov/data/

The rate of unemployment peaked at 10.8 percent in both Nov and Dec 1982 seasonally adjusted, as shown in Chart I-29. The rate of unemployment dropped sharply during the expansion after 1984 and continued to decline during the rest of the decade to 5.4 percent in Dec 1989. Using not seasonally adjusted data, the rate of unemployment peaked at 11.4 percent in Jan 1983, declining to 7.0 percent in Dec 1984 and 5.1 percent in Dec 1989.

Chart I-29, US, Unemployment Rate, 1979-1989, %

Source: US Bureau of Labor Statistics

http://www.bls.gov/data/

The rate of unemployment in the US seasonally adjusted jumped from 4.4 percent in May 2007 to 10.0 percent in Oct 2009 and 9.9 percent in both Nov and Dec 2009, as shown in Chart I-30. The rate of unemployment fluctuated at around 9.0 percent in 2011, declining to 7.9 percent in Dec 2012 and 6.7 percent in Dec 2013. The rate of unemployed eased to 5.6 percent in Dec 2014 and 5.4 percent in Apr 2015.

Chart I-30, US, Unemployment Rate, 2001-2015, %

Source: US Bureau of Labor Statistics

http://www.bls.gov/data/

The employment population ratio seasonally adjusted fell from around 60.1 in Dec 1979 to 57.1 in both Feb and Mar 1983, as shown in Chart I-31. The employment population ratio seasonally adjusted rose back to 59.9 in Dec 1984 and reached 63.0 later in the decade in Dec 1989. Using not seasonally adjusted data, the employment population ratio dropped from 60.4 percent in Oct 1979 to 56.1 percent in Jan 1983, increasing to 59.8 in Dec 1984 and to 62.9 percent in Dec 1989.

Chart I-31, US, Employment Population Ratio, 1979-1989, %

Source: US Bureau of Labor Statistics

http://www.bls.gov/data/

The US employment-population ratio seasonally adjusted has fallen from 63.4 in Dec 2006 to 58.6 in Dec 2011, 58.6 in Dec 2012, 58.6 in Dec 2013 and 59.2 in Dec 2014, as shown in Chart I-32. The employment-population ratio reached 59.3 in Apr 2015. The employment population-ratio has stagnated during the expansion. Using not seasonally adjusted data, the employment population ratio fell from 63.6 percent in Jul 2006 to 57.6 percent in Jan 2011, 58.5 percent in Dec 2012, 58.5 percent in Dec 2013 and 59.1 in Dec 2014. The employment population ratio eased to 59.4 in Apr 2015.

Chart I-32, US, Employment Population Ratio, 2001-2015, %

Source: US Bureau of Labor Statistics

http://www.bls.gov/data/

The number unemployed 27 weeks or more rose in Chart I-33 rose from 492,000 NSA in Oct 1979 to 2.978 million in Mar 1983. The level unemployed 27 weeks or more NSA fell to 566,000 in Aug 1989.

Chart I-33, US, Number Unemployed for 27 Weeks or More 1979-1989, SA, Thousands

Source: US Bureau of Labor Statistics

http://www.bls.gov/data/

The number unemployed for 27 weeks or over, seasonally adjusted, increased sharply during the contraction as shown in Chart I-34 from 1.131 million in Nov 2006 to 6.800 million in Apr 2010 seasonally adjusted. The number of unemployed for 27 weeks remained at around 6 million during the expansion compared with somewhat above 1 million before the contraction, falling to 2.525 million in Apr 2015 seasonally adjusted and 2.564 million not seasonally adjusted.

Chart I-34, US, Number Unemployed for 27 Weeks or More, 2001-2015, SA, Thousands

Source: US Bureau of Labor Statistics

http://www.bls.gov/data/

The number of persons working part-time for economic reasons because they cannot find full-time work peaked during the contraction at 6.857 million SA in Oct 1982, as shown in Chart I-35. The number of persons at work part-time for economic reasons fell sharply during the expansion to 5.797 million in Dec 1984 and continued to fall throughout the decade to 4.817 million in Dec 1989 SA and 4.709 million NSA.

Chart I-35, US, Part-Time for Economic Reasons, 1979-1989, Thousands

Source: US Bureau of Labor Statistics

http://www.bls.gov/data/

The number of people working part-time because they cannot find full-time employment, not seasonally adjusted, increased sharply during the contraction from 3.787 million in Apr 2006, not seasonally adjusted, to 9.354 million in Dec 2009, as shown in Chart I-36. The number of people working part-time because of failure to find an alternative occupation stagnated at a very high level during the expansion, declining to 6.356 million not seasonally adjusted in Apr 2015.

Chart I-36, US, Part-Time for Economic Reasons, 2001-2015, Thousands

Source: US Bureau of Labor Statistics

http://www.bls.gov/data/

The number marginally attached to the labor force in Chart I-37 jumped from 1.252 million in Dec 2006 to 2.800 million in Jan 2011, remaining at a high level of 2.540 million in Dec 2011, 2.809 million in Jan 2012 and 2.614 million in Dec 2012. The number marginally attached to the labor force eased to 2.427 million in Dec 2013 and 2.260 million in Dec 2014. The level of marginally attached to the labor force reached 2.115 million in Apr 2015.

Chart I-37, US, Marginally Attached to the Labor Force, 2001-2015

Source: US Bureau of Labor Statistics

http://www.bls.gov/data/

IA4 Job Creation. What is striking about the data in Table I-8 is that the numbers of monthly increases in jobs in 1983 and 1984 are several times higher than in 2010 to 2014. The civilian noninstitutional population grew by 42.3 percent from 174.215 million in 1983 to 247.947 million in 2014 and labor force higher by 39.8 percent, growing from 111.550 million in 1983 to 155.922 million in 2014. Total nonfarm payroll employment seasonally adjusted (SA) increased 223,000 in Apr 2015 and private payroll employment increased 213,000. The average monthly number of nonfarm jobs created from Apr 2013 to Apr 2014 was 206,333 using seasonally adjusted data, while the average number of nonfarm jobs created from Apr 2014 to Apr 2015 was 248,500, or increase by 20.4 percent. The average number of private jobs created in the US from Apr 2013 to Apr 2014 was 208,000, using seasonally adjusted data, while the average from Apr 2014 to Apr 2015 was 243,167, or increase by 16.9 percent. This blog calculates the effective labor force of the US at 165.676 million in Apr 2014 and 163.805 million in Apr 2015 (Table I-4), for growth of 1.871 million at average 155,917 per month. The difference between the average increase of 243,167 new private nonfarm jobs per month in the US from Apr 2014 to Apr 2015 and the 155,917 average monthly increase in the labor force from Apr 2014 to Apr 2015 is 87,250 monthly new jobs net of absorption of new entrants in the labor force. There are 25.559 million in job stress in the US currently. Creation of 87,250 new jobs per month net of absorption of new entrants in the labor force would require 293 months to provide jobs for the unemployed and underemployed (25.559 million divided by 87,250) or 24 years (293 divided by 12). The civilian labor force of the US in Apr 2015 not seasonally adjusted stood at 156.554 million with 7.966 million unemployed or effectively 17.088 million unemployed in this blog’s calculation by inferring those who are not searching because they believe there is no job for them for effective labor force of 165.676 million. Reduction of one million unemployed at the current rate of job creation without adding more unemployment requires 0.96 years (1 million divided by product of 87,250 by 12, which is 1,047,000). Reduction of the rate of unemployment to 5 percent of the labor force would be equivalent to unemployment of only 7.828 million (0.05 times labor force of 156.554 million). New net job creation would be 0.138 million (7.966 million unemployed minus 7.828 million unemployed at rate of 5 percent) that at the current rate would take 0.13 years (0.138 million divided by 1.047). Under the calculation in this blog, there are 17.088 million unemployed by including those who ceased searching because they believe there is no job for them and effective labor force of 165.676 million. Reduction of the rate of unemployment to 5 percent of the labor force would require creating 8.804 million jobs net of labor force growth that at the current rate would take 8.4 years (17.088 million minus 0.05(165.676 million) = 9.639 million divided by 1.047, using LF PART 66.2% and Total UEM in Table I-4). These calculations assume that there are no more recessions, defying United States economic history with periodic contractions of economic activity when unemployment increases sharply. The number employed in Apr 2015 was 148.587 million (NSA) or 1.272 million more people with jobs relative to the peak of 147.315 million in Jul 2007 while the civilian noninstitutional population of ages 16 years and over increased from 231.958 million in Jul 2007 to 250.266 million in Apr 2015 or by 18.308 million. The number employed increased 0.9 percent from Jul 2007 to Apr 2015 while the noninstitutional civilian population of ages of 16 years and over, or those available for work, increased 7.9 percent. The ratio of employment to population in Jul 2007 was 63.5 percent (147.315 million employment as percent of population of 231.958 million). The same ratio in Apr 2015 would result in 158.919 million jobs (0.635 multiplied by noninstitutional civilian population of 250.266 million). There are effectively 10.332 million fewer jobs in Apr 2015 than in Jul 2007, or 158.919 million minus 148.587 million. There is actually not sufficient job creation in merely absorbing new entrants in the labor force because of those dropping from job searches, worsening the stock of unemployed or underemployed in involuntary part-time jobs.

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.”

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). 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 (http://cmpassocregulationblog.blogspot.com/2015/04/dollar-revaluation-recovery-without.html). The proper explanation is not in secular stagnation but in cyclically slow growth. 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 IQ2015 would have accumulated to 23.9 percent. GDP in IQ2015 would be $18,574.8 billion (in constant dollars of 2009) if the US had grown at trend, which is higher by $2,270.0 billion than actual $16,304.8 billion. There are about two trillion dollars of GDP less than at trend, explaining the 25.6 million unemployed or underemployed equivalent to actual unemployment/underemployment of 15.4 percent of the effective labor force (Section I and earlier http://cmpassocregulationblog.blogspot.com/2015/04/volatility-of-valuations-of-financial.html and earlier (http://cmpassocregulationblog.blogspot.com/2015/03/global-competitive-devaluation-rules.html). US GDP in IQ2015 is 12.2 percent lower than at trend. US GDP grew from $14,991.8 billion in IVQ2007 in constant dollars to $16,304.8 billion in IQ2015 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. There is classic research on analyzing deviations of output from trend (see for example Schumpeter 1939, Hicks 1950, Lucas 1975, Sargent and Sims 1977). The long-term trend is growth at average 3.3 percent per year from Mar 1919 to Mar 2015. Growth at 3.3 percent per year would raise the NSA index of manufacturing output from 99.2392 in Dec 2007 to 125.5771 in Mar 2015. The actual index NSA in Mar 2015 is 101.8045, which is 18.9 percent below trend. Manufacturing output grew at average 2.4 percent between Dec 1986 and Dec 2014, raising the index at trend to 117.2305 in Mar 2015. The output of manufacturing at 101.8045 in Mar 2015 is 13.2 percent below trend under this alternative calculation.

Table I-8, US, Monthly Change in Jobs, Number SA

Month	1981	1982	1983	2008	2009	2010	Private
Jan	94	-326	224	15	-796	32	23
Feb	68	-5	-75	-87	-703	-68	-53
Mar	105	-130	172	-79	-824	161	119
Apr	73	-280	276	-213	-684	247	196
May	10	-45	277	-183	-355	518	91
Jun	197	-243	379	-172	-467	-130	126
Jul	112	-342	418	-210	-325	-64	107
Aug	-36	-158	-308	-259	-217	-39	110
Sep	-87	-181	1115	-452	-227	-49	124
Oct	-99	-277	271	-476	-201	248	198
Nov	-209	-123	353	-765	-6	121	131
Dec	-278	-14	356	-696	-283	89	110
			1984			2011	Private
Jan			446			75	77
Feb			481			167	218
Mar			275			206	225
Apr			363			321	330
May			308			103	160
Jun			379			185	186
Jul			313			117	190
Aug			242			128	137
Sep			310			223	287
Oct			286			183	166
Nov			349			146	174
Dec			128			226	246
			1985			2012	Private
Jan			266			380	381
Feb			124			247	249
Mar			346			216	218
Apr			196			87	110
May			274			113	122
Jun			146			35	56
Jul			190			177	154
Aug			193			188	160
Sep			203			144	164
Oct			188			213	240
Nov			209			164	186
Dec			167			293	275
			1986			2013	Private
Jan			125			205	220
Feb			107			314	297
Mar			94			115	139
Apr			187			187	194
May			127			219	225
Jun			-94			127	172
Jul			318			164	162
Aug			114			256	213
Sep			347			150	168
Oct			186			225	235
Nov			186			317	303
Dec			205			109	124
			1987			2014	Private
Jan			172			166	183
Feb			232			188	175
Mar			249			225	223
Apr			338			330	313
May			226			236	238
Jun			172			286	272
Jul			347			249	243
Aug			171			213	209
Sep			228			250	235
Oct			492			221	218
Nov			232			423	414
Dec			294			329	319
			1988			2015	Private
Jan			94			201	202
Feb			453			266	261
Mar			276			85	94
Apr			245			223	213
May			229
Jun			363
Jul			222
Aug			124
Sep			339
Oct			268
Nov			339
Dec			290

Source: US Bureau of Labor Statistics

http://www.bls.gov/

Charts numbered from I-38 to I-41 from the database of the Bureau of Labor Statistics provide a comparison of payroll survey data for the contractions and expansions in the 1980s and after 2007. Chart I-38 provides total nonfarm payroll jobs from 2001 to 2013. The sharp decline in total nonfarm jobs during the contraction after 2007 has been followed by initial stagnation and then inadequate growth in 2012 and 2013-2015 while population growth continued.

Chart I-38, US, Total Nonfarm Payroll Jobs SA 2001-2015

Source: US Bureau of Labor Statistics

http://www.bls.gov/data/

Chart I-39 provides total nonfarm jobs SA from 1979 to 1989. Recovery is strong throughout the decade with the economy growing at trend over the entire economic cycle.

Chart I-39, US, Total Nonfarm Payroll Jobs SA 1979-1989

Source: US Bureau of Labor Statistics

http://www.bls.gov/data/

Most job creation in the US is by the private sector. Chart I-40 shows the sharp destruction of private payroll jobs during the contraction after 2007. There has been growth after 2010 but insufficient to recover higher levels of employment prevailing before the contraction. At current rates, recovery of employment may spread over several years in contrast with past expansions of the business cycle in the US.

Chart I-40, US, Total Private Payroll Jobs SA 2001-2015

Source: US Bureau of Labor Statistics

http://www.bls.gov/data/

In contrast, growth of private payroll jobs in the US recovered vigorously during the expansion in 1983 through 1985, as shown in Chart I-41. Rapid growth of creation of private jobs continued throughout the 1980s.

Chart I-41, US, Total Private Payroll Jobs SA 1979-1989

Source: US Bureau of Labor Statistics

http://www.bls.gov/data/

Types of jobs created, and not only the pace of job creation, may be important. Aspects of growth of payroll jobs from Apr 2014 to Apr 2015, not seasonally adjusted (NSA), are in Table I-9. Total nonfarm employment increased by 3,085,000 (row A, column Change), consisting of growth of total private employment by 3,019,000 (row B, column Change) and increase by 66,000 of government employment (row C, column Change). Monthly average growth of private payroll employment has been 251,583, which is mediocre relative to 24 to 30 million in job stress, while total nonfarm employment has grown on average by only 257,083 per month, which does not significantly reduce job stress with 155,917 new entrants per month in the labor force. These monthly rates of job creation net of the demands of new entrants in the labor force perpetuate unemployment and underemployment. Manufacturing employment increased by 192,000, at the monthly rate of 16,000 while private service providing employment grew by 2,554,000, at the monthly average rate of 212,833. An important feature in Table I-9 is that jobs in professional and business services increased by 687,000 with temporary help services increasing by 159,000. This episode of jobless recovery is characterized by part-time jobs and creation of jobs that are inferior to those that have been lost. Monetary and fiscal stimuli fail to increase consumption in a fractured job market. The segment leisure and hospitality added 453,000 jobs in 12 months. An important characteristic is that the loss of government jobs has stabilized in federal government with increase of 14,000 jobs while states added 23,000 jobs and local government added 29,000 jobs. Local government provides the bulk of government jobs, 14.347 million, while federal government provides 2.742 million and states’ government 5.247 million.

Table I-9, US, Employees in Nonfarm Payrolls Not Seasonally Adjusted, in Thousands

	Apr 2014	Apr 2015	Change
A Total Nonfarm	138,377	141,462	3,085
B Total Private	116,107	119,126	3,019
B1 Goods Producing	18,923	19,388	465
B1a Manufacturing	12,080	12,272	192
B2 Private service providing	97,184	99,738	2,554
B2a Wholesale Trade	5,793	5,890	97
B2b Retail Trade	15,133	15,430	297
B2c Transportation & Warehousing	4,551	4,706	155
B2d Financial Activities	7,908	8,057	149
B2e Professional and Business Services	18,917	19,604	687
B2e1 Temporary help services	2,668	2,827	159
B2f Health Care & Social Assistance	17,949	18,463	514
B2g Leisure & Hospitality	14,527	14,980	453
C Government	22,270	22,336	66
C1 Federal	2,728	2,742	14
C2 State	5,224	5,247	23
C3 Local	14,318	14,347	29

Note: A = B+C, B = B1 + B2, C=C1 + C2 + C3

Source: US Bureau of Labor Statistics

http://www.bls.gov/

Greater detail on the types of jobs created is provided in Table I-10 with data for Mar 2015 and

Apr 2015. Strong seasonal effects are shown by the significant difference between seasonally adjusted (SA) and not-seasonally-adjusted (NSA) data. The purpose of adjusting for seasonality is to isolate nonseasonal effects. The 223,000 SA total nonfarm jobs created in Apr 2015 relative to Mar 2015 actually correspond to increase of 1,178,000 jobs NSA, as shown in row A. Most of this difference in Jan 2015 is due to the necessary benchmark and seasonal adjustments in the beginning of every year. The 213,000 total private payroll jobs SA created in Apr 2015 relative to Mar 2015 actually correspond to increase of 1,130,000 jobs NSA. The analysis of NSA job creation in the prior Table I-9 does show improvement over the 12 months ending in Apr 2015 that is not clouded by seasonal variations but is inadequate number of jobs created. In fact, the 12-month rate of job creation without seasonal adjustment is stronger indication of marginal improvement in the US job market but that is insufficient in even making a dent in about 30 million people unemployed or underemployed. Benchmark and seasonal adjustments affect comparability of data over time.

Table I-10, US, Employees on Nonfarm Payrolls and Selected Industry Detail, Thousands, SA and NSA

	Mar  2015 SA	Apr    2015 SA	∆	Mar   2015 NSA	Apr    2015 NSA	∆
A Total Nonfarm	141,144	141,367	223	140,284	141,462	1178
B Total Private	119,247	119,460	213	117,996	119,126	1130
B1 Goods Producing	19,539	19,570	31	19,139	19,388	249
B1a Constr.	6,338	6,383	45	6,014	6,265	251
B Mfg	12,321	12,322	1	12,259	12,272	13
B2 Private Service Providing	99,708	99,890	182	98,857	99,738	881
B2a Wholesale Trade	5,908	5,904	-4	5,879	5,890	11
B2b Retail Trade	15,580	15,592	12	15,329	15,430	101
B2c Couriers     & Mess.	598	602	4	598	602	4
B2d Health-care & Social Assistance	18,397	18,452	55	18,387	18,463	76
B2De Profess. & Business Services	19,543	19,605	62	19,342	19,604	262
B2De1 Temp Help Services	2,864	2,880	16	2,769	2,827	58
B2f Leisure & Hospit.	15,027	15,044	17	14,636	14,980	344

Notes: ∆: Absolute Change; Constr.: Construction; Mess.: Messengers; Temp: Temporary; Hospit.: Hospitality. SA aggregates do not add because of seasonal adjustment.

Source: US Bureau of Labor Statistics

http://www.bls.gov/

Chart I-42 provides output of durable manufacturing from 1972 to 2015. Output fell sharply during the global recession, recovering at relatively high pace. Output is lower than extrapolation of trend.

Chart I-42, US, Output of Durable Manufacturing, 1972-2015

Source: Board of Governors of the Federal Reserve

http://www.federalreserve.gov/releases/g17/Current/default.htm

Manufacturing jobs not seasonally adjusted increased 192,000 from Apr 2014 to
Apr 2015 or at the average monthly rate of 16,000. There are effects of the weaker economy and international trade together with the yearly adjustment of labor statistics. Industrial production increased 0.1 percent in Feb 2015 and decreased 0.3 percent in Jan 2015 after decreasing 0.2 percent in Dec 2014, with all data seasonally adjusted. The Federal Reserve completed its annual revision of industrial production and capacity utilization on Mar 28, 2014 (http://www.federalreserve.gov/releases/g17/revisions/Current/DefaultRev.htm). The report of the Board of Governors of the Federal Reserve System states (http://www.federalreserve.gov/releases/g17/Current/default.htm):

Industrial production decreased 0.6 percent in Mar 2015 and increased 0.1 percent in Feb 2015 after decreasing 0.4 percent in Jan 2015, with all data seasonally adjusted. The Federal Reserve completed its annual revision of industrial production and capacity utilization on Mar 28, 2014 (http://www.federalreserve.gov/releases/g17/revisions/Current/DefaultRev.htm). The report of the Board of Governors of the Federal Reserve System states (http://www.federalreserve.gov/releases/g17/Current/default.htm):

“Industrial production decreased 0.6 percent in March after increasing 0.1 percent in February. For the first quarter of 2015 as a whole, industrial production declined at an annual rate of 1.0 percent, the first quarterly decrease since the second quarter of 2009. The decline last quarter resulted from a drop in oil and gas well drilling and servicing of more than 60 percent at an annual rate and from a decrease in manufacturing production of 1.2 percent. In March, manufacturing output moved up 0.1 percent for its first monthly gain since November; however, factory output in January is now estimated to have fallen 0.6 percent, about twice the size of the previously reported decline. The index for mining decreased 0.7 percent in March. The output of utilities fell 5.9 percent to largely reverse a similarly sized increase in February, which was related to unseasonably cold temperatures. At 105.2 percent of its 2007 average, total industrial production in March was 2.0 percent above its level of a year earlier. Capacity utilization for the industrial sector decreased 0.6 percentage point in March to 78.4 percent, a rate that is 1.7 percentage points below its long-run (1972–2014) average.” In the six months ending in Mar 2015, United States national industrial production accumulated increase of 0.1 percent at the annual equivalent rate of 0.2 percent, which is lower than growth of 2.0 percent in the 12 months ending in Mar 2015. Excluding growth of 1.1 percent in Nov 2014, growth in the remaining five months from Oct 2014 to Mar 2015 accumulated to minus 1.0 percent or minus 2.4 percent annual equivalent. Industrial production declined in three of the past six months. Industrial production contracted at annual equivalent 3.5 percent in the most recent quarter from Jan 2015 to Mar 2015 and expanded at 4.1 percent in the prior quarter Oct to Dec 2014. Business equipment accumulated growth of 1.5 percent in the six months from Oct 2014 to Mar 2015 at the annual equivalent rate of 3.0 percent, which is lower than growth of 3.2 percent in the 12 months ending in Mar 2015. The Fed analyzes capacity utilization of total industry in its report (http://www.federalreserve.gov/releases/g17/Current/default.htm): “Capacity utilization for the industrial sector decreased 0.6 percentage point in March to 78.4 percent, a rate that is 1.7 percentage points below its long-run (1972–2014) average.” United States industry apparently decelerated to a lower growth rate followed by possible acceleration and oscillating growth in past months.

Manufacturing fell 21.9 from the peak in Jun 2007 to the trough in Apr 2009 and increased by 25.1 percent from the trough in Apr 2009 to Dec 2014. Manufacturing grew 26.5 percent from the trough in Apr 2009 to Mar 2015. Manufacturing output in Mar 2015 is 1.2 percent below the peak in Jun 2007. 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 IQ2015 would have accumulated to 23.9 percent. GDP in IQ2015 would be $18,574.8 billion (in constant dollars of 2009) if the US had grown at trend, which is higher by $2,270.0 billion than actual $16,304.8 billion. There are about two trillion dollars of GDP less than at trend, explaining the 25.6 million unemployed or underemployed equivalent to actual unemployment/underemployment of 15.4 percent of the effective labor force (Section I and earlier http://cmpassocregulationblog.blogspot.com/2015/04/volatility-of-valuations-of-financial.html and earlier (http://cmpassocregulationblog.blogspot.com/2015/03/global-competitive-devaluation-rules.html). US GDP in IQ2015 is 12.2 percent lower than at trend. US GDP grew from $14,991.8 billion in IVQ2007 in constant dollars to $16,304.8 billion in IQ2015 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. There is classic research on analyzing deviations of output from trend (see for example Schumpeter 1939, Hicks 1950, Lucas 1975, Sargent and Sims 1977). The long-term trend is growth at average 3.3 percent per year from Mar 1919 to Mar 2015. Growth at 3.3 percent per year would raise the NSA index of manufacturing output from 99.2392 in Dec 2007 to 125.5771 in Mar 2015. The actual index NSA in Mar 2015 is 101.8045, which is 18.9 percent below trend. Manufacturing output grew at average 2.4 percent between Dec 1986 and Dec 2014, raising the index at trend to 117.2305 in Mar 2015. The output of manufacturing at 101.8045 in Mar 2015 is 13.2 percent below trend under this alternative calculation.

Table I-13 provides national income by industry without capital consumption adjustment (WCCA). “Private industries” or economic activities have share of 87.6 percent in IVQ2014. Most of US national income is in the form of services. In Mar 2015, there were 140.326 million nonfarm jobs NSA in the US, according to estimates of the establishment survey of the Bureau of Labor Statistics (BLS) (http://www.bls.gov/news.release/empsit.nr0.htm Table B-1). Total private jobs of 119.126 million NSA in Apr 2015 accounted for 84.2 percent of total nonfarm jobs of 141.462 million, of which 12.272 million, or 10.3 percent of total private jobs and 8.7 percent of total nonfarm jobs, were in manufacturing. Private service-providing jobs were 99.738 million NSA in Apr 2015, or 70.5 percent of total nonfarm jobs and 83.7 percent of total private-sector jobs. Manufacturing has share of 11.3 percent in US national income in IVQ2014 and durable goods 6.5 percent, as shown in Table I-13. Most income in the US originates in services. Subsidies and similar measures designed to increase manufacturing jobs will not increase economic growth and employment and may actually reduce growth by diverting resources away from currently employment-creating activities because of the drain of taxation.

Table I-13, US, National Income without Capital Consumption Adjustment by Industry, Seasonally Adjusted Annual Rates, Billions of Dollars, % of Total

	SAAR IIIQ2014	% Total	SAAR IVQ2014	% Total
National Income WCCA	15,494.0	100.0	15,575.3	100.0
Domestic Industries	15,264.1	98.5	15,382.8	98.8
Private Industries	13,538.5	87.4	13,649.7	87.6
Agriculture	167.6	1.1	168.7	1.1
Mining	273.9	1.8	266.7	1.7
Utilities	221.8	1.4	212.8	1.4
Construction	681.7	4.4	694.5	4.5
Manufacturing	1743.0	11.2	1759.9	11.3
Durable Goods	1002.2	6.5	1013.6	6.5
Nondurable Goods	740.8	4.8	746.3	4.8
Wholesale Trade	944.4	6.1	954.3	6.1
Retail Trade	1055.1	6.8	1081.1	6.9
Transportation & WH	479.8	3.1	476.6	3.1
Information	574.9	3.7	578.1	3.7
Finance, Insurance, RE	2794.1	18.0	2765.8	17.8
Professional & Business Services	2066.4	13.3	2109.5	13.5
Education, Health Care	1494.6	9.6	1515.6	9.7
Arts, Entertainment	609.4	3.9	627.7	4.0
Other Services	431.9	2.8	438.5	2.8
Government	1725.6	11.1	1733.1	11.1
Rest of the World	229.9	1.5	192.5	1.2

Notes: SSAR: Seasonally-Adjusted Annual Rate; WCCA: Without Capital Consumption Adjustment by Industry; WH: Warehousing; RE, includes rental and leasing: Real Estate; Art, Entertainment includes recreation, accommodation and food services; BS: business services

Source: US Bureau of Economic Analysis

http://www.bea.gov/iTable/index_nipa.cfm

The NBER dates recessions in the US from peaks to troughs as: IQ80 to IIIQ80, IIIQ81 to IV82 and IVQ07 to IIQ09 (http://www.nber.org/cycles/cyclesmain.html). Table I-12 provides total annual level nonfarm employment in the US for the 1980s and the 2000s, which is different from 12-month comparisons. Nonfarm jobs rose by 4.859 million from 1982 to 1984, or 5.4 percent, and continued rapid growth in the rest of the decade. In contrast, nonfarm jobs are down by 7.661 million in 2010 relative to 2007 and fell by 958,000 in 2010 relative to 2009 even after six quarters of GDP growth. Monetary and fiscal stimuli have failed in increasing growth to rates required for mitigating job stress. The initial growth impulse reflects a flatter growth curve in the current expansion. Nonfarm jobs declined from 137.936 million in 2007 to 136.393 million in 2013, by 1.543 million or 1.1 percent. Nonfarm jobs increased from 137.936 million in 2007 to 139.042 million in 2014, by 1.106 million or 0.8 percent. The US noninstitutional population or in condition to work increased from 231.867 million in 2007 to 247.947 million in 2014, by 16.080 million or 6.9 percent. The ratio of nonfarm jobs of 137.936 million in 2007 to the noninstitutional population of 231.867 was 59.5. Nonfarm jobs in 2014 corresponding to the ratio of 59.5 of nonfarm jobs/noninstitutional population would be 147.528 million (0.595x247.947). The difference between actual nonfarm jobs of 139.042 million in 2014 and nonfarm jobs of 147.528 million that are equivalent to 59.5 percent of the noninstitutional population as in 2007 is 8.486 million. The proper explanation for this loss of work opportunities is not in secular stagnation but in cyclically slow growth. 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 IQ2015 would have accumulated to 23.9 percent. GDP in IQ2015 would be $18,574.8 billion (in constant dollars of 2009) if the US had grown at trend, which is higher by $2,270.0 billion than actual $16,304.8 billion. There are about two trillion dollars of GDP less than at trend, explaining the 25.6 million unemployed or underemployed equivalent to actual unemployment/underemployment of 15.4 percent of the effective labor force (Section I and earlier http://cmpassocregulationblog.blogspot.com/2015/04/volatility-of-valuations-of-financial.html and earlier (http://cmpassocregulationblog.blogspot.com/2015/03/global-competitive-devaluation-rules.html). US GDP in IQ2015 is 12.2 percent lower than at trend. US GDP grew from $14,991.8 billion in IVQ2007 in constant dollars to $16,304.8 billion in IQ2015 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. There is classic research on analyzing deviations of output from trend (see for example Schumpeter 1939, Hicks 1950, Lucas 1975, Sargent and Sims 1977). The long-term trend is growth at average 3.3 percent per year from Mar 1919 to Mar 2015. Growth at 3.3 percent per year would raise the NSA index of manufacturing output from 99.2392 in Dec 2007 to 125.5771 in Mar 2015. The actual index NSA in Mar 2015 is 101.8045, which is 18.9 percent below trend. Manufacturing output grew at average 2.4 percent between Dec 1986 and Dec 2014, raising the index at trend to 117.2305 in Mar 2015. The output of manufacturing at 101.8045 in Mar 2015 is 13.2 percent below trend under this alternative calculation.

Table I-12, US, Total Nonfarm Employment in Thousands

Year	Total Nonfarm	Year	Total Nonfarm
1980	90,533	2000	132,019
1981	91,297	2001	132,074
1982	89,689	2002	130,628
1983	90,295	2003	130,318
1984	94,548	2004	131,749
1985	97,532	2005	134,005
1986	99,500	2006	136,398
1987	102,116	2007	137,936
1988	105,378	2008	137,170
1989	108,051	2009	131,233
1990	109,527	2010	130,275
1991	108,427	2011	131,842
1992	108,802	2012	134,104
1993	110,935	2013	136,393
1994	114,398	2014	139,042

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

Chart I-43 provides annual nonfarm jobs in the US not seasonally adjusted from 2000 to 2014. Cyclically slow growth in the expansion since IIIQ2009 has not been sufficient to recover nonfarm jobs. Because of population growth, there are 8.486 million fewer nonfarm jobs in the US in 2014 than in 2007.

Chart I-43, US, Annual Nonfarm Jobs, NSA, Thousands, 2000-2014

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

Chart I-44 provides annual nonfarm jobs in the US not seasonally adjusted from 1980 to 1993. Much more rapid cyclical growth as in other expansions historically allowed steady and rapid growth of nonfarm job opportunities even with similarly dynamic population growth.

Chart I-44, US, Annual Nonfarm Jobs, NSA, Thousands, 1980-1994

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

The highest average yearly percentage of unemployed to the labor force since 1940 was 14.6 percent in 1940 followed by 9.9 percent in 1941, 8.5 percent in 1975, 9.7 percent in 1982 and 9.6 percent in 1983 (ftp://ftp.bls.gov/pub/special.requests/lf/aa2006/pdf/cpsaat1.pdf). The rate of unemployment remained at high levels in the 1930s, rising from 3.2 percent in 1929 to 22.9 percent in 1932 in one estimate and 23.6 percent in another with real wages increasing by 16.4 percent (Margo 1993, 43; see Pelaez and Pelaez, Regulation of Banks and Finance (2009b), 214-5). There are alternative estimates of 17.2 percent or 9.5 percent for 1940 with real wages increasing by 44 percent. Employment declined sharply during the 1930s. The number of hours worked remained in 1939 at 29 percent below the level of 1929 (Cole and Ohanian 1999). Private hours worked fell in 1939 to 25 percent of the level in 1929. The policy of encouraging collusion through the National Industrial Recovery Act (NIRA), to maintain high prices, together with the National Labor Relations Act (NLRA), to maintain high wages, prevented the US economy from recovering employment levels until Roosevelt abandoned these policies toward the end of the 1930s (for review of the literature analyzing the Great Depression see Pelaez and Pelaez, Regulation of Banks and Finance (2009b), 198-217).

The Bureau of Labor Statistics (BLS) makes yearly revisions of its establishment survey (Harris 2011BA):

“With the release of data for January 2011, the Bureau of Labor Statistics (BLS) introduced its annual revision of national estimates of employment, hours, and earnings from the Current Employment Statistics (CES) monthly survey of nonfarm establishments.  Each year, the CES survey realigns its sample-based estimates to incorporate universe counts of employment—a process known as benchmarking.  Comprehensive counts of employment, or benchmarks, are derived primarily from unemployment insurance (UI) tax reports that nearly all employers are required to file with State Workforce Agencies.”

The number of not seasonally adjusted total private jobs in the US in Dec 2010 is 108.464 million, declining to 106.079 million in Jan 2011, or by 2.385 million, because of the adjustment of a different benchmark and not actual job losses. The not seasonally adjusted number of total private jobs in Dec 1984 is 80.250 million, declining to 78.704 million in Jan 1985, or by 1.546 million for the similar adjustment. Table I-13 attempts to measure job losses and gains in the recessions and expansions of 1981-1985 and 2007-2011. The final ten rows provide job creation from May 1983 to May 1984 and from May 2010 to May 2011, that is, at equivalent stages of the recovery from two comparable strong recessions. The row “Change ∆%” for May 1983 to May 1984 shows an increase of total nonfarm jobs by 4.9 percent and of 5.9 percent for total private jobs. The row “Change ∆%” for May 2010 to May 2011 shows an increase of total nonfarm jobs by 0.7 percent and of 1.7 percent for total private jobs. The last two rows of Table 7 provide a calculation of the number of jobs that would have been created from May 2010 to May 2011 if the rate of job creation had been the same as from May 1983 to May 1984. If total nonfarm jobs had grown between May 2010 and May 2011 by 4.9 percent, as between May 1983 and May 1984, 6.409 million jobs would have been created in the past 12 months for a difference of 5.457 million more total nonfarm jobs relative to 0.952 million jobs actually created. If total private jobs had grown between May 2010 and May 2011 by 5.9 percent as between May 1983 and May 1984, 6.337 million private jobs would have been created for a difference of 4.539 million more total private jobs relative to 1.798 million jobs actually created.

Table I-13, US, Total Nonfarm and Total Private Jobs Destroyed and Subsequently Created in Two Recessions IIIQ1981-IVQ1982 and IVQ2007-IIQ2009, Thousands and Percent

	Total Nonfarm Jobs	Total Private Jobs
06/1981 #	92,288	75,969
11/1982 #	89,482	73,260
Change #	-2,806	-2,709
Change ∆%	-3.0	-3.6
12/1982 #	89,383	73,185
05/1984 #	94,471	78,049
Change #	5,088	4,864
Change ∆%	5.7	6.6
11/2007 #	139,090	116,291
05/2009 #	131,626	108,601
Change %	-7,464	-7,690
Change ∆%	-5.4	-6.6
12/2009 #	130,178	107,338
05/2011 #	131,753	108,494
Change #	1,575	1,156
Change ∆%	1.2	1.1
05/1983 #	90,005	73,667
05/1984 #	94,471	78,049
Change #	4,466	4,382
Change ∆%	4.9	5.9
05/2010 #	130,801	107,405
05/2011 #	131,753	109,203
Change #	952	1,798
Change ∆%	0.7	1.7
Change # by ∆% as in 05/1984 to 05/1985	6,409*	6,337**
Difference in Jobs that Would Have Been Created	5,457 = 6,409-952	4,539 = 6,337-1,798

*[(130,801x1.049)-130,801] = 6,409 thousand

**[(107,405)x1.059 – 107,405] = 6,337 thousand

Source: http://www.bls.gov/data/

IB Stagnating Real Wages. The wage bill is the product of average weekly hours times the earnings per hour. Table IB-1 provides the estimates by the Bureau of Labor Statistics (BLS) of earnings per hour seasonally adjusted, increasing from $24.34/hour in Mar 2014 to $24.86/hour in Mar 2015, or by 2.1 percent. There has been disappointment about the pace of wage increases because of rising food and energy costs that inhibit consumption and thus sales and similar concern about growth of consumption that accounts for about 68.4 percent of GDP (Table I-10 at http://cmpassocregulationblog.blogspot.com/2015/05/dollar-devaluation-and-carry-trade.html). Growth of consumption by decreasing savings by means of controlling interest rates in what is called financial repression may not be lasting and sound for personal finances (See Pelaez and Pelaez, Globalization and the State, Vol. II (2008c), 81-6, Pelaez (1975), http://cmpassocregulationblog.blogspot.com/2015/05/dollar-devaluation-and-carry-trade.html and earlier http://cmpassocregulationblog.blogspot.com/2015/04/volatility-of-valuations-of-financial.html and earlier http://cmpassocregulationblog.blogspot.com/2015/03/global-competitive-devaluation-rules.html and earlier http://cmpassocregulationblog.blogspot.com/2015/02/job-creation-and-monetary-policy-twenty.html and earlier http://cmpassocregulationblog.blogspot.com/2014/12/valuations-of-risk-financial-assets.html http://cmpassocregulationblog.blogspot.com/2014/11/valuations-of-risk-financial-assets.html http://cmpassocregulationblog.blogspot.com/2014/11/growth-uncertainties-mediocre-cyclical.html and earlier http://cmpassocregulationblog.blogspot.com/2014/09/geopolitical-and-financial-risks.html and earlier http://cmpassocregulationblog.blogspot.com/2014/08/fluctuating-financial-valuations.html http://cmpassocregulationblog.blogspot.com/2014/06/financial-indecision-mediocre-cyclical.html and earlier http://cmpassocregulationblog.blogspot.com/2014/06/financial-instability-mediocre-cyclical.html and earlier http://cmpassocregulationblog.blogspot.com/2014/03/financial-uncertainty-mediocre-cyclical.html

http://cmpassocregulationblog.blogspot.com/2014/02/mediocre-cyclical-united-states.html and earlier http://cmpassocregulationblog.blogspot.com/2013/12/collapse-of-united-states-dynamism-of.html http://cmpassocregulationblog.blogspot.com/2013/11/global-financial-risk-mediocre-united.html http://cmpassocregulationblog.blogspot.com/2013/09/mediocre-and-decelerating-united-states.html

http://cmpassocregulationblog.blogspot.com/2013/09/increasing-interest-rate-risk.html http://cmpassocregulationblog.blogspot.com/2013/08/risks-of-steepening-yield-curve-and.html http://cmpassocregulationblog.blogspot.com/2013/06/tapering-quantitative-easing-policy-and.html

http://cmpassocregulationblog.blogspot.com/2013/06/mediocre-united-states-economic-growth.html

http://cmpassocregulationblog.blogspot.com/2013/04/mediocre-and-decelerating-united-states.html http://cmpassocregulationblog.blogspot.com/2013/03/mediocre-gdp-growth-at-16-to-20-percent.html http://cmpassocregulationblog.blogspot.com/2012/12/mediocre-and-decelerating-united-states_24.html http://cmpassocregulationblog.blogspot.com/2012/12/mediocre-and-decelerating-united-states.html http://cmpassocregulationblog.blogspot.com/2012/09/historically-sharper-recoveries-from.html http://cmpassocregulationblog.blogspot.com/2012/09/collapse-of-united-states-dynamism-of.html http://cmpassocregulationblog.blogspot.com/2012/07/recovery-without-jobs-stagnating-real.html http://cmpassocregulationblog.blogspot.com/2012/06/mediocre-recovery-without-jobs.html http://cmpassocregulationblog.blogspot.com/2012/04/mediocre-growth-with-high-unemployment.html http://cmpassocregulationblog.blogspot.com/2012/04/mediocre-economic-growth-falling-real.html http://cmpassocregulationblog.blogspot.com/2012/03/mediocre-economic-growth-flattening.html http://cmpassocregulationblog.blogspot.com/2012/01/mediocre-economic-growth-financial.html http://cmpassocregulationblog.blogspot.com/2011/12/slow-growth-falling-real-disposable.html http://cmpassocregulationblog.blogspot.com/2011/11/us-growth-standstill-falling-real.html http://cmpassocregulationblog.blogspot.com/2011/10/slow-growth-driven-by-reducing-savings.html). Average hourly earnings seasonally adjusted increased 0.1 percent from $24.84 in Mar 2015 to $24.87 in Apr 2015. Average private weekly earnings increased $18.29 from $839.73 in Apr 2014 to $858.02 in Apr 2015 or 2.2 percent and increased from $856.98 in Mar 2015 to $858.02 in Apr 2015 or 0.1 percent. The inflation-adjusted wage bill can only be calculated for Mar, which is the most recent month for which there are estimates of the consumer price index. Earnings per hour (not-seasonally-adjusted (NSA)) rose from $24.50 in Mar 2014 to $25.02 in Mar 2015 or by 2.1 percent (http://www.bls.gov/data/; see Table IB-3 below). Data NSA are more suitable for comparison over a year. Average weekly hours NSA were 34.7 in Mar 2014 and 34.7 in Mar 2015 (http://www.bls.gov/data/; see Table IB-2 below). The wage bill increased 2.1 percent in the 12 months ending in Mar 2015:

{[(wage bill in Mar 2015)/(wage bill in Mar 2014)]-1}100 =

{[($25.02x34.7)/($24.50x34.7)]-1]}100

= {[($868.19)/($850.15]-1}100 = 2.1%

CPI inflation was -0.1 percent in the 12 months ending in Mar 2015 (http://www.bls.gov/cpi/) for an inflation-adjusted wage-bill change of 2.2 percent :{[(1.021/0.999)-1]100 = 2.2 %} (see Table IB-5 below for Mar 2015 with minor rounding difference). The wage bill for Apr 2015 before inflation adjustment increased 2.2 percent relative to the wage bill for Apr 2014:

{[(wage bill in Mar 2015)/(wage bill in Mar 2014)]-1}100 =

{[($24.91x34.3)/($24.40x34.4)]-1]}100

= {[$854.41)/$839.36]-1}100 = 1.8%

Average hourly earnings increased 2.1 percent from Apr 2014 to Apr 2015 {[($24.91/$24.40) – 1]100 = 2.1%} while hours worked decreased 0.3 percent {[(34.3/34.4) – 1]100 = -0.3%}. The increase of the wage bill is the product of the increase of hourly earnings of 1.8 percent and decrease of hours worked of 0.3 percent {[(1.021x0.997) -1]100 = 1.8%}.

Energy and food price increases are similar to a “silent tax” that is highly regressive, harming the most those with lowest incomes. There are concerns that the wage bill would deteriorate in purchasing power because of renewed raw materials shocks in the form of increases in prices of commodities such as the 31.1 percent steady increase in the DJ-UBS Commodity Index from Jul 2, 2010 to Sep 2, 2011. The charts of four commodity price indexes by Bloomberg show steady increase since Jul 2, 2010 that was interrupted briefly only in Nov 2010 with the sovereign issues in Europe triggered by Ireland; in Mar 2011 by the earthquake and tsunami in Japan; and in the beginning of May 2011 by the decline in oil prices and sovereign risk difficulties in Europe (http://www.bloomberg.com/markets/commodities/futures/). Renewed risk aversion because of the sovereign risks in Europe had reduced the rate of increase of the DJ UBS commodity index to 10.2 percent on May 2, 2014, relative to Jul 2, 2010 (see Table VI-4) but there has been a shift in investor preferences into equities. Inflation has been rising in waves with carry trades driven by zero interest rates to commodity futures during periods of risk appetite with interruptions during risk aversion (http://cmpassocregulationblog.blogspot.com/2015/04/global-portfolio-reallocations-squeeze.html). Inflation-adjusted wages fall sharply during carry trades from zero interest rates to long positions in commodity futures during periods of risk appetite.

Table IB-1, US, Earnings per Hour and Average Weekly Hours SA

Earnings per Hour	Apr 2014	Feb 2015	Mar 2015	Apr 2015
Total Private	$24.34	$24.78	$24.84	$24.87
Goods Producing	$25.57	$25.92	$26.05	$26.08
Service Providing	$24.05	$24.51	$24.56	$24.58
Average Weekly Earnings
Total Private	$839.73	$857.39	$856.98	$858.02
Goods Producing	$1,035.59	$1,052.35	$1,052.42	$1,051.02
Service Providing	$800.87	$818.63	$820.30	$818.51
Average Weekly Hours
Total Private	34.5	34.6	34.5	34.5
Goods Producing	40.5	40.6	40.4	40.3
Service Providing	33.3	33.4	33.4	33.3

Source: US Bureau of Labor Statistics

http://www.bls.gov/

Average weekly hours in Table IB-2 fell from 34.9 in Dec 2007 at the beginning of the contraction to 33.8 in Jun 2009, which was the last month of the contraction. Average weekly hours rose to 34.4 in Dec 2011 and oscillated to 34.9 in Dec 2012 and 34.7 in Dec 2013. Average weekly hours of all employees decreased to 34.6 in Dec 2014 and 34.3 in Apr 2015.

Year	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec	Annual
2006			34.2	34.6	34.3	34.6	34.9	34.6	34.5	34.9	34.4	34.6
2007	34.1	34.1	34.3	34.7	34.4	34.7	34.9	34.7	35.0	34.5	34.5	34.9	34.6
2008	34.1	34.2	34.7	34.4	34.4	34.9	34.5	34.6	34.4	34.4	34.6	34.1	34.4
2009	33.8	34.2	33.9	33.6	33.7	33.8	33.8	34.3	33.7	33.8	34.2	33.9	33.9
2010	33.7	33.6	33.8	34.0	34.4	34.1	34.2	34.7	34.1	34.3	34.2	34.2	34.1
2011	34.2	34.0	34.1	34.2	34.6	34.4	34.4	34.4	34.4	34.8	34.3	34.4	34.4
2012	34.5	34.2	34.2	34.6	34.2	34.4	34.8	34.5	34.9	34.3	34.3	34.9	34.5
2013	34.0	34.2	34.3	34.3	34.3	34.9	34.3	34.5	34.9	34.4	34.4	34.7	34.4
2014	34.0	34.4	34.7	34.4	34.4	34.9	34.5	34.6	34.5	34.5	34.9	34.6	34.5
2015	34.2	34.6	34.7	34.3

Table IB-2, US, Average Weekly Hours of All Employees, NSA 2006-2015

Source: US Bureau of Labor Statistics

http://www.bls.gov/

Chart IB-1 provides average weekly hours monthly from Mar 2006 to May 2014. Average weekly hours remained relatively stable in the period before the contraction and fell sharply during the contraction as business could not support lower production with the same labor input. Average weekly hours rose rapidly during the expansion; stabilized at a level below that prevailing before the contraction; and are around the level before the contraction.

Chart IB-1, US, Average Weekly Hours of All Employees, SA 2006-2015

Source: US Bureau of Labor Statistics

http://www.bls.gov/data/

Calculations of inflation-adjusted average hourly earnings using BLS data are in Table IB-3. The final column of Table IB-3 (“12-Month Real ∆%”) provides inflation-adjusted average hourly earnings of all employees in the US. Average hourly earnings rose above inflation throughout the first nine months of 2007 just before the global recession that began in the final quarter of 2007 when average hourly earnings began to lose to inflation. In contrast, average hourly earnings of all US workers have risen less than inflation in four months in 2010 and in all but the first month in 2011 and the loss accelerated at 1.8 percent in Sep 2011, declining to a real loss of 1.1 percent in Feb 2012 and 0.6 percent in Mar 2012. There was a gain of 0.5 percent in Apr 2012 in inflation-adjusted average hourly earnings but another fall of 0.6 percent in May 2012 followed by increases of 0.3 percent in Jun and 1.0 percent in Jul 2012. Real hourly earnings stagnated in the 12 months ending in Aug 2012 with increase of only 0.1 percent, and increased 0.7 percent in the 12 months ending in Sep 2012. Real hourly earnings fell 1.3 percent in Oct 2012 and gained 1.0 percent in Dec 2012 but declined 0.3 percent in Jan 2013 and stagnated at change of 0.1 percent in Feb 2013. Real hourly earnings increased 0.4 percent in the 12 months ending in Mar 2013 and 0.2 percent in Apr 2013, increasing 0.6 percent in May 2013. In Jun 2013, real hourly earnings increased 1.0 percent relative to Jun 2012. Real hourly earnings fell 0.6 percent in the 12 months ending in Jul 2013 and increased 0.8 percent in the 12 months ending in Aug 2013. Real hourly earnings increased 1.2 percent in the 12 months ending in Oct 2013 and 1.0 percent in Nov 2013. Real hourly earnings increased 0.4 percent in the 12 months ending in Dec 2013. Real hourly earnings increased 0.4 percent in the 12 months ending in Jan 2014 and 1.7 percent in the 12 months ending in Feb 2014. Real hourly earnings increased 1.3 percent in the 12 months ending in Mar 2014. Real hourly earnings changed 0.0 percent in the 12 months ending in Apr 2014. Real hourly earnings stagnated at 0.0 percent in the 12 months ending in May 2014. Real hourly earnings fell 0.1 percent in the 12 months ending in Jun 2014. Real hourly earnings increased 0.1 percent in the 12 months ending in Jul 2014 and increased 0.5 percent in the 12 months ending in Aug 2014. Real hourly earnings fell 0.3 percent in the 12 months ending in Sep 2014 and increased 0.3 percent in the 12 months ending in Oct 2014. Real hourly earnings increased 1.5 percent in the 12 months ending in Nov 2014. Real hourly earnings increased 0.4 percent in the 12 months ending in Dec 2014 and increased 2.3 percent in the 12 months ending in Jan 2015. Real hourly earnings increased 2.0 percent in the 12 months ending in Feb 2015 and 2.2 percent in the 12 months ending in Mar 2015. Real hourly earnings are oscillating in part because of world inflation waves caused by carry trades from zero interest rates to commodity futures (http://cmpassocregulationblog.blogspot.com/2015/04/global-portfolio-reallocations-squeeze.html) and in part because of the collapse of hiring (http://cmpassocregulationblog.blogspot.com/2015/04/dollar-revaluation-recovery-without.html) originating in weak economic growth (http://cmpassocregulationblog.blogspot.com/2015/05/dollar-devaluation-and-carry-trade.html).

Table IB-3, US, Average Hourly Earnings Nominal and Inflation Adjusted, Dollars and % NSA

	AHE ALL	12 Month- Nominal ∆%	∆% 12 Month CPI	12-Month Real ∆%
2007
Jan*	$20.69*	4.2*	2.1	2.1*
Feb*	$20.77*	4.1*	2.4	1.7*
Mar	$20.80	3.6	2.8	0.8
Apr	$21.03	3.3	2.6	0.7
May	$20.82	3.8	2.7	1.1
Jun	$20.81	3.8	2.7	1.1
Jul	$20.97	3.4	2.4	1.0
Aug	$20.83	3.5	2.0	1.5
Sep	$21.17	4.0	2.8	1.2
Oct	$21.05	2.6	3.5	-0.9
Nov	$21.12	3.3	4.3	-1.0
Dec	$21.35	3.6	4.1	-0.5
2010
Jan	$22.53	2.0	2.6	-0.6
Feb	$22.59	1.4	2.1	-0.7
Mar	$22.49	1.1	2.3	-1.2
Apr	$22.54	1.8	2.2	-0.4
May	$22.61	2.5	2.0	0.5
Jun	$22.35	1.7	1.1	0.6
Jul	$22.42	1.8	1.2	0.6
Aug	$22.55	1.7	1.1	0.6
Sep	$22.61	1.8	1.1	0.7
Oct	$22.70	1.9	1.2	0.7
Nov	$22.70	1.1	1.1	0.0
Dec	$22.77	1.7	1.5	0.2
2011
Jan	$23.17	2.8	1.6	1.2
Feb	$23.00	1.8	2.1	-0.3
Mar	$22.91	1.9	2.7	-0.8
Apr	$22.97	1.9	3.2	-1.3
May	$23.07	2.0	3.6	-1.5
Jun	$22.82	2.1	3.6	-1.4
Jul	$22.95	2.4	3.6	-1.2
Aug	$22.86	1.4	3.8	-2.3
Sep	$23.06	2.0	3.9	-1.8
Oct	$23.31	2.7	3.5	-0.8
Nov	$23.16	2.0	3.4	-1.4
Dec	$23.22	2.0	3.0	-1.0
2012
Jan	$23.57	1.7	2.9	-1.2
Feb	$23.41	1.8	2.9	-1.1
Mar	$23.40	2.1	2.7	-0.6
Apr	$23.62	2.8	2.3	0.5
May	$23.33	1.1	1.7	-0.6
Jun	$23.28	2.0	1.7	0.3
Jul	$23.49	2.4	1.4	1.0
Aug	$23.27	1.8	1.7	0.1
Sep	$23.68	2.7	2.0	0.7
Oct	$23.52	0.9	2.2	-1.3
Nov	$23.59	1.9	1.8	0.1
Dec	$23.85	2.7	1.7	1.0
2013
Jan	$23.88	1.3	1.6	-0.3
Feb	$23.91	2.1	2.0	0.1
Mar	$23.84	1.9	1.5	0.4
Apr	$23.92	1.3	1.1	0.2
May	$23.80	2.0	1.4	0.6
Jun	$23.93	2.8	1.8	1.0
Jul	$23.81	1.4	2.0	-0.6
Aug	$23.80	2.3	1.5	0.8
Sep	$24.17	2.1	1.2	0.9
Oct	$24.04	2.2	1.0	1.2
Nov	$24.11	2.2	1.2	1.0
Dec	$24.30	1.9	1.5	0.4
2014
Jan	$24.35	2.0	1.6	0.4
Feb	$24.58	2.8	1.1	1.7
Mar	$24.50	2.8	1.5	1.3
Apr	$24.40	2.0	2.0	0.0
May	$24.31	2.1	2.1	0.0
Jun	$24.42	2.0	2.1	-0.1
Jul	$24.31	2.1	2.0	0.1
Aug	$24.33	2.2	1.7	0.5
Sep	$24.50	1.4	1.7	-0.3
Oct	$24.53	2.0	1.7	0.3
Nov	$24.79	2.8	1.3	1.5
Dec	$24.60	1.2	0.8	0.4
2015
Jan	$24.89	2.2	-0.1	2.3
Feb	$25.06	2.0	0.0	2.0
Mar	$25.02	2.1	-0.1	2.2
Apr	$24.91	2.1

Note: AHE ALL: average hourly earnings of all employees; CPI: consumer price index; Real: adjusted by CPI inflation; NA: not available

*AHE of production and nonsupervisory employees because of unavailability of data for all employees for Jan-Feb 2006

Source: US Bureau of Labor Statistics

http://www.bls.gov/

Calculations of inflation-adjusted average hourly earnings by the BLS are in Table IB-4. Average hourly earnings rose above inflation throughout the first nine months of 2007 just before the global recession that began in the final quarter of 2007 when average hourly earnings began to lose to inflation. In contrast, average hourly earnings of all US workers have risen less than inflation in five months in 2010 and in all but the first month in 2011 and the loss accelerated at 1.8 percent in Sep 2011, declining to a real loss of 1.1 percent in Feb 2012 and 0.5 percent in Mar 2012. There was a gain of 0.6 percent in Apr 2012 in inflation-adjusted average hourly earnings but another fall of 0.6 percent in May 2012 followed by increases of 0.3 percent in Jun and 0.9 percent in Jul 2012. Real hourly earnings stagnated in the 12 months ending in Aug 2012 with increase of only 0.1 percent, and increased 0.7 percent in the 12 months ending in Sep 2012. Real hourly earnings fell 1.2 percent in Oct 2012 and gained 1.0 percent in Dec 2012 but declined 0.3 percent in Jan 2013 and stagnated at change of 0.2 percent in Feb 2013. Real hourly earnings increased 0.4 percent in the 12 months ending in Mar 2013 and 0.2 percent in Apr 2013, increasing 0.7 percent in May 2013. In Jun 2013, real hourly earnings increased 1.1 percent relative to Jun 2012. Real hourly earnings fell 0.6 percent in the 12 months ending in Jul 2013 and increased 0.8 percent in the 12 months ending in Aug 2013. Real hourly earnings increased 1.2 percent in the 12 months ending in Oct 2013 and 0.9 percent in Nov 2013. Real hourly earnings increased 0.4 percent in the 12 months ending in Dec 2013. Real hourly earnings increased 0.4 percent in the 12 months ending in Jan 2014 and 1.7 percent in the 12 months ending in Feb 2014. Real hourly earnings increased 1.3 percent in the 12 months ending in Mar 2014. Real hourly changed 0.0 percent in the 12 months ending in Apr 2014. Real hourly changed 0.0 percent in the 12 months ending in May 2014. Real hourly earnings changed 0.0 percent in the 12 months ending in Jun 2014. Real hourly earnings increased 0.1 percent in the 12 months ending in Jul 2014 and increased 0.5 percent in the 12 months ending in Aug 2014. Real hourly earnings fell 0.3 percent in the 12 months ending in Sep 2014 and increased 0.4 percent in the 12 months ending in Oct 2014. Real hourly earnings increased 1.5 percent in the 12 months ending in Nov 2014 and 0.5 percent in the 12 months ending in Dec 2014. Real hourly earnings increased 2.3 percent in the 12 months ending in Jan 2015 and increased 2.0 percent in the 12 months ending in Feb 2014. Real hourly earnings increased 2.2 percent in the 12 months ending in Mar 2015. Real hourly earnings are oscillating in part because of world inflation waves caused by carry trades from zero interest rates to commodity futures (http://cmpassocregulationblog.blogspot.com/2015/04/global-portfolio-reallocations-squeeze.html) and in part because of the collapse of hiring (http://cmpassocregulationblog.blogspot.com/2015/04/dollar-revaluation-recovery-without.html) originating in weak economic growth (http://cmpassocregulationblog.blogspot.com/2015/05/dollar-devaluation-and-carry-trade.html).

Table IB-4, US, Average Hourly Earnings of All Employees NSA in Constant Dollars of 1982-1984

Year	Jan	Feb	Mar	Jul	Aug	Sep	Oct	Nov	Dec
2006			10.05	9.97	9.87	10.03	10.16	10.14	10.21
2007	10.22	10.21	10.13	10.07	10.02	10.15	10.07	10.05	10.16
2008	10.11	10.11	10.10	9.76	9.82	9.93	10.05	10.36	10.46
2009	10.46	10.50	10.46	10.23	10.28	10.29	10.31	10.38	10.37
2010	10.40	10.42	10.33	10.28	10.33	10.35	10.38	10.37	10.39
2011	10.52	10.39	10.25	10.16	10.09	10.16	10.29	10.24	10.29
2012	10.40	10.28	10.20	10.25	10.10	10.23	10.17	10.25	10.39
∆%12M	-1.1	-1.1	-0.5	0.9	0.1	0.7	-1.2	0.1	1.0
2013	10.37	10.30	10.24	10.19	10.18	10.32	10.29	10.34	10.43
∆%12M	-0.3	0.2	0.4	-0.6	0.8	0.9	1.2	0.9	0.4
2014	10.41	10.47	10.37	10.20	10.23	10.29	10.33	10.50	10.48
∆%12M	0.4	1.7	1.3	0.1	0.5	-0.3	0.4	1.5	0.5
2015	10.65	10.68	10.60
∆%12M	2.3	2.0	2.2

Source: US Bureau of Labor Statistics

http://www.bls.gov/

Chart IB-2 of the US Bureau of Labor Statistics plots average hourly earnings of all US employees in constant 1982-1984 dollars with evident decline from annual earnings of $10.34 in 2009 and $10.35 in 2010 to $10.24 in 2011 and $10.24 again in 2012 or loss of 1.1 percent (data in http://www.bls.gov/data/). Annual real hourly earnings increased 0.5 percent in 2013 relative to 2012 and increased 0.5 percent in 2014 relative to 2013. The economic welfare or wellbeing of United States workers deteriorated in a recovery without hiring (http://cmpassocregulationblog.blogspot.com/2015/04/dollar-revaluation-recovery-without.html), stagnating/declining real wages and 25.6 million unemployed or underemployed (Section I and earlier http://cmpassocregulationblog.blogspot.com/2015/04/volatility-of-valuations-of-financial.html) because of mediocre economic growth (http://cmpassocregulationblog.blogspot.com/2015/05/dollar-devaluation-and-carry-trade.html).

Chart IB-2, US, Average Hourly Earnings of All Employees in Constant Dollars of 1982-1984, SA 2006-2015

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

Chart IB-3 provides 12-month percentage changes of average hourly earnings of all employees in constant dollars of 1982-1984, that is, adjusted for inflation. There was sharp contraction of inflation-adjusted average hourly earnings of US employees during parts of 2007 and 2008. Rates of change in 12 months became positive in parts of 2009 and 2010 but then became negative again in 2011 and into 2012 with temporary increase in Apr 2012 that was reversed in May with another gain in Jun and Jul 2012 followed by stagnation in Aug 2012. There was marginal gain in Sep 2012 with sharp decline in Oct 2012, stagnation in Nov 2012, increase in Dec 2012 and renewed decrease in Jan 2013 with near stagnation in Feb 2013 followed by mild increase in Mar-Apr 2013. Hourly earnings adjusted for inflation increased in Jun 2013 and fell in Jul 2013, increasing in Aug-Dec 2013 and Jan-Mar 2014. Average hourly earnings stagnated in Apr-May 2014 and rebounded mildly in Jul 2014, increasing in Aug 2014 and decreasing in Sep 2014. Average hourly earnings adjusted for inflation increased in Oct-Dec 2014 and Jan-Feb 2015, decreasing in Mar 2015.

Chart IB-3, Average Hourly Earnings of All Employees NSA 12-Month Percent Change, 1982-1984 Dollars, NSA 2007-2015

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

Average weekly earnings of all US employees in the US in constant dollars of 1982-1984 from the dataset of the US Bureau of Labor Statistics (BLS) are provided in Table IB-5. Average weekly earnings fell 3.2 percent after adjusting for inflation in the 12 months ending in Aug 2011, decreased 0.9 percent in the 12 months ending in Sep 2011 and increased 0.6 percent in the 12 months ending in Oct 2011. Average weekly earnings fell 1.0 percent in the 12 months ending in Nov 2011 and 0.4 percent in the 12 months ending in Dec 2011. Average weekly earnings declined 0.3 percent in the 12 months ending in Jan 2012 and 0.5 percent in the 12 months ending in Feb 2012. Average weekly earnings in constant dollars were virtually flat in Mar 2012 relative to Mar 2011, decreasing 0.2 percent. Average weekly earnings in constant dollars increased 1.7 percent in Apr 2012 relative to Apr 2011 but fell 1.7 percent in May 2012 relative to May 2011, increasing 0.3 percent in the 12 months ending in Jun 2012 and 2.1 percent in the 12 months ending in Jul 2012. Real weekly earnings increased 0.4 percent in the 12 months ending in Aug 2012 and 2.1 percent in the 12 months ending in Sep 2012. Real weekly earnings fell 2.7 percent in the 12 months ending in Oct 2012 and increased 0.1 percent in the 12 months ending in Nov 2012 and 2.4 percent in the 12 months ending in Dec 2012. Real weekly earnings fell 1.7 percent in the 12 months ending in Jan 2013 and virtually stagnated with gain of 0.2 percent in the 12 months ending in Feb 2013, increasing 0.7 percent in the 12 months ending in Mar 2013. Real weekly earnings fell 0.7 percent in the 12 months ending in Apr 2013 and increased 0.9 percent in the 12 months ending in May 2013. Average weekly earnings increased 2.5 percent in the 12 months ending in Jun 2013 and fell 2.0 percent in the 12 months ending in Jul 2013. Real weekly earnings increased 0.7 percent in the 12 months ending in Aug 2013, 0.9 percent in the 12 months ending in Sep 2013 and 1.5 percent in the 12 months ending in Oct 2013. Average weekly earnings increased 1.2 percent in the 12 months ending in Nov 2013 and fell 0.2 percent in the 12 months ending in Dec 2013. Average weekly earnings increased 0.4 percent in the 12 months ending in Jan 2014 and 2.3 percent in the 12 months ending in Feb 2014. Average weekly earnings increased 2.4 percent in the 12 months ending in Mar 2014 and 0.3 percent in the 12 months ending in Apr 2014. Average weekly earnings in constant dollars increased 0.3 percent in the 12 months ending in May 2014 and changed 0.0 percent in the 12 months ending in Jun 2014. Real average weekly earnings increased 0.7 percent in the 12 months ending in Jul 2014 and 0.8 percent in the 12 months ending in Aug 2014. Real weekly earnings decreased 1.4 percent in the 12 months ending in Sep 2014 and increased 0.7 percent in the 12 months ending in Oct 2014. Average weekly earnings increased 3.0 percent in the 12 months ending in Nov 2014 and increased 0.2 percent in the 12 months ending in Dec 2014. Average weekly earnings increased 2.9 percent in the 12 months ending in Jan 2015 and increased 2.6 percent in the 12 months ending in Feb 2015. Average weekly earnings adjusted for inflation increased 2.2 percent in the 12 months ending in Mar 2015. Table I-5 confirms the trend of deterioration of purchasing power of average weekly earnings in 2011 and into 2013 with oscillations according to carry trades causing world inflation waves (http://cmpassocregulationblog.blogspot.com/2015/04/global-portfolio-reallocations-squeeze.html). On an annual basis, average weekly earnings in constant 1982-1984 dollars increased from $349.34 in 2007 to $354.19 in 2013, by 1.4 percent or at the average rate of 0.2 percent per year (data in http://www.bls.gov/data/). Annual average weekly earnings in constant dollars of $353.11 in 2010 were virtually unchanged at $353.00 in 2012. Annual average weekly earnings increased from $349.34 in 2007 to $356.96 in 2014 or by 2.2 at the average rate of 0.3 percent. Those who still work bring back home a paycheck that buys fewer high-quality goods than a year earlier. The fractured US job market does not provide an opportunity for advancement as in past booms following recessions because of poor job creation with 25.6 million unemployed or underemployed (Section I and earlier http://cmpassocregulationblog.blogspot.com/2015/04/volatility-of-valuations-of-financial.html) in a recovery without hiring (http://cmpassocregulationblog.blogspot.com/2015/04/dollar-revaluation-recovery-without.html) because of mediocre economic growth (http://cmpassocregulationblog.blogspot.com/2015/05/dollar-devaluation-and-carry-trade.html).

Table IB-5, US, Average Weekly Earnings of All Employees in Constant Dollars of 1982-1984, NSA 2007-2015

Year	Jan	Feb	Mar	Oct	Nov	Dec
2006			343.54	354.71	348.95	353.20
2007	348.55	348.04	347.42	347.58	346.68	354.76
2008	344.58	345.89	350.37	345.63	358.50	356.85
2009	353.62	358.93	354.45	348.35	355.07	351.48
2010	350.39	350.20	349.29	356.00	354.81	355.29
2011	359.82	353.35	349.60	358.27	351.14	353.95
2012	358.75	351.67	348.87	348.76	351.46	362.53
∆%12M	-0.3	-0.5	-0.2	-2.7	0.1	2.4
2013	352.58	352.21	351.29	354.10	355.85	361.82
∆%12M	-1.7	0.2	0.7	1.5	1.2	-0.2
2014	353.93	360.14	359.79	356.43	366.36	362.49
∆%12M	0.4	2.3	2.4	0.7	3.0	0.2
2015	364.23	369.41	367.69
∆%12M	2.9	2.6	2.2

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

Chart IB-4 provides average weekly earnings of all employees in constant dollars of 1982-1984. The same pattern emerges of sharp decline during the contraction, followed by recovery in the expansion and continuing fall with oscillations caused by carry trades from zero interest rates into commodity futures from 2010 to 2011 and into 2012-2015. The increase in the final segment is mostly because of collapse of commodity prices in reversals of carry trade exposures.

Chart IB-4, US, Average Weekly Earnings of All Employees in Constant Dollars of 1982-1984, SA 2006-2015

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

Chart IB-5 provides 12-month percentage changes of average weekly earnings of all employees in the US in constant dollars of 1982-1984. There is the same pattern of contraction during the global recession in 2008 and then again trend of deterioration in the recovery without hiring and inflation waves. (http://cmpassocregulationblog.blogspot.com/2015/04/global-portfolio-reallocations-squeeze.html http://cmpassocregulationblog.blogspot.com/2015/03/dollar-revaluation-and-financial-risk.html http://cmpassocregulationblog.blogspot.com/2015/03/irrational-exuberance-mediocre-cyclical.html http://cmpassocregulationblog.blogspot.com/2015/01/competitive-currency-conflicts-world.html http://cmpassocregulationblog.blogspot.com/2014/12/patience-on-interest-rate-increases.html http://cmpassocregulationblog.blogspot.com/2014/11/squeeze-of-economic-activity-by-carry.html http://cmpassocregulationblog.blogspot.com/2014/10/financial-oscillations-world-inflation.html http://cmpassocregulationblog.blogspot.com/2014/09/world-inflation-waves-squeeze-of.html http://cmpassocregulationblog.blogspot.com/2014/08/monetary-policy-world-inflation-waves.html http://cmpassocregulationblog.blogspot.com/2014/07/world-inflation-waves-united-states.html http://cmpassocregulationblog.blogspot.com/2014/06/valuation-risks-world-inflation-waves.html http://cmpassocregulationblog.blogspot.com/2014/05/world-inflation-waves-squeeze-of.html http://cmpassocregulationblog.blogspot.com/2014/04/imf-view-world-inflation-waves-squeeze.html http://cmpassocregulationblog.blogspot.com/2014/03/interest-rate-risks-world-inflation.html http://cmpassocregulationblog.blogspot.com/2014/01/world-inflation-waves-interest-rate.html http://cmpassocregulationblog.blogspot.com/2013/12/tapering-quantitative-easing-mediocre.html

http://cmpassocregulationblog.blogspot.com/2013/11/risks-of-zero-interest-rates-world.html http://cmpassocregulationblog.blogspot.com/2013/10/world-inflation-waves-regional-economic.html http://cmpassocregulationblog.blogspot.com/2013/08/duration-dumping-and-peaking-valuations.html http://cmpassocregulationblog.blogspot.com/2013/07/tapering-quantitative-easing-policy-and.html

http://cmpassocregulationblog.blogspot.com/2013/06/paring-quantitative-easing-policy-and.html http://cmpassocregulationblog.blogspot.com/2013/05/word-inflation-waves-squeeze-of.html http://cmpassocregulationblog.blogspot.com/2013/04/world-inflation-waves-squeeze-of.html http://cmpassocregulationblog.blogspot.com/2013/04/recovery-without-hiring-ten-million.html http://cmpassocregulationblog.blogspot.com/2013/04/mediocre-and-decelerating-united-states.html http://cmpassocregulationblog.blogspot.com/2013/02/world-inflation-waves-united-states.html http://cmpassocregulationblog.blogspot.com/2012/12/recovery-without-hiring-forecast-growth.html http://cmpassocregulationblog.blogspot.com/2012/11/united-states-unsustainable-fiscal.html http://cmpassocregulationblog.blogspot.com/2012/09/recovery-without-hiring-world-inflation.html http://cmpassocregulationblog.blogspot.com/2012_09_01_archive.html http://cmpassocregulationblog.blogspot.com/2012/07/world-inflation-waves-financial.html http://cmpassocregulationblog.blogspot.com/2012/06/destruction-of-three-trillion-dollars.html http://cmpassocregulationblog.blogspot.com/2012/05/world-inflation-waves-monetary-policy.html http://cmpassocregulationblog.blogspot.com/2012/06/recovery-without-hiring-continuance-of.html http://cmpassocregulationblog.blogspot.com/2012/04/fractured-labor-market-with-hiring.html http://cmpassocregulationblog.blogspot.com/2012/03/global-financial-and-economic-risk.html http://cmpassocregulationblog.blogspot.com/2012/02/world-inflation-waves-united-states.html http://cmpassocregulationblog.blogspot.com/2012/01/world-inflation-waves-united-states.html http://cmpassocregulationblog.blogspot.com/2012/01/recovery-without-hiring-united-states.html

http://cmpassocregulationblog.blogspot.com/2012/09/recovery-without-hiring-world-inflation.html http://cmpassocregulationblog.blogspot.com/2012_09_01_archive.html http://cmpassocregulationblog.blogspot.com/2012/07/world-inflation-waves-financial.html http://cmpassocregulationblog.blogspot.com/2012/05/world-inflation-waves-monetary-policy.html http://cmpassocregulationblog.blogspot.com/2012/06/recovery-without-hiring-continuance-of.html http://cmpassocregulationblog.blogspot.com/2012/04/fractured-labor-market-with-hiring.html http://cmpassocregulationblog.blogspot.com/2012/03/global-financial-and-economic-risk.html http://cmpassocregulationblog.blogspot.com/2012/02/world-inflation-waves-united-states.html http://cmpassocregulationblog.blogspot.com/2012/01/world-inflation-waves-united-states.html http://cmpassocregulationblog.blogspot.com/2012/01/recovery-without-hiring-united-states.html).

Chart IB-5, US, Average Weekly Earnings of All Employees NSA in Constant Dollars of 1982-1984 12-Month Percent Change, NSA 2007-2015

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

© Carlos M. Pelaez, 2009, 2010, 2011, 2012, 2013, 2014, 2015.