Sunday, October 6, 2019

Volatility of Valuations of Risk Financial Assets, Global Manufacturing Stress, Nineteen Million Unemployed or Underemployed in the Lost Economic Cycle of the Global Recession with Economic Growth Underperforming Below Trend Worldwide, Job Creation, Cyclically Stagnating Real Wages, Cyclically Stagnating Real Disposable Income Per Capita, Financial Repression, World Cyclical Slow Growth, Government Intervention in Globalization, and Global Recession Risk: Part I


Volatility of Valuations of Risk Financial Assets, Global Manufacturing Stress, Nineteen Million Unemployed or Underemployed in the Lost Economic Cycle of the Global Recession with Economic Growth Underperforming Below Trend Worldwide, Job Creation, Cyclically Stagnating Real Wages, Cyclically Stagnating Real Disposable Income Per Capita, Financial Repression, World Cyclical Slow Growth, Government Intervention in Globalization, and Global Recession Risk

Carlos M. Pelaez

© Carlos M. Pelaez, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019.

I Nineteen Million Unemployed or Underemployed in the Lost Economic Cycle of the Global Recession with Economic Growth Underperforming Below Trend Worldwide

IA2 Number of People in Job Stress

IA3 Long-term and Cyclical Comparison of Employment

IA4 Job Creation

IB Stagnating Real Wages

II Stagnating Real Disposable Income and Consumption Expenditures

IIB1 Stagnating Real Disposable Income and Consumption Expenditures

IB2 Financial Repression

III World Financial Turbulence

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

I Nineteen Million Unemployed or Underemployed in the Lost Economic Cycle of the Global Recession with Economic Growth Underperforming Below Trend Worldwide. Section IA1 Summary of the Employment Situation provides succinctly the major aspects of employment. Section IA2 Number of People in Job Stress analyzes alternative approaches to measuring job stress. Section IA3 Long-Term and Cyclical Comparison of Employment analyzes long-term and cyclical aspects of employment. Section IA4 Job Creation provides data and analysis on creation of jobs. Section IB Stagnating Real Wages analyzes cyclically stagnating real wages.

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 136,000 in Sep 2019 and private payroll employment increased 114,000. The Bureau of Labor Statistics states (https://www.bls.gov/news.release/empsit.nr0.htm): “Our analysis suggests that the net effect of these hurricanes [Harvey and Irma] was to reduce the estimate of total nonfarm payroll employment for September. There was no discernible effect on the national unemployment rate. No changes were made to either the establishment or household survey estimation procedures for the September figures.” The average monthly number of nonfarm jobs created from Sep 2017 to Sep 2018 was 219,417 using seasonally adjusted data, while the average number of nonfarm jobs created from Sep 2018 to Sep 2019 was 178,917 or decrease by 18.5 percent. The average number of private jobs created in the US from Sep 2017 to Sep 2018 was 208,500, using seasonally adjusted data, while the average from Sep 2018 to Sep 2019 was 166,667 or decrease by 20.1 percent. This blog calculates the effective labor force of the US at 171.880 million in Sep 2019 and 170.988 million in Sep 2018 (Table I-4), for growth of 0.892 million at average 74,333 per month. The difference between the average increase of 166,667 new private nonfarm jobs per month in the US from Sep 2018 to Sep 2019 and the 74,333-average monthly increase in the labor force from Sep 2018 to Sep 2019 is 92,334 monthly new jobs net of absorption of new entrants in the labor force. There are 18.693 million in job stress in the US currently. Creation of 92,334 new jobs per month net of absorption of new entrants in the labor force would require 202 months to provide jobs for the unemployed and underemployed (18.693 million divided by 92,334) or 17 years (202 divided by 12). The civilian labor force of the US in Sep 2019 not seasonally adjusted stood at 163.943 million with 5.465 million unemployed or effectively 13.402 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 171.880 million. Reduction of one million unemployed at the current rate of job creation without adding more unemployment requires 0.90 years (1 million divided by product of 92,334 by 12, which is 1,108,000). Reduction of the rate of unemployment to 5 percent of the labor force would be equivalent to unemployment of only 8.197 million (0.05 times labor force of 163.943 million). New net job creation would be minus 2.732 million (5.465 million unemployed minus 8.197 million unemployed at rate of 5 percent) that at the current rate would take 0.0 years (-2.732 million divided by 1.108). Under the calculation in this blog, there are 13.402 million unemployed by including those who ceased searching because they believe there is no job for them and effective labor force of 171.880 million. Reduction of the rate of unemployment to 5 percent of the labor force would require creating 5.341 million jobs net of labor force growth that at the current rate would take 4.3 years (13.402 million minus 0.05

(171.880 million) = 4.808 million divided by 1.108 using LF PART 66.2% and Total UEM in Table I-4). These calculations assume that there are no more recessions, defying United States economic history with periodic contractions of economic activity when unemployment increases sharply. The number employed in Sep 2019 was 158.478 million (NSA) or 11.163 million more people with jobs relative to the peak of 147.315 million in Aug 2007 while the civilian noninstitutional population of ages 16 years and over increased from 231.958 million in Jul 2007 to 259.638 million in Sep 2019 or by 27.680 million. The number employed increased 7.6 percent from Jul 2007 to Sep 2019 while the noninstitutional civilian population of ages of 16 years and over, or those available for work, increased 11.9 percent. The ratio of employment to population in Jul 2007 was 63.5 percent (147.315 million employed as percent of population of 231.958 million). The same ratio in Sep 2019 would result in 164.870 million jobs (0.635 multiplied by noninstitutional civilian population of 259.638 million). There are effectively 6.392 million fewer jobs in Sep 2019 than in Jul 2007, or 164.870 million minus 158.478 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 (https://cmpassocregulationblog.blogspot.com/2019/09/competitive-exchange-rate-and-interest.html and earlier https://cmpassocregulationblog.blogspot.com/2019/08/competitive-exchange-rate-policies.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 Sep 2019 were $28.09 seasonally adjusted (SA), increasing 2.9 percent not seasonally adjusted (NSA) relative to Sep 2018 and changing 0.0 percent relative to Aug 2019 seasonally adjusted. In Aug 2019, average hourly earnings seasonally adjusted were $28.10, increasing 3.3 percent relative to Aug 2018 not seasonally adjusted, and increasing 0.4 percent seasonally adjusted relative to Aug 2019. 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 Sep 2019 because the prices indexes of the BLS for Sep 2019 will only be released on Oct 10, 2019 (http://www.bls.gov/cpi/), which will be covered in this blog’s comment on Oct 13, 2019 together with world inflation. The third column provides changes in real wages for Aug 2019 and the fourth for Jul 2019. Average hourly earnings adjusted for inflation or in constant dollars increased 1.5 percent in Aug 2019 relative to Aug 2018 and increased 0.8 percent from Jul 2018 to Jul 2019 but have been decreasing/stagnating during multiple months. World inflation waves in bouts of risk aversion (https://cmpassocregulationblog.blogspot.com/2019/09/uncertain-fomc-outlook-of-monetary.html and earlier https://cmpassocregulationblog.blogspot.com/2019/08/contraction-of-valuations-of-risk.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 cyclically stagnating real wages or wages adjusted for inflation (Section I and earlier https://cmpassocregulationblog.blogspot.com/2019/09/increase-in-valuations-of-risk.html). The following section IB Stagnating Real Wages provides more detailed analysis. Average weekly hours of US workers seasonally adjusted had remained virtually unchanged, decreasing to 34.3 in Jul 2019 and increasing to 34.4 in Aug 2019 and 34.4 in Sep 2019, which could affect additional work on a labor force of 164.039 million SA in Sep 2019. 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 did not increase from 3.7 percent in Jul 2019 to 3.7 percent in Aug 2019 and declining to 3.5 percent in Sep 2015. 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 18.7 million in Sep 2019 and 19.8 million in Aug 2019. The final row in Table I-1 provides the number in job stress as percent of the actual labor force calculated at 10.9 percent in Sep 2019 and 11.5 percent in Aug 2019.

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

and earlier http://cmpassocregulationblog.blogspot.com/2015/07/fluctuating-risk-financial-assets.html and earlier http://cmpassocregulationblog.blogspot.com/2015/06/fluctuating-financial-asset-valuations.html and earlier http://cmpassocregulationblog.blogspot.com/2015/05/fluctuating-valuations-of-financial.html and earlier 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)

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

Sep 2019

Aug 2019

Jul 2019

New Nonfarm Payroll Jobs

136

168

75

New Private Payroll Jobs

114

122

122

Average Hourly Earnings

Sep $28.09

∆% Sep 19/Sep 18 NSA: 2.9

∆% Sep 19/Aug 19 SA: 0.0

Aug $28.10

∆% Aug 19/Aug 18 NSA: 3.3

∆% Aug 19/Jul 19 SA: 0.4

Jul $27.99

∆% Jul 19/Jul 18 NSA: 2.7

∆% Jul 19/Jun 19 SA: 0.3

Average Hourly Earnings in Constant Dollars

∆% Aug 19/Aug 18 NSA: 1.5

∆% Jul 19/Jul 18 NSA: 0.8

Average Weekly Hours

34.4

34.7

34.4 SA

34.5 NSA

34.3 SA

34.3 NSA

Unemployment Rate Household Survey % of Labor Force SA

3.5

3.7

3.7

Number in Job Stress Unemployed and Underemployed Blog Calculation

18.7

19.8

18.8

In Job Stress as % Labor Force

10.9

11.5

11.0

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.”

The Bureau of Labor Statistics (BLS) revised household data for seasonal factors in the release for Dec 2015 (http://www.bls.gov/news.release/pdf/empsit.pdf):

“Seasonally adjusted household survey data have been revised using updated seasonal adjustment factors, a procedure done at the end of each calendar year. Seasonally adjusted estimates back to January 2011 were subject to revision. The unemployment rates for January 2015 through November 2015 (as originally published and as revised) appear in table A on page 5, along with additional information about the revisions.”

The Bureau of Labor Statistics (BLS) revised household data for seasonal factors in the release for Dec 2016 (https://www.bls.gov/news.release/pdf/empsit.pdf):

“Seasonally adjusted household survey data have been revised using updated seasonal adjustment factors, a procedure done at the end of each calendar year. Seasonally adjusted estimates back to January 2012 were subject to revision. The unemployment rates for January 2016 through November 2016 (as originally published and as revised) appear in table A on page 5, along with additional information about the revisions.”

The Bureau of Labor Statistics (BLS) revised establishment data for seasonal and benchmarks in the release for Jan 2016 (http://www.bls.gov/news.release/pdf/empsit.pdf): “Establishment survey data have been revised as a result of the annual benchmarking process and the updating of seasonal adjustment factors. Also, household survey data for January 2016 reflect updated population estimates. See the notes beginning on page 4 for more information about these changes.”

The Bureau of Labor Statistics (BLS) revised establishment data for seasonal and benchmarks in the release for Jan 2017 (https://www.bls.gov/news.release/pdf/empsit.pdf): “Establishment survey data have been revised as a result of the annual benchmarking process and the updating of seasonal adjustment factors using an improved methodology to select models. Also, household survey data for January 2017 reflect updated population estimates. See the notes beginning on page 4 for more information about these changes.”

The Bureau of Labor Statistics (BLS) revised household data for seasonal adjustment in the release for Dec 2017 (https://www.bls.gov/news.release/pdf/empsit.pdf): “Seasonally adjusted household survey data have been revised using updated seasonal adjustment factors, a procedure done at the end of each calendar year. Seasonally adjusted estimates back to January 2013 were subject to revision. The unemployment rates for January 2017 through November 2017 (as originally published and as revised) appear in table A on page 6, along with additional information about the 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 (http://www.bls.gov/).

The Bureau of Labor Statistics (BLS) revised household data for seasonal adjustment in the release for Dec 2018 (https://www.bls.gov/news.release/pdf/empsit.pdf): “Revision of Seasonally Adjusted Household Survey Data. Seasonally adjusted household survey data have been revised using updated seasonal adjustment factors, a procedure done at the end of each calendar year. Seasonally adjusted estimates back to January 2014 were subject to revision. The unemployment rates for January 2018 through November 2018 (as originally published and as revised) appear in table A on page 5, along with additional information about the revisions.”

The Bureau of Labor Statistics (BLS) revised payroll establishment data with the release of the estimates for Jan 2019 (https://www.bls.gov/news.release/archives/empsit_02012019.htm): “ Establishment survey data have been revised as a result of the annual benchmarking process and the updating of seasonal adjustment factors. Also, household survey data for January 2019 reflect updated population estimates. See the notes beginning at the end of this news release for more information about these changes.”

The Bureau of Labor Statistics (BLS) revised the Establishment Survey Data with the release of estimates for Jan 2018 on Feb 20, 2018 (https://www.bls.gov/news.release/pdf/empsit.pdf): “In accordance with annual practice, the establishment survey data released today have been benchmarked to reflect comprehensive counts of payroll jobs for March 2017. These counts are derived principally from the Quarterly Census of Employment and Wages (QCEW), which counts jobs covered by the Unemployment Insurance (UI) tax system. In addition, the data were updated to the 2017 North American Industry Classification System (NAICS) from the 2012 NAICS. This update resulted in minor changes to several detailed industries. The normal benchmark process revises not seasonally adjusted data from April 2016 forward and seasonally adjusted data from January 2013 forward. However, some data were also revised further back in their history than normal due to the implementation of 2017 NAICS and other minor technical changes related to rounding and re-aggregation of some series. The total nonfarm employment level for March 2017 was revised upward by 146,000 (+138,000 on a not seasonally adjusted basis, or +0.1 percent). On a not seasonally adjusted basis, the average absolute benchmark revision over the past 10 years is 0.2 percent. The effect of these revisions on the underlying trend in nonfarm payroll employment was minor. For example, the over-the-year change in total nonfarm employment for 2017 was revised from +2,055,000 to +2,173,000 (seasonally adjusted). Table A presents revised total nonfarm employment data on a seasonally adjusted basis from January to December 2017. All revised historical establishment survey data are available on the BLS website at www.bls.gov/ces/data.htm. In addition, an article that discusses the benchmark and post-benchmark revisions and other technical issues is available at www.bls.gov/web/empsit/cesbmart.htm.”

The Bureau of Labor Statistics (BLS) informs that “Establishment survey data have been revised as a result of the annual benchmarking process and the updating of seasonal adjustment factors. Also, household survey data for January 2019 reflect updated population estimates. See the notes beginning on page 6 for more information about these changes” (https://www.bls.gov/news.release/pdf/empsit.pdf).

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 6.063 million in Jul 2019 to 6.044 million in Aug 2019 and decrease to 5.769 million in Sep 2019. The rate of unemployment did not change from 3.7 percent in Jul 2019 to 3.7 percent in Aug 2019 and decreased to 3.5 percent in Sep 2019. An important aspect of unemployment is its persistence for more than 27 weeks with 1.314 million in Sep 2019 corresponding to 22.8 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, who would have preferred full-time employment, were working part time because their hours had been reduced or because they were unable to find full-time jobs” (http://www.bls.gov/news.release/pdf/empsit.pdf 2). The number of part-time for economic reasons increased from 3.984 million in Jul 2019 to 4.381 million in Aug 2019 and decreased to 4.350 million in Sep 2019. 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 11.418 million in Sep 2019 consists of:

· 5.769 million unemployed (of whom 1.314 million, or 22.8 percent, unemployed for 27 weeks or more) compared with 6.044 million unemployed in Aug 2019 (of whom 1.243 million, or 20.6 percent, unemployed for 27 weeks or more).

· 4.350 million employed part-time for economic reasons in Sep 2019 (who suffered reductions in their work hours or could not find full-time employment) compared with 4.381 million in Aug 2019

· 1.299 million who were marginally attached to the labor force in Sep 2019 (who were not in the labor force but wanted and were available for work) compared with 1.564 million in Aug 2019

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

Sep 2019

Aug 2019

Jul 2019

Labor Force Millions

164.039

163.922

163.351

Unemployed
Millions

5.769

6.044

6.063

Unemployment Rate (unemployed as % labor force)

3.5

3.7

3.7

Unemployed ≥27 weeks
Millions

1.314

1.243

1.166

Unemployed ≥27 weeks %

22.8

20.6

19.2

Part Time for Economic Reasons
Millions

4.350

4.381

3.984

Marginally
Attached to Labor Force
Millions

1.299

1.564

1.478

Job Stress
Millions

11.418

11.989

11.525

In Job Stress as % Labor Force

7.0

7.3

7.1

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

Source: US Bureau of Labor Statistics

http://www.bls.gov/

Table I-3 repeats the data in Table I-2 but including Jun 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 60.1 in Nov 2017, 60.2 in Dec 2017, 60.5 in Jul 2018, 60.3 in Aug 2018, 60.4 for Sep 2018, 60.6 in Oct 2018, 60.6 in Nov 2018, 60.6 in Dec 2018, 60.7 in Jan 2019, 60.7 in Feb 2019, 60.6 in Mar 2019, 60.6 in Apr 2019, 60.6 in May 2019 , 60.6 in Jun 2019, 60.7 in Jul 2019 and 60.9 in Aug 2019. 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. The employment population ratio NSA reached 59.4 in Dec 2015, 59.6 in Dec 2016, 60.0 in Dec 2017, 60.4 in Dec 2018 and 61.0 in Sep 2019.

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

Sep 2019

Aug 2019

Jul 2019

Jun 2019

Labor Force

164.039

163.922

163.351

162.981

Participation Rate

63.2

63.2

63.0

62.9

Unemployed

5.769

6.044

6.063

5.975

UNE Rate %

3.5

3.7

3.7

3.7

Part Time Economic Reasons

4.350

4.381

3.984

4.347

Marginally Attached to Labor Force

1.299

1.564

1.478

1.571

In Job Stress

11.418

11.989

11.525

11.893

In Job Stress % Labor Force

7.0

7.3

7.1

7.3

Employed

158.269

157.878

157.288

157.005

Employment % Population

61.0

60.9

60.7

60.6

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 2019. There was a big drop of the number of people employed from 147.315 million at the peak in Jul 2007 (NSA) to 136.809 million at the trough in Jan 2010 (NSA) with 10.506 million fewer people employed. Recovery has been anemic compared with the shallow recession of 2001 that was followed by nearly vertical growth in jobs. The number employed in Sep 2019 was 158.478 million (NSA) or 11.163 million more people with jobs relative to the peak of 147.315 million in Aug 2007 while the civilian noninstitutional population of ages 16 years and over increased from 231.958 million in Jul 2007 to 259.638 million in Sep 2019 or by 27.680 million. The number employed increased 7.6 percent from Jul 2007 to Sep 2019 while the noninstitutional civilian population of ages of 16 years and over, or those available for work, increased 11.9 percent. The ratio of employment to population in Jul 2007 was 63.5 percent (147.315 million employed as percent of population of 231.958 million). The same ratio in Sep 2019 would result in 164.870 million jobs (0.635 multiplied by noninstitutional civilian population of 259.638 million). There are effectively 6.392 million fewer jobs in Sep 2019 than in Jul 2007, or 164.870 million minus 158.478 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.

clip_image001

Chart I-1, US, Employed, Thousands, SA, 2001-2019

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 2018. 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.

clip_image002

Chart I-2, US, Employed, 12-Month Percentage Change NSA, 2001-2019

Source: Bureau of Labor Statistics

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

The foundation of the second approach derives from Chart I-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 NSA grew 9.4 percent from 142.828 million in Jan 2001 to 156.255 million in Jul 2009. The civilian labor force is 4.9 percent higher at 163.943 million in Sep 2019 than in Jul 2009, 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 163.943 million in Sep 2019 to the noninstitutional population of 259.638 million in Sep 2019 was 63.1 percent. The labor force of the US in Sep 2019 corresponding to 66.8 percent of participation in the population would be 173.438 million (0.668 x 259.638) The difference between the measured labor force in Sep 2019 of 163.943 million and the labor force in Sep 2019 with participation rate of 66.8 percent (as in Jul 2007) of 173.438 million is 9.495 million. The level of the labor force in the US has stagnated and is 9.495 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.

clip_image003

Chart I-3, US, Civilian Labor Force, Thousands, SA, 2001-2019

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.

clip_image004

Chart I-4, US, Civilian Labor Force, Thousands, NSA, 12-month Percentage Change, 2001-2019

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

Chart I-5 of the Bureau of Labor Statistics provides the labor force participation rate in the US or labor force as percent of the population. The labor force participation rate of the US fell from 66.8 percent in Jan 2001 to 63.1 percent NSA in Sep 2019, 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.

clip_image005

Chart I-5, Civilian Labor Force Participation Rate, Percent of Population in Labor Force SA, 2001-2019

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 5.465 million in Sep 2019, all numbers not seasonally adjusted.

clip_image006

Chart I-6, US, Unemployed, Thousands, SA, 2001-2019

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 4.8 percent in Dec 2015 and 4.5 percent in Dec 2016, reaching 3.9 percent in Dec 2017. The NSA rate of unemployment was at 3.7 percent in Dec 2018 and 3.3 percent in Sep 2019.

clip_image007

Chart I-7, US, Unemployment Rate, SA, 2001-2019

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 annual level of unemployment fell 13.7 percent in 2015 and fell 6.6 percent in 2016, decreasing 9.9 percent in 2017. The level of unemployment decreased 12.4 percent in Dec 2017 relative to a year earlier and decreased 4.0 percent in Dec 2018 relative to a year earlier. The level of unemployment decreased 5.2 percent in Sep 2019 relative to a year earlier.

clip_image008

Chart I-8, US, Unemployed, 12-month Percentage Change, NSA, 2001-2019

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 8.171 million in Dec 2011 but increasing to 8.305 million in Jan 2012 and 8.238 million in Feb 2012 but then falling to 7.943 million in Dec 2012 and increasing to 8.099 million in Jul 2013. The number employed part-time for economic reasons seasonally adjusted reached 4.657 million in Dec 2018 and 3.984 million in Jul 2019. 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, 6.970 million in Dec 2014 and 6.179 million in Dec 2015. The number employed part-time for economic reasons NSA stood at 5.707 million in Dec 2016. The number employed part-time for economic reasons reached 5.060 million in Dec 2017. The level of employed part-time for economic reasons stood at 4.740 million in Dec 2018 and 3.992 million in Sep 2019. The longer the period in part-time jobs the lower are the chances of finding another full-time job.

clip_image009

Chart I-9, US, Part-Time for Economic Reasons, Thousands, SA, 2001-2019

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 annual number of part-time for economic reasons fell 11.7 percent in 2015 and fell 6.7 percent in 2016. The number of part-time for economic reasons decreased 7.6 percent in Dec 2016 relative to a year earlier. The level of part-time for economic reason fell 11.3 percent in Dec 2017 relative to a year earlier. The level of part-time for economic reasons fell 6.3 percent in Dec 2018 relative to a year earlier and decreased 7.3 percent in Dec 2019 relative to a year earlier.

clip_image010

Chart I-10, US, Part-Time for Economic Reasons NSA 12-Month Percentage Change, 2001-2019

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 and 1.833 million in Dec 2015. The number marginally attached to the labor force stood at 1.684 million in Dec 2016. The level marginally attached to the labor force reached 1.623 million in Dec 2017. The level of marginally attached to the labor force stood at 1.556 million in Dec 2018 and 1.299 million in Sep 2019.

clip_image011

Chart I-11, US, Marginally Attached to the Labor Force, Thousands, NSA, 2001-2019

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 2018. 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 annual number of marginally attached to the labor force fell 11.4 percent in 2015. 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 18.9 percent in the 12 months ending in Dec 2015 and decreased 8.1 percent in the 12 months ending in Dec 2016. The level of marginally attached to the labor force decreased 3.6 percent in the 12 months ending in Dec 2017. The level of marginally attached to the labor force decreased 4.1 percent in the 12 months ending in Dec 2018 and decreased 17.6 percent in the 12 months ending in Sep 2019.

clip_image012

Chart I-12, US, Marginally Attached to the Labor Force 12-Month Percentage Change, NSA, 2001-2019

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 8.1 percent and the number of people in job stress could be around 19.8 million, which is 11.5 percent of the effective labor force. The first column provides for 2006 the yearly average population (POP), labor force (LF), participation rate or labor force as percent of population (PART %), employment (EMP), employment population ratio (EMP/POP %), unemployment (UEM), the unemployment rate as percent of labor force (UEM/LF Rate %) and the number of people not in the labor force (NLF). All data are unadjusted or not-seasonally-adjusted (NSA). The numbers in column 2006 are averages in millions while the monthly numbers for Sep 2018, Aug 2019 and Sep 2019 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 2019. 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. Abraham, Hatiwanger, Sandusky and Spletzer (2016) find that “unemployment duration has a strongly negative effect on the likelihood of subsequent employment.” 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 Sep 2018, Aug 2019 and Sep 2019 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 62.7 percent by Sep 2018 and was 63.2 percent in Aug 2019 and 63.1 percent in Sep 2019, suggesting that many people simply gave up on finding another job. Row “∆ NLF UEM” calculates the number of people not counted in the labor force because they could have given up on finding another job by subtracting from the labor force with participation rate of 66.2 percent (row “LF PART 66.2%”) the labor force estimated in the household survey (row “LF”). Total unemployed (row “Total UEM”) is obtained by adding unemployed in row “∆NLF UEM” to the unemployed of the household survey in row “UEM.” The row “Total UEM%” is the effective total unemployed “Total UEM” as percent of the effective labor force in row “LF PART 66.2%.” The results are that:

  • there are an estimated 7.937 million unemployed in Sep 2019 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 13.402 million (Total UEM) and not 5.456 million (UEM) of whom many have been unemployed long term
  • the rate of unemployment is 7.8 percent (Total UEM%) and not 3.3 percent, not seasonally adjusted, or 3.5 percent seasonally adjusted
  • the number of people in job stress is close to 18.693 million by adding the 7.937 million leaving the labor force because they believe they could not find another job, corresponding to 10.9 percent of the effective labor force.

The row “In Job Stress” in Table I-4 provides the number of people in job stress not seasonally adjusted at 18.693 million in Sep 2019, 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 10.9 percent of the labor force in Sep 2019. The number employed in Sep 2019 was 158.478 million (NSA) or 11.163 million more people with jobs relative to the peak of 147.315 million in Aug 2007 while the civilian noninstitutional population of ages 16 years and over increased from 231.958 million in Jul 2007 to 259.638 million in Sep 2019 or by 27.680 million. The number employed increased 7.6 percent from Jul 2007 to Sep 2019 while the noninstitutional civilian population of ages of 16 years and over, or those available for work, increased 11.9 percent. The ratio of employment to population in Jul 2007 was 63.5 percent (147.315 million employed as percent of population of 231.958 million). The same ratio in Sep 2019 would result in 164.870 million jobs (0.635 multiplied by noninstitutional civilian population of 259.638 million). There are effectively 6.392 million fewer jobs in Sep 2019 than in Jul 2007, or 164.870 million minus 158.478 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 (https://cmpassocregulationblog.blogspot.com/2019/09/competitive-exchange-rate-and-interest.html and earlier https://cmpassocregulationblog.blogspot.com/2019/08/competitive-exchange-rate-policies.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. 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 2.3 percent on average in the cyclical expansion in the 40 quarters from IIIQ2009 to IIQ2019. 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 third estimate of GDP for IIQ2019 (https://www.bea.gov/system/files/2019-09/gdp2q19_3rd.pdf). The average of 7.7 percent in the first four quarters of major cyclical expansions is in contrast with the rate of growth in the first four quarters of the expansion from IIIQ2009 to IIQ2010 of only 2.8 percent obtained by dividing GDP of $15,557.3 billion in IIQ2010 by GDP of $15,134.1 billion in IIQ2009 {[($15,557.3/$15,134.1) -1]100 = 2.8%], or accumulating the quarter on quarter growth rates (https://cmpassocregulationblog.blogspot.com/2019/09/dollar-appreciation-decreasing.html and earlier https://cmpassocregulationblog.blogspot.com/2019/08/revaluation-of-us-dollar-falling-yields.html). The expansion from IQ1983 to IQ1986 was at the average annual growth rate of 5.7 percent, 5.3 percent from IQ1983 to IIIQ1986, 5.1 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, 4.8 percent from IQ1983 to IVQ1988, 4.8 percent from IQ1983 to IQ1989, 4.7 percent from IQ1983 to IIQ1989, 4.6 percent from IQ1983 to IIIQ1989, 4.5 percent from IQ1983 to IVQ1989. 4.5 percent from IQ1983 to IQ1990, 4.4 percent from IQ1983 to IIQ1990, 4.3 percent from IQ1983 to IIIQ1990, 4.0 percent from IQ1983 to IVQ1990, 3.8 percent from IQ1983 to IQ1991, 3.8 percent from IQ1983 to IIQ1991, 3.8 percent from IQ1983 to IIIQ1991, 3.7 percent from IQ1983 to IVQ1991, 3.7 percent from IQ1983 to IQ1992, 3.7 percent from IQ1983 to IIQ1992, 3.7 percent from IQ1983 to IIIQ2019, 3.8 percent from IQ1983 to IVQ1992 and at 7.9 percent from IQ1983 to IVQ1983 (https://cmpassocregulationblog.blogspot.com/2019/09/dollar-appreciation-decreasing.html and earlier https://cmpassocregulationblog.blogspot.com/2019/08/revaluation-of-us-dollar-falling-yields.html). The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (https://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.3 percent from the pre-recession peak of $8983.9 billion of chained 2009 dollars in IIIQ1990 to the trough of $8865.6 billion in IQ1991 (https://apps.bea.gov/iTable/index_nipa.cfm). 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 IIQ2019 would have accumulated to 40.5 percent. GDP in IIQ2019 would be $22,145.6 billion (in constant dollars of 2012) if the US had grown at trend, which is higher by $3123.7 billion than actual $19,021.9 billion. There are more than three trillion dollars of GDP less than at trend, explaining the 18.7 million unemployed or underemployed equivalent to actual unemployment/underemployment of 10.9 percent of the effective labor force (Section I and earlier https://cmpassocregulationblog.blogspot.com/2019/09/increase-in-valuations-of-risk.html). US GDP in IIQ2019 is 14.1 percent lower than at trend. US GDP grew from $15,762.0 billion in IVQ2007 in constant dollars to $19,021.9 billion in IIQ2019 or 20.7 percent at the average annual equivalent rate of 1.6 percent. Professor John H. Cochrane (2014Jul2) estimates US GDP at more than 10 percent below trend. Cochrane (2016May02) measures GDP growth in the US at average 3.5 percent per year from 1950 to 2000 and only at 1.76 percent per year from 2000 to 2015 with only at 2.0 percent annual equivalent in the current expansion. Cochrane (2016May02) proposes drastic changes in regulation and legal obstacles to private economic activity. 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 of manufacturing at average 3.0 percent per year from Aug 1919 to Aug 2019. Growth at 3.0 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 108.2987 in Dec 2007 to 152.8943 in Aug 2019. The actual index NSA in Aug 2019 is 106.7670, which is 30.2 percent below trend. Manufacturing grew at the average annual rate of 3.3 percent between Dec 1986 and Dec 2006. Growth at 3.3 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 108.2987 in Dec 2007 to 158.1712 in Aug 2019. The actual index NSA in Aug 2019 is 106.7670, which is 32.5 percent below trend. Manufacturing output grew at average 2.0 percent between Dec 1986 and Aug 2019. Using trend growth of 2.0 percent per year, the index would increase to 136.4454 in Aug 2019. The output of manufacturing at 106.7670 in Aug 2019 is 21.8 percent below trend under this alternative calculation. Using the NAICS (North American Industry Classification System), manufacturing output fell from the high of 110.5147 in Jun 2007 to the low of 86.3800 in Apr 2009 or 21.8 percent. The NAICS manufacturing index increased from 86.3800 in Apr 2009 to 107.5806 in Aug 2019 or 24.5 percent. The NAICS manufacturing index increased at the annual equivalent rate of 3.5 percent from Dec 1986 to Dec 2006. Growth at 3.5 percent would increase the NAICS manufacturing output index from 106.6777 in Dec 2007 to 159.3596 in Aug 2019. The NAICS index at 107.5806 in Aug 2019 is 32.5 below trend. The NAICS manufacturing output index grew at 1.7 percent annual equivalent from Dec 1999 to Dec 2006. Growth at 1.7 percent would raise the NAICS manufacturing output index from 106.6777 in Dec 2007 to 129.8629 in Aug 2019. The NAICS index at 107.5806 in Aug 2019 is 17.2 percent below trend under this alternative calculation.

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

2006

Sep 2018

Aug 2019

Sep 2019

POP

229

258.290

259.432

259.638

LF

151

161.958

164.019

163.943

PART%

66.2

62.7

63.2

63.1

EMP

144

156.191

157.816

158.478

EMP/POP%

62.9

60.5

60.8

61.0

UEM

7

5.766

6.203

5.465

UEM/LF Rate%

4.6

3.6

3.8

3.3

NLF

77

96.332

95.413

95.694

LF PART 66.2%

170.988

171.744

171.880

∆NLF UEM

9.030

7.725

7.937

Total UEM

14.796

13.928

13.402

Total UEM%

8.7

8.1

7.8

Part Time Economic Reasons

4,306

4,316

3,992

Marginally Attached to LF

1,577

1,564

1,299

In Job Stress

20,679

19,808

18,693

People in Job Stress as % Labor Force

12.1

11.5

10.9

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/

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

Y = ∑isiyi (1)

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

∆Y = ∑i∆siy*i + ∑i∆yis*i (2)

The first term in (2) captures changes in the demographic and industrial composition of the economy ∆si multiplied by the average rate of unemployment y*i , or structural factors. The second term in (2) captures changes in the unemployment rate specific to a group, or ∆yi, multiplied by the average share of the group s*i, or cyclical factors. There are also mismatches in skills and locations relative to available job vacancies. A simple observation by Lazear and Spletzer (2012JHJul22) casts intuitive doubt on structural factors: the rate of unemployment jumped from 4.4 percent in the spring of 2007 to 10 percent in October 2009. By nature, structural factors should be permanent or occur over relative long periods. The revealing result of the exhaustive research of Lazear and Spletzer (2012JHJul22) is:

“The analysis in this paper and in others that we review do not provide any compelling evidence that there have been changes in the structure of the labor market that are capable of explaining the pattern of persistently high unemployment rates. The evidence points to primarily cyclic factors.”

Table I-4b and Chart I-12-b provide the US labor force participation rate or percentage of the labor force in population. It is not likely that simple demographic trends caused the sharp decline during the global recession and failure to recover earlier levels. The civilian labor force participation rate dropped from the peak of 66.9 percent in Jul 2006 to 62.6 percent in Dec 2013, 62.5 percent in Dec 2014, 62.4 percent in Dec 2015 and 62.4 in Dec 2016. The civilian labor force participation rate reached 62.4 in Dec 2017. The civilian labor force participation rate was at 62.9 percent in Nov 2018 and 62.8 percent in Dec 2018. The civilian labor force participation was 63.1 in Sep 2019. 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 (https://cmpassocregulationblog.blogspot.com/2019/09/competitive-exchange-rate-and-interest.html and earlier https://cmpassocregulationblog.blogspot.com/2019/08/competitive-exchange-rate-policies.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, 1979-2019

Year

May

Jun

Jul

Aug

Sep

Dec

Annual

1979

62.9

64.5

64.9

64.5

63.8

63.8

63.7

1980

63.5

64.6

65.1

64.5

63.6

63.4

63.8

1981

63.9

64.6

65.0

64.6

63.5

63.4

63.9

1982

63.9

64.8

65.3

64.9

64.0

63.8

64.0

1983

63.4

65.1

65.4

65.1

64.3

63.8

64.0

1984

64.3

65.5

65.9

65.2

64.4

64.3

64.4

1985

64.6

65.5

65.9

65.4

64.9

64.6

64.8

1986

65.0

66.3

66.6

66.1

65.3

65.0

65.3

1987

65.6

66.3

66.8

66.5

65.5

65.5

65.6

1988

65.5

66.7

67.1

66.8

65.9

65.9

65.9

1989

66.2

67.4

67.7

67.2

66.3

66.3

66.5

1990

66.5

67.4

67.7

67.1

66.4

66.1

66.5

1991

66.0

67.2

67.3

66.6

66.1

65.8

66.2

1992

66.4

67.6

67.9

67.2

66.3

66.1

66.4

1993

66.3

67.3

67.5

67.0

66.1

66.2

66.3

1994

66.5

67.2

67.5

67.2

66.5

66.5

66.6

1995

66.4

67.2

67.7

67.1

66.5

66.2

66.6

1996

66.7

67.4

67.9

67.2

66.8

66.7

66.8

1997

67.0

67.8

68.1

67.6

67.0

67.0

67.1

1998

67.0

67.7

67.9

67.3

67.0

67.0

67.1

1999

67.0

67.7

67.9

67.3

66.8

67.0

67.1

2000

67.0

67.7

67.6

67.2

66.7

67.0

67.1

2001

66.6

67.2

67.4

66.8

66.6

66.6

66.8

2002

66.5

67.1

67.2

66.8

66.6

66.2

66.6

2003

66.2

67.0

66.8

66.3

65.9

65.8

66.2

2004

65.8

66.5

66.8

66.2

65.7

65.8

66.0

2005

66.0

66.5

66.8

66.5

66.1

65.9

66.0

2006

66.0

66.7

66.9

66.5

66.1

66.3

66.2

2007

65.8

66.6

66.8

66.1

66.0

65.9

66.0

2008

66.0

66.6

66.8

66.4

65.9

65.7

66.0

2009

65.5

66.2

66.2

65.6

65.0

64.4

65.4

2010

64.8

65.1

65.3

65.0

64.6

64.1

64.7

2011

64.1

64.5

64.6

64.3

64.2

63.8

64.1

2012

63.8

64.3

64.3

63.7

63.6

63.4

63.7

2013

63.5

64.0

64.0

63.4

63.2

62.6

63.2

2014

62.9

63.4

63.5

63.0

62.8

62.5

62.9

2015

63.0

63.1

63.2

62.7

62.3

62.4

62.7

2016

62.7

63.2

63.4

62.9

62.8

62.4

62.8

2017

62.8

63.3

63.5

63.0

63.0

62.4

62.9

2018

62.8

63.4

63.5

62.7

62.7

62.8

62.9

2019

62.8

63.4

63.6

63.2

63.1

Source: US Bureau of Labor Statistics

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

clip_image013

Chart I-12b, US, Labor Force Participation Rate, Percent of Labor Force in Population, NSA, 1979-2019

Source: Bureau of Labor Statistics

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

Broader perspective is in 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.

clip_image014

Chart I-12c, US, Civilian Noninstitutional Population, Thousands, NSA, 1948-2019

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, with growth below historical trend. 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.

clip_image015

Chart I-12d, US, Labor Force, Thousands, NSA, 1948-2019

Sources: US Bureau of Labor Statistics

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

The rate of labor force participation in the US is in Chart I-12E from 1948 to 2019. There is sudden decline during the global recession after 2007 without recovery explained by cyclical factors (Lazear and Spletzer2012JHJul22) as many potential workers stopped their searches disillusioned that there could be an opportunity for them in sharply contracted markets.

clip_image016

Chart I-12E, US, Labor Force Participation Rate, Percent of Labor Force in Population, NSA, 1948-2019

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 2019. 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 2.3 percent on average in the cyclical expansion in the 40 quarters from IIIQ2009 to IIQ2019. 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 third estimate of GDP for IIQ2019 (https://www.bea.gov/system/files/2019-09/gdp2q19_3rd.pdf). The average of 7.7 percent in the first four quarters of major cyclical expansions is in contrast with the rate of growth in the first four quarters of the expansion from IIIQ2009 to IIQ2010 of only 2.8 percent obtained by dividing GDP of $15,557.3 billion in IIQ2010 by GDP of $15,134.1 billion in IIQ2009 {[($15,557.3/$15,134.1) -1]100 = 2.8%], or accumulating the quarter on quarter growth rates (https://cmpassocregulationblog.blogspot.com/2019/09/dollar-appreciation-decreasing.html and earlier https://cmpassocregulationblog.blogspot.com/2019/08/revaluation-of-us-dollar-falling-yields.html). The expansion from IQ1983 to IQ1986 was at the average annual growth rate of 5.7 percent, 5.3 percent from IQ1983 to IIIQ1986, 5.1 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, 4.8 percent from IQ1983 to IVQ1988, 4.8 percent from IQ1983 to IQ1989, 4.7 percent from IQ1983 to IIQ1989, 4.6 percent from IQ1983 to IIIQ1989, 4.5 percent from IQ1983 to IVQ1989. 4.5 percent from IQ1983 to IQ1990, 4.4 percent from IQ1983 to IIQ1990, 4.3 percent from IQ1983 to IIIQ1990, 4.0 percent from IQ1983 to IVQ1990, 3.8 percent from IQ1983 to IQ1991, 3.8 percent from IQ1983 to IIQ1991, 3.8 percent from IQ1983 to IIIQ1991, 3.7 percent from IQ1983 to IVQ1991, 3.7 percent from IQ1983 to IQ1992, 3.7 percent from IQ1983 to IIQ1992, 3.7 percent from IQ1983 to IIIQ2019, 3.8 percent from IQ1983 to IVQ1992 and at 7.9 percent from IQ1983 to IVQ1983 (https://cmpassocregulationblog.blogspot.com/2019/09/dollar-appreciation-decreasing.html and earlier https://cmpassocregulationblog.blogspot.com/2019/08/revaluation-of-us-dollar-falling-yields.html). The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (https://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.3 percent from the pre-recession peak of $8983.9 billion of chained 2009 dollars in IIIQ1990 to the trough of $8865.6 billion in IQ1991 (https://apps.bea.gov/iTable/index_nipa.cfm). 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 IIQ2019 would have accumulated to 40.5 percent. GDP in IIQ2019 would be $22,145.6 billion (in constant dollars of 2012) if the US had grown at trend, which is higher by $3123.7 billion than actual $19,021.9 billion. There are more than three trillion dollars of GDP less than at trend, explaining the 18.7 million unemployed or underemployed equivalent to actual unemployment/underemployment of 10.9 percent of the effective labor force (Section I and earlier https://cmpassocregulationblog.blogspot.com/2019/09/increase-in-valuations-of-risk.html). US GDP in IIQ2019 is 14.1 percent lower than at trend. US GDP grew from $15,762.0 billion in IVQ2007 in constant dollars to $19,021.9 billion in IIQ2019 or 20.7 percent at the average annual equivalent rate of 1.6 percent. Professor John H. Cochrane (2014Jul2) estimates US GDP at more than 10 percent below trend. Cochrane (2016May02) measures GDP growth in the US at average 3.5 percent per year from 1950 to 2000 and only at 1.76 percent per year from 2000 to 2015 with only at 2.0 percent annual equivalent in the current expansion. Cochrane (2016May02) proposes drastic changes in regulation and legal obstacles to private economic activity. 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 of manufacturing at average 3.0 percent per year from Aug 1919 to Aug 2019. Growth at 3.0 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 108.2987 in Dec 2007 to 152.8943 in Aug 2019. The actual index NSA in Aug 2019 is 106.7670, which is 30.2 percent below trend. Manufacturing grew at the average annual rate of 3.3 percent between Dec 1986 and Dec 2006. Growth at 3.3 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 108.2987 in Dec 2007 to 158.1712 in Aug 2019. The actual index NSA in Aug 2019 is 106.7670, which is 32.5 percent below trend. Manufacturing output grew at average 2.0 percent between Dec 1986 and Aug 2019. Using trend growth of 2.0 percent per year, the index would increase to 136.4454 in Aug 2019. The output of manufacturing at 106.7670 in Aug 2019 is 21.8 percent below trend under this alternative calculation. Using the NAICS (North American Industry Classification System), manufacturing output fell from the high of 110.5147 in Jun 2007 to the low of 86.3800 in Apr 2009 or 21.8 percent. The NAICS manufacturing index increased from 86.3800 in Apr 2009 to 107.5806 in Aug 2019 or 24.5 percent. The NAICS manufacturing index increased at the annual equivalent rate of 3.5 percent from Dec 1986 to Dec 2006. Growth at 3.5 percent would increase the NAICS manufacturing output index from 106.6777 in Dec 2007 to 159.3596 in Aug 2019. The NAICS index at 107.5806 in Aug 2019 is 32.5 below trend. The NAICS manufacturing output index grew at 1.7 percent annual equivalent from Dec 1999 to Dec 2006. Growth at 1.7 percent would raise the NAICS manufacturing output index from 106.6777 in Dec 2007 to 129.8629 in Aug 2019. The NAICS index at 107.5806 in Aug 2019 is 17.2 percent below trend under this alternative calculation.

clip_image017

Chart I-13, US, Employment Level, Thousands, SA, 1948-2019

Source: US Bureau of Labor Statistics

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

The steep and consistent curve of growth of the US labor force is 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, growing below historical trend.

clip_image018

Chart I-14, US, Civilian Labor Force, SA, 1948-2019, Thousands

Source: US Bureau of Labor Statistics

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

Chart I-15 provides the labor force participation rate for the period from 1948 to 2019. 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 because 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.

clip_image019

Chart I-15, US, Civilian Labor Force Participation Rate, SA, 1948-2019, %

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.

clip_image020

Chart I-16, US, Unemployed, SA, 1948-2019, 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 2019. 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 SA. The unadjusted rate of unemployment NSA reached 3.3 percent in Sep 2019.

clip_image021

Chart I-17, US, Unemployment Rate, SA, 1948-2019

Source: US Bureau of Labor Statistics

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

The number unemployed 27 weeks or more in Chart I-18 jumped to peak levels in the current cycle. There is insufficient decline to return to earlier levels.

clip_image022

Chart I-18, US, Unemployed for 27 Weeks or More, SA, 1948-2019, 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 60.4 NSA in Dec 2018. The employment population ration reached 60.0 NSA in Dec 2017. The NSA employment/population ratio stood at 60.4 in Dec 2018 and 61.0 in Sep 2019. There is no comparable decline followed by stabilization during a cyclical expansion in Chart I-19.

clip_image023

Chart I-19, US, Employment-Population Ratio, 1948-2019

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.

clip_image024

Chart I-20, US, Part-Time for Economic Reasons, NSA, 1955-2019, Thousands

Source: US Bureau of Labor Statistics

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

Table I-5 provides percentage change of real GDP in the United States in the 1930s, 1980s and 2000s. The recession in 1981-1982 is quite similar on its own to the 2007-2009 recession. In contrast, during the Great Depression in the four years of 1930 to 1933, GDP in constant dollars fell 26.3 percent cumulatively and fell 45.3 percent in current dollars (Pelaez and Pelaez, Financial Regulation after the Global Recession (2009a), 150-2, Pelaez and Pelaez, Globalization and the State, Vol. II (2009b), 205-7 and revisions in http://bea.gov/iTable/index_nipa.cfm). Data are available for the 1930s only on a yearly basis. US GDP fell 4.8 percent in the two recessions (1) from IQ1980 to IIIQ1980 and (2) from III1981 to IVQ1982 and 4.0 percent cumulatively in the recession from IVQ2007 to IIQ2009. It is instructive to compare the first years of the expansions in the 1980s and the current expansion. GDP grew at 4.6 percent in 1983, 7.2 percent in 1984, 4.2 percent in 1985, 3.5 percent in 1986, 3.5 percent in 1987, 4.2 percent in 1988 and 3.7 percent in 1989. In contrast, GDP grew 2.6 percent in 2010, 1.6 percent in 2011, 2.2 percent in 2012, 1.8 percent in 2013, 2.5 percent in 2014 and 2.9 percent in 2015. GDP grew 1.6 percent in 2016 and 2.4 percent in 2017. GDP grew 2.9 percent in 2018. Actual annual equivalent GDP growth in the forty quarters from IQ2012 to IIQ2019 is 2.3 percent and 2.3 percent in the four quarters ending in IIQ2019. GDP grew at 4.2 percent in 1985, 3.5 percent in 1986, 3.5 percent in 1987, 4.2 percent in 1988 and 3.7 percent in 1989. The forecasts of the central tendency of participants of the Federal Open Market Committee (FOMC) are in the range of 2.1 to 2.3 percent in 2019 (https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20190918.pdf) with less reliable forecast of 1.8 to 2.1 percent in 2020 (https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20190918.pdf). Growth of GDP in the expansion from IIIQ2009 to IIQ2019 has been at average 2.3 percent in annual equivalent.

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

Year

GDP ∆%

Year

GDP ∆%

Year

GDP ∆%

1930

-8.5

1980

-0.3

2000

4.1

1931

-6.4

1981

2.5

2001

1.0

1932

-12.9

1982

-1.8

2002

1.7

1933

-1.2

1983

4.6

2003

2.9

1934

10.8

1984

7.2

2004

3.8

1935

8.9

1985

4.2

2005

3.5

1936

12.9

1986

3.5

2006

2.9

1937

5.1

1987

3.5

2007

1.9

1938

-3.3

1988

4.2

2008

-0.1

1939

8.0

1989

3.7

2009

-2.5

1940

8.8

1990

1.9

2010

2.6

1941

17.7

1991

-0.1

2011

1.6

1942

18.9

1992

3.5

2012

2.2

1943

17.0

1993

2.8

2013

1.8

1944

8.0

1994

4.0

2014

2.5

1945

-1.0

1995

2.7

2015

2.9

1946

-11.6

1996

3.8

2016

1.6

1947

-1.1

1997

4.4

2017

2.4

1948

4.1

1998

4.5

2018

2.9

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

Characteristics of the four cyclical contractions are in Table I-6 with the first column showing the number of quarters of contraction; the second column the cumulative percentage contraction; and the final column the average quarterly rate of contraction. There were two contractions from IQ1980 to IIIQ1980 and from IIIQ1981 to IVQ1982 separated by three quarters of expansion. The drop of output combining the declines in these two contractions is 4.8 percent, which is almost equal to the decline of 4.0 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 26.3 percent cumulatively and fell 45.3 percent in current dollars (Pelaez and Pelaez, Financial Regulation after the Global Recession (2009a), 150-2, Pelaez and Pelaez, Globalization and the State, Vol. II (2009b), 205-7 and revisions in http://bea.gov/iTable/index_nipa.cfm). The comparison of the global recession after 2007 with the Great Depression is entirely misleading.

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

Number of Quarters

Cumulative Percentage Contraction

Average Percentage Rate

IIQ1953 to IIQ1954

3

-2.4

-0.8

IIIQ1957 to IIQ1958

3

-3.0

-1.0

IVQ1973 to IQ1975

5

-3.1

-0.6

IQ1980 to IIIQ1980

2

-2.2

-1.1

IIIQ1981 to IVQ1982

4

-2.6

-0.65

IVQ2007 to IIQ2009

6

-4.0

-0.7

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

Table I-7 shows the mediocre average annual equivalent growth rate of 2.3 percent of the US economy in the forty quarters of the current cyclical expansion from IIIQ2009 to IIQ2019. In sharp contrast, the average growth rate of GDP was:

  • 5.7 percent in the first thirteen quarters of expansion from IQ1983 to IQ1986
  • 5.3 percent in the first fifteen quarters of expansion from IQ1983 to IIIQ1986
  • 5.1 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
  • 4.8 percent in the first twenty-four quarters of expansion from IQ1983 to IVQ1988
  • 4.8 percent in the first twenty-five quarters of expansion from IQ1983 to IQ1989
  • 4.7 percent in the first twenty-six quarters of expansion from IQ1983 to IIQ1989
  • 4.6 percent in the first twenty-seven quarters of expansion from IQ1983 to IIIQ1989
  • 4.5 percent in the first twenty-eight quarters of expansion from IQ1983 to IVQ1989
  • 4.5 percent in the first twenty-nine quarters of expansion from IQ1983 to IQ1990
  • 4.4 percent in the first thirty quarters of expansion from IQ1983 to IIQ1990
  • 4.3 percent in the first thirty-one quarters of expansion from IQ1983 to IIIQ1990
  • 4.0 percent in the first thirty-two quarters of expansion from IQ1983 to IVQ1990
  • 3.8 percent in the first thirty-three quarters of expansion from IQ1983 to IQ1991
  • 3.8 percent in the first thirty-four quarters of expansion from IQ1983 to IIQ1991
  • 3.8 percent in the first thirty-five quarters of expansion from IQ1983 to IIIQ1991
  • 3.7 percent in the thirty-six quarters of expansion from IQ1983 to IVQ1991
  • 3.7 percent in the thirty-seven quarters of expansion from IQ1983 to IQ1992
  • 3.7 percent in the thirty-eight quarters of expansion from IQ1983 to IIQ1992
  • 3.7 percent in the thirty-nine quarters of expansion from IQ1983 to IIIQ1992
  • 3.8 percent in the forty quarters of expansion from IQ1983 to IVQ1992

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 7.9 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 relative to historical experience with annual growth of 2.6 percent in 2010 decelerating to 1.6 percent annual growth in 2011, 2.2 percent in 2012, 1.8 percent in 2013, 2.5 percent in 2014, 2.9 percent in 2015, 1.6 percent in 2016, 2.4 percent in 2017 and 2.9 percent in 2018 (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, 5.1 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. 4.8 percent from IQ1983 to IVQ1988, 4.8 percent from IQ1983 to IQ1989, 4.7 percent from IQ1983 to IIQ1989, 4.6 percent from IQ1983 to IIIQ1989. 4.5 percent from IQ1983 to IVQ1989, 4.5 percent from IQ1983 to IQ1990, 4.4 percent from IQ1983 to IIQ1990, 4.3 percent from IQ1983 to IIIQ1990. 4.0 percent from IQ1983 to IVQ1990. 3.8 percent from IQ1983 to IQ1991, 3.8 percent from IQ1983 to IIQ1991, 3.8 percent from IQ1983 to IIIQ1991. 3.7 percent from IQ1983 to IVQ1991, 3.7 percent from IQ1983 to IQ1992, 3.7 percent from IQ1983 to IIQ1992, 3.7 percent from IQ1983 to IIIQ1992, 3.8 percent from IQ1983 to IVQ2019 and at 7.9 percent from IQ1983 to IVQ1983. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (http://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.3 percent from the pre-recession peak of $8983.9 billion of chained 2009 dollars in IIIQ1990 to the trough of $8865.6 billion in IQ1991 (http://www.bea.gov/iTable/index_nipa.cfm). GDP grew 2.8 percent in the first four quarters of the expansion from IIIQ2009 to IIQ2010. GDP growth in the thirty quarters from IQ2012 to IIQ2019 accumulated to 18.9 percent. This growth is equivalent to 2.3 percent per year, obtained by dividing GDP in IIQ2019 of $19,021.9 billion by GDP in IVQ2011 of $16,004.1 billion and compounding by 4/30: {[($19,021.9/$16,004.1)4/30 -1]100 = 2.3 percent}.

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

Number
of
Quarters

Cumulative Growth

∆%

Average Annual Equivalent Growth Rate

IIIQ 1954 to IQ1957

11

12.8

4.5

First Four Quarters IIIQ1954 to IIQ1955

4

7.8

IIQ1958 to IIQ1959

5

10.0

7.9

First Four Quarters

IIIQ1958 to IIQ1959

4

9.2

IIQ1975 to IVQ1976

8

8.3

4.1

First Four Quarters IIIQ1975 to IIQ1976

4

6.1

IQ1983-IQ1986

IQ1983-IIIQ1986

IQ1983-IVQ1986

IQ1983-IQ1987

IQ1983-IIQ1987

IQ1983 to IIIQ1987

IQ1983 to IVQ1987

IQ1983 to IQ1988

IQ1983 to IIQ1988

IQ1983 to IIIQ1988

IQ1983 to IVQ1988

IQ1983 to IQ1989

IQ1983 to IIQ1989

IQ1983 to IIIQ1989

IQ1983 to IVQ1989

IQ1983 to IQ1990

IQ1983 to IIQ1990

IQ1983 to IIIQ1990

IQ1983 to IVQ1990

IQ1983 to IQ1991

IQ1983 to IIQ1991

IQ1983 to IIIQ1991

IQ1983 to IVQ1991

IQ1983 to IQ1992

IQ1983 to IIQ1992

IQ1983 to IIIQ1992

IQ1983 to IVQ1992

13

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

38

39

40

19.8

21.5

22.1

23.0

24.4

25.4

27.6

28.3

29.9

30.7

32.5

33.8

34.8

35.8

36.1

37.6

38.1

38.2

36.9

36.3

37.3

38.0

38.5

40.2

41.7

43.1

44.6

5.7

5.3

5.1

5.0

5.0

4.9

5.0

4.9

4.9

4.8

4.8

4.8

4.7

4.6

4.5

4.5

4.4

4.3

4.0

3.8

3.8

3.8

3.7

3.7

3.7

3.7

3.8

First Four Quarters IQ1983 to IVQ1983

4

7.9

Average First Four Quarters in Four Expansions*

7.7

IIIQ2009 to IIQ2019

40

25.7

2.3

First Four Quarters IIIQ2009 to IIQ2010

2.8

*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 1992. Employment surged after the contraction and grew rapidly during the decade. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (http://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.3 percent from the pre-recession peak of $8983.9 billion of chained 2009 dollars in IIIQ1990 to the trough of $8865.6 billion in IQ1991 (http://www.bea.gov/iTable/index_nipa.cfm). The third recession explains the decline of employment in 1990 followed by incipient recovery.

clip_image025

Chart I-21, US, Employed, Thousands, 1979-1992

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 2019. 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 Sep 2019 was 158.478 million (NSA) or 11.163 million more people with jobs relative to the peak of 147.315 million in Aug 2007 while the civilian noninstitutional population of ages 16 years and over increased from 231.958 million in Jul 2007 to 259.638 million in Sep 2019 or by 27.680 million. The number employed increased 7.6 percent from Jul 2007 to Sep 2019 while the noninstitutional civilian population of ages of 16 years and over, or those available for work, increased 11.9 percent. The ratio of employment to population in Jul 2007 was 63.5 percent (147.315 million employed as percent of population of 231.958 million). The same ratio in Sep 2019 would result in 164.870 million jobs (0.635 multiplied by noninstitutional civilian population of 259.638 million). There are effectively 6.392 million fewer jobs in Sep 2019 than in Jul 2007, or 164.870 million minus 158.478 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.

clip_image001[1]

Chart I-22, US, Employed, Thousands, 2001-2019

Source: US Bureau of Labor Statistics

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

The US civilian labor force in Chart I-23 grew with few interruptions from 1979 to 1992. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (http://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.3 percent from the pre-recession peak of $8983.9 billion of chained 2009 dollars in IIIQ1990 to the trough of $8865.6 billion in IQ1991 (http://www.bea.gov/iTable/index_nipa.cfm). The third recession explains the flattening of the curve in 1990.

clip_image026

Chart I-23, US, Civilian Labor Force, Thousands, 1979-1992

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 2013-2018. There is substantial underperformance relative to trend before the global recession. 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 NSA grew 9.4 percent from 142.828 million in Jan 2001 to 156.255 million in Jul 2009. The civilian labor force is 4.9 percent higher at 163.943 million in Sep 2019 than in Jul 2009, all numbers not seasonally adjusted. Chart I-24 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 163.943 million in Sep 2019 to the noninstitutional population of 259.638 million in Sep 2019 was 63.1 percent. The labor force of the US in Sep 2019 corresponding to 66.8 percent of participation in the population would be 173.438 million (0.668 x 259.638) The difference between the measured labor force in Sep 2019 of 163.943 million and the labor force in Sep 2019 with participation rate of 66.8 percent (as in Jul 2007) of 173.438 million is 9.495 million. The level of the labor force in the US has stagnated and is 9.495 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.

clip_image003[1]

Chart I-24, US, Civilian Labor Force, Thousands, 2001-2019

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. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (http://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.3 percent from the pre-recession peak of $8983.9 billion of chained 2009 dollars in IIIQ1990 to the trough of $8865.6 billion in IQ1991 (http://www.bea.gov/iTable/index_nipa.cfm). The third recession explains the flattening/decline of the curve in 1990 followed by incipient recovery.

clip_image027

Chart I-25, US, Civilian Labor Force Participation Rate, 1979-1992, %

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 during 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.

clip_image005[1]

Chart I-26, US, Civilian Labor Force Participation Rate, 2001-2019, %

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 million in Dec 1984 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. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (http://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.3 percent from the pre-recession peak of $8983.9 billion of chained 2009 dollars in IIIQ1990 to the trough of $8865.6 billion in IQ1991 (http://www.bea.gov/iTable/index_nipa.cfm). The third recession explains the increase of the curve in 1990 with 7.525 million unemployed NSA and 7.901 million SA.

clip_image028

Chart I-27, US, Unemployed Thousands 1979-1992

Source: US Bureau of Labor Statistics

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

Chart I-28 provides the number unemployed from 2001 to 2019. Using seasonally adjusted data, the number unemployed rose from 6.727 million in Oct 2006 to 15.352 million in Oct 2009, declining to 13.093 million in Dec 2011, 8.717 million in Dec 2014 and 7.916 million in Dec 2015. The number unemployed SA stood at 7.503 million in Dec 2016. The level of unemployment SA was 6.572 million in Dec 2017. The level of unemployment SA was 6.294 million in Dec 2018. The level of unemployment SA was 5.769 million in Sep 2019. 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 2013 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 7.542 million in Dec 2015 and 7.170 million in Dec 2016. The level of unemployment was 6.278 million in Dec 2017. The level of unemployment NSA was 6.029 million in Dec 2018. The level of unemployment NSA was 5.465 million in Sep 2019.

clip_image006[1]

Chart I-28, US, Unemployed Thousands 2001-2019

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. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (http://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.3 percent from the pre-recession peak of $8983.9 billion of chained 2009 dollars in IIIQ1990 to the trough of $8865.6 billion in IQ1991 (http://www.bea.gov/iTable/index_nipa.cfm). The third recession explains the increase of the curve in Dec 1990 with 6.0 percent unemployed NSA and 6.2 percent SA. The rate of unemployment continued to increase in 1991-92.

clip_image029

Chart I-29, US, Unemployment Rate, 1979-1992, %

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 5.0 percent in Dec 2015. The rate of unemployment SA stood at 4.7 percent in Dec 2016. The rate of unemployment SA reached 4.1 percent in Dec 2017. The rate of unemployment SA was 3.9 percent in Dec 2018. The rate of unemployment SA was 3.5 percent in Sep 2019.

clip_image007[1]

Chart I-30, US, Unemployment Rate, 2001-2019, %

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. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (http://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.3 percent from the pre-recession peak of $8983.9 billion of chained 2009 dollars in IIIQ1990 to the trough of $8865.6 billion in IQ1991 (http://www.bea.gov/iTable/index_nipa.cfm). The third recession explains the increase of the curve in Dec 1990 with 62.2 NSA and 62.2 percent SA.

clip_image030

Chart I-31, US, Employment Population Ratio, 1979-1992, %

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, 58.7 in Dec 2012, 58.7 in Dec 2013, 59.3 in Dec 2014 and 59.6 in Dec 2015, as shown in Chart I-32. The employment-population ratio reached 59.8 in Dec 2016. The employment population ratio stood at 60.2 in Dec

2017. The SA employment population ratio was at 60.6 in Dec 2018. The employment population ratio was 61.0 in Sep 2019. 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 reached 59.4 percent in Dec 2015 and 59.6 percent in Dec 2016. The employment population ratio stood at 60.0 in Dec 2017. The employment population ratio was 60.4 in Dec 2018. The employment population ratio was 61.0 in Sep 2019.

clip_image031

Chart I-32, US, Employment Population Ratio, 2001-2019, %

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. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (http://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.3 percent from the pre-recession peak of $8983.9 billion of chained 2009 dollars in IIIQ1990 to the trough of $8865.6 billion in IQ1991 (http://www.bea.gov/iTable/index_nipa.cfm). The third recession explains the increase of the curve in Dec 1990 with 774,000 NSA and 831,000 SA. The number unemployed 27 weeks or more rose to 1.924 million NSA in Dec 1992 and 2.056 million SA.

clip_image032

Chart I-33, US, Number Unemployed for 27 Weeks or More 1979-1992, 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 or over remained at around 6 million during the expansion compared with somewhat above 1 million before the contraction, falling to 1.866 million in Dec 2016 seasonally adjusted and 1.769 million not seasonally adjusted. The level unemployed for 27 weeks or over reached 1.511 million SA in Dec 2017 and 1.420 million NSA. The level unemployed for 27 weeks and over was 1.306 million SA in Dec 2018 and 1.219 million NSA in Dec 2018. The level of unemployed for 27 weeks and over was 1.314 million SA in Aug 2019 and 1.320 million NSA.

clip_image033

Chart I-34, US, Number Unemployed for 27 Weeks or More, 2001-2019, 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. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (http://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.3 percent from the pre-recession peak of $8983.9 billion of chained 2009 dollars in IIIQ1990 to the trough of $8865.6 billion in IQ1991 (http://www.bea.gov/iTable/index_nipa.cfm). The third recession explains the increase of the curve in Dec 1990 with 5.615 million NSA and 5.699 million SA. The level employed part-time for economic reasons rose to 6.347 million NSA in Dec 1992 and 6.458 million NSA.

clip_image034

Chart I-35, US, Part-Time for Economic Reasons, 1979-1992, 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 5.060 million not seasonally adjusted in Dec 2017. The level of part-time for economic reason was at 4.740 million NSA in Dec 2018 and 3.992 million NSA in Sep 2019.

clip_image009[1]

Chart I-36, US, Part-Time for Economic Reasons, 2001-2019, 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, 2.260 million in Dec 2014 and 1.833 million in Dec 2015. The level of marginally attached to the labor force reached 1.684 million in Dec 2016. The number of marginally attached to the labor force stood at 1.623 million in Dec 2017. The level of marginally attached to the labor force was at 1.556 million in Dec 2018 and 1.299 million in Sep 2019.

clip_image011[1]

Chart I-37, US, Marginally Attached to the Labor Force, 2001-2019

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 2018. The civilian noninstitutional population grew by 48.0 percent from 174.215 million in 1983 to 257.791 million in 2018 and labor force higher by 45.3 percent, growing from 111.550 million in 1983 to 162.075 million in 2018. Total nonfarm payroll employment seasonally adjusted (SA) increased 136,000 in Sep 2019 and private payroll employment increased 114,000. The Bureau of Labor Statistics states (https://www.bls.gov/news.release/empsit.nr0.htm): “Our analysis suggests that the net effect of these hurricanes [Harvey and Irma] was to reduce the estimate of total nonfarm payroll employment for September. There was no discernible effect on the national unemployment rate. No changes were made to either the establishment or household survey estimation procedures for the September figures.” The average monthly number of nonfarm jobs created from Sep 2017 to Sep 2018 was 219,417 using seasonally adjusted data, while the average number of nonfarm jobs created from Sep 2018 to Sep 2019 was 178,917 or decrease by 18.5 percent. The average number of private jobs created in the US from Sep 2017 to Sep 2018 was 208,500, using seasonally adjusted data, while the average from Sep 2018 to Sep 2019 was 166,667 or decrease by 20.1 percent. This blog calculates the effective labor force of the US at 171.880 million in Sep 2019 and 170.988 million in Sep 2018 (Table I-4), for growth of 0.892 million at average 74,333 per month. The difference between the average increase of 166,667 new private nonfarm jobs per month in the US from Sep 2018 to Sep 2019 and the 74,333-average monthly increase in the labor force from Sep 2018 to Sep 2019 is 92,334 monthly new jobs net of absorption of new entrants in the labor force. There are 18.693 million in job stress in the US currently. Creation of 92,334 new jobs per month net of absorption of new entrants in the labor force would require 202 months to provide jobs for the unemployed and underemployed (18.693 million divided by 92,334) or 17 years (202 divided by 12). The civilian labor force of the US in Sep 2019 not seasonally adjusted stood at 163.943 million with 5.465 million unemployed or effectively 13.402 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 171.880 million. Reduction of one million unemployed at the current rate of job creation without adding more unemployment requires 0.90 years (1 million divided by product of 92,334 by 12, which is 1,108,000). Reduction of the rate of unemployment to 5 percent of the labor force would be equivalent to unemployment of only 8.197 million (0.05 times labor force of 163.943 million). New net job creation would be minus 2.732 million (5.465 million unemployed minus 8.197 million unemployed at rate of 5 percent) that at the current rate would take 0.0 years (-2.732 million divided by 1.108). Under the calculation in this blog, there are 13.402 million unemployed by including those who ceased searching because they believe there is no job for them and effective labor force of 171.880 million. Reduction of the rate of unemployment to 5 percent of the labor force would require creating 5.341 million jobs net of labor force growth that at the current rate would take 4.3 years (13.402 million minus 0.05

(171.880 million) = 4.808 million divided by 1.108 using LF PART 66.2% and Total UEM in Table I-4). These calculations assume that there are no more recessions, defying United States economic history with periodic contractions of economic activity when unemployment increases sharply. The number employed in Sep 2019 was 158.478 million (NSA) or 11.163 million more people with jobs relative to the peak of 147.315 million in Aug 2007 while the civilian noninstitutional population of ages 16 years and over increased from 231.958 million in Jul 2007 to 259.638 million in Sep 2019 or by 27.680 million. The number employed increased 7.6 percent from Jul 2007 to Sep 2019 while the noninstitutional civilian population of ages of 16 years and over, or those available for work, increased 11.9 percent. The ratio of employment to population in Jul 2007 was 63.5 percent (147.315 million employed as percent of population of 231.958 million). The same ratio in Sep 2019 would result in 164.870 million jobs (0.635 multiplied by noninstitutional civilian population of 259.638 million). There are effectively 6.392 million fewer jobs in Sep 2019 than in Jul 2007, or 164.870 million minus 158.478 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 (https://cmpassocregulationblog.blogspot.com/2019/09/competitive-exchange-rate-and-interest.html and earlier https://cmpassocregulationblog.blogspot.com/2019/08/competitive-exchange-rate-policies.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. US economic growth has been at only 2.3 percent on average in the cyclical expansion in the 40 quarters from IIIQ2009 to IIQ2019. 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 third estimate of GDP for IIQ2019 (https://www.bea.gov/system/files/2019-09/gdp2q19_3rd.pdf). The average of 7.7 percent in the first four quarters of major cyclical expansions is in contrast with the rate of growth in the first four quarters of the expansion from IIIQ2009 to IIQ2010 of only 2.8 percent obtained by dividing GDP of $15,557.3 billion in IIQ2010 by GDP of $15,134.1 billion in IIQ2009 {[($15,557.3/$15,134.1) -1]100 = 2.8%], or accumulating the quarter on quarter growth rates (https://cmpassocregulationblog.blogspot.com/2019/09/dollar-appreciation-decreasing.html and earlier https://cmpassocregulationblog.blogspot.com/2019/08/revaluation-of-us-dollar-falling-yields.html). The expansion from IQ1983 to IQ1986 was at the average annual growth rate of 5.7 percent, 5.3 percent from IQ1983 to IIIQ1986, 5.1 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, 4.8 percent from IQ1983 to IVQ1988, 4.8 percent from IQ1983 to IQ1989, 4.7 percent from IQ1983 to IIQ1989, 4.6 percent from IQ1983 to IIIQ1989, 4.5 percent from IQ1983 to IVQ1989. 4.5 percent from IQ1983 to IQ1990, 4.4 percent from IQ1983 to IIQ1990, 4.3 percent from IQ1983 to IIIQ1990, 4.0 percent from IQ1983 to IVQ1990, 3.8 percent from IQ1983 to IQ1991, 3.8 percent from IQ1983 to IIQ1991, 3.8 percent from IQ1983 to IIIQ1991, 3.7 percent from IQ1983 to IVQ1991, 3.7 percent from IQ1983 to IQ1992, 3.7 percent from IQ1983 to IIQ1992, 3.7 percent from IQ1983 to IIIQ2019, 3.8 percent from IQ1983 to IVQ1992 and at 7.9 percent from IQ1983 to IVQ1983 (https://cmpassocregulationblog.blogspot.com/2019/09/dollar-appreciation-decreasing.html and earlier https://cmpassocregulationblog.blogspot.com/2019/08/revaluation-of-us-dollar-falling-yields.html). The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (https://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.3 percent from the pre-recession peak of $8983.9 billion of chained 2009 dollars in IIIQ1990 to the trough of $8865.6 billion in IQ1991 (https://apps.bea.gov/iTable/index_nipa.cfm). 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 IIQ2019 would have accumulated to 40.5 percent. GDP in IIQ2019 would be $22,145.6 billion (in constant dollars of 2012) if the US had grown at trend, which is higher by $3123.7 billion than actual $19,021.9 billion. There are more than three trillion dollars of GDP less than at trend, explaining the 18.7 million unemployed or underemployed equivalent to actual unemployment/underemployment of 10.9 percent of the effective labor force (Section I and earlier https://cmpassocregulationblog.blogspot.com/2019/09/increase-in-valuations-of-risk.html). US GDP in IIQ2019 is 14.1 percent lower than at trend. US GDP grew from $15,762.0 billion in IVQ2007 in constant dollars to $19,021.9 billion in IIQ2019 or 20.7 percent at the average annual equivalent rate of 1.6 percent. Professor John H. Cochrane (2014Jul2) estimates US GDP at more than 10 percent below trend. Cochrane (2016May02) measures GDP growth in the US at average 3.5 percent per year from 1950 to 2000 and only at 1.76 percent per year from 2000 to 2015 with only at 2.0 percent annual equivalent in the current expansion. Cochrane (2016May02) proposes drastic changes in regulation and legal obstacles to private economic activity. 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 of manufacturing at average 3.0 percent per year from Aug 1919 to Aug 2019. Growth at 3.0 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 108.2987 in Dec 2007 to 152.8943 in Aug 2019. The actual index NSA in Aug 2019 is 106.7670, which is 30.2 percent below trend. Manufacturing grew at the average annual rate of 3.3 percent between Dec 1986 and Dec 2006. Growth at 3.3 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 108.2987 in Dec 2007 to 158.1712 in Aug 2019. The actual index NSA in Aug 2019 is 106.7670, which is 32.5 percent below trend. Manufacturing output grew at average 2.0 percent between Dec 1986 and Aug 2019. Using trend growth of 2.0 percent per year, the index would increase to 136.4454 in Aug 2019. The output of manufacturing at 106.7670 in Aug 2019 is 21.8 percent below trend under this alternative calculation. Using the NAICS (North American Industry Classification System), manufacturing output fell from the high of 110.5147 in Jun 2007 to the low of 86.3800 in Apr 2009 or 21.8 percent. The NAICS manufacturing index increased from 86.3800 in Apr 2009 to 107.5806 in Aug 2019 or 24.5 percent. The NAICS manufacturing index increased at the annual equivalent rate of 3.5 percent from Dec 1986 to Dec 2006. Growth at 3.5 percent would increase the NAICS manufacturing output index from 106.6777 in Dec 2007 to 159.3596 in Aug 2019. The NAICS index at 107.5806 in Aug 2019 is 32.5 below trend. The NAICS manufacturing output index grew at 1.7 percent annual equivalent from Dec 1999 to Dec 2006. Growth at 1.7 percent would raise the NAICS manufacturing output index from 106.6777 in Dec 2007 to 129.8629 in Aug 2019. The NAICS index at 107.5806 in Aug 2019 is 17.2 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

90

-330

219

13

-783

3

-6

Feb

72

-2

-73

-82

-742

-92

-77

Mar

105

-129

173

-48

-803

180

138

Apr

73

-284

274

-236

-694

237

186

May

13

-43

280

-184

-344

534

107

Jun

194

-242

377

-166

-465

-136

120

Jul

111

-344

416

-198

-341

-88

83

Aug

-36

-158

-308

-279

-184

-5

144

Sep

-88

-180

1118

-460

-242

-64

109

Oct

-97

-276

273

-481

-198

269

219

Nov

-209

-121

355

-727

12

123

133

Dec

-276

-15

355

-704

-269

74

95

1984

2011

Private

Jan

443

20

28

Feb

484

213

256

Mar

272

232

255

Apr

363

321

329

May

306

95

150

Jun

381

235

200

Jul

310

61

176

Aug

243

122

154

Sep

312

236

270

Oct

285

204

189

Nov

353

132

159

Dec

125

204

221

1985

2012

Private

Jan

265

355

363

Feb

131

262

261

Mar

339

238

242

Apr

196

83

95

May

274

99

119

Jun

147

72

53

Jul

189

153

170

Aug

192

170

167

Sep

205

189

180

Oct

188

158

180

Nov

210

158

178

Dec

166

237

233

1986

2013

Private

Jan

123

195

213

Feb

115

279

267

Mar

87

136

147

Apr

187

192

193

May

127

224

229

Jun

-93

181

205

Jul

318

105

130

Aug

115

242

226

Sep

346

189

185

Oct

187

225

230

Nov

187

267

254

Dec

201

67

90

1987

2014

Private

Jan

169

177

183

Feb

241

168

157

Mar

245

250

242

Apr

335

327

307

May

229

221

242

Jun

172

324

261

Jul

347

227

221

Aug

173

188

234

Sep

227

311

269

Oct

491

258

238

Nov

234

286

271

Dec

289

269

254

1988

2015

Private

Jan

92

213

201

Feb

461

248

227

Mar

275

77

87

Apr

243

300

262

May

230

319

314

Jun

364

170

172

Jul

224

293

252

Aug

124

122

113

Sep

339

133

152

Oct

263

339

325

Nov

341

235

214

Dec

281

280

255

1989

2016

Private

Jan

263

90

73

Feb

266

232

206

Mar

194

234

196

Apr

170

211

205

May

122

15

8

Jun

114

282

275

Jul

42

336

241

Aug

51

135

162

Sep

249

270

245

Oct

107

128

130

Nov

276

170

184

Dec

84

215

191

1990

2017

Private

Jan

361

252

246

Feb

238

141

131

Mar

209

127

118

Apr

44

213

210

May

151

128

127

Jun

18

229

206

Jul

-33

204

192

Aug

-207

187

194

Sep

-97

18

16

Oct

-153

260

249

Nov

-154

220

212

Dec

-46

174

167

1991

2018

Private

Jan

-111

171

186

Feb

-321

330

304

Mar

-159

182

173

Apr

-209

196

184

May

-116

270

264

Jun

86

262

236

Jul

-45

178

173

Aug

21

282

246

Sep

25

108

108

Oct

19

277

285

Nov

-60

196

200

Dec

33

227

224

1992

2019

Private

Jan

42

312

297

Feb

-59

56

46

Mar

55

153

153

Apr

155

216

195

May

129

62

81

Jun

67

178

161

Jul

75

166

122

Aug

135

168

122

Sep

34

136

114

Oct

181

Nov

133

Dec

222

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 2019. 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 2013-2019 while population growth continued.

clip_image035

Chart I-38, US, Total Nonfarm Payroll Jobs SA 2001-2019

Source: US Bureau of Labor Statistics

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

Chart I-39 provides total nonfarm jobs SA from 1979 to 1992. Recovery is strong throughout the decade with the economy growing at trend over the entire economic cycle. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (http://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.3 percent from the pre-recession peak of $8983.9 billion of chained 2009 dollars in IIIQ1990 to the trough of $8865.6 billion in IQ1991 (http://www.bea.gov/iTable/index_nipa.cfm). The third recession explains the decline of the curve in 1990 followed by incipient recovery.

clip_image036

Chart I-39, US, Total Nonfarm Payroll Jobs SA 1979-1992

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.

clip_image037

Chart I-40, US, Total Private Payroll Jobs SA 2001-2019

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. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (http://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.3 percent from the pre-recession peak of $8983.9 billion of chained 2009 dollars in IIIQ1990 to the trough of $8865.6 billion in IQ1991 (http://www.bea.gov/iTable/index_nipa.cfm). The third recession explains the decline of the curve in 1990 followed by incipient recovery.

clip_image038

Chart I-41, US, Total Private Payroll Jobs SA 1979-1992

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 Sep 2018 to Sep 2019, not seasonally adjusted (NSA), are in Table I-9. Total nonfarm employment increased by 2,156,000 (row A, column Change), consisting of growth of total private employment by 1,979,000 (row B, column Change) and increase by 177,000 of government employment (row C, column Change). Monthly average growth of private payroll employment has been 164,917, which is mediocre relative to 20 to 30 million in job stress, while total nonfarm employment has grown on average by only 179,667 per month, which does not significantly reduce job stress with 74,333 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 112,000, at the monthly rate of 9,333 while private service providing employment grew by 1,712,000, at the monthly average rate of 142,667. An important feature in Table I-9 is that jobs in professional and business services increased 446,000 with temporary help services increasing 17,000. 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 and investment in a fractured job market. The segment leisure and hospitality added 326,000 jobs in 12 months. An important characteristic is that the loss of government jobs has stabilized in federal government with increase of 45,000 jobs while states increased 21,000 jobs and local government added 111,000 jobs. Local government provides the bulk of government jobs, 14.520 million, while federal government provides 2.846 million and states’ government 5.271 million.

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

Sep 2018

Sep 2019

Change

A Total Nonfarm

149,793

151,949

2,156

B Total Private

127,333

129,312

1,979

B1 Goods Producing

21,060

21,327

267

B1a

Manufacturing

12,772

12,884

112

B2 Private service providing

106,273

107,985

1,712

B2a Wholesale Trade

5,872

5,940

68

B2b Retail Trade

15,681

15,611

-70

B2c Transportation & Warehousing

5,474

5,580

106

B2d Financial Activities

8,599

8,699

100

B2e Professional and Business Services

21,193

21,639

446

B2e1 Temporary help services

3092

3109

17

B2f Health Care & Social Assistance

19,990

20,539

549

B2g Leisure & Hospitality

16,546

16,872

326

C Government

22,460

22,637

177

C1 Federal

2,801

2,846

45

C2 State

5,250

5,271

21

C3 Local

14,409

14,520

111

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 Aug 2019 and

Sep 2019. 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 136,000 SA total nonfarm jobs created in Sep 2019 relative to Aug 2019 actually correspond to increase of 362 thousand jobs NSA, as shown in row A. Most of this difference in Jan 2019 is due to the necessary benchmark and seasonal adjustments in the beginning of every year. The 114,000 total private payroll jobs SA created in Sep 2019 relative to Aug 2019 actually correspond to decrease of 618 thousand jobs NSA. The analysis of NSA job creation in the prior Table I-9 does show improvement over the 12 months ending in Sep 2019 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

Aug

2019

Sep

2019

∆

Aug

2019

Sep 2019

∆

A Total Nonfarm

151,586

151,722

136

151,587

151,949

362

B Total Private

128,967

129,081

114

129,930

129,312

-618

B1 Goods Producing

21,101

21,106

5

21,451

21,327

-124

B1a Constr.

7503

7510

7

7756

7689

-67

B Mfg

12,852

12,850

-2

12,935

12,884

-51

B2 Private Service Providing

107,866

107,975

109

108,479

107,985

-494

B2a Wholesale Trade

5939

5942

3

5961

5940

-21

B2b Retail Trade

15,755

15,743

-12

15,750

15,611

-139

B2c Couriers     & Mess.

774

778

4

735

748

13

B2d Health-care & Social Assistance

20,535

20,576

41

20,541

20,539

-2

B2De Profess. & Business Services

21,531

21,565

34

21,673

21,639

-34

B2De1 Temp Help Services

3033

3044

11

3040

3109

69

B2f Leisure & Hospit.

16,699

16,720

21

17,380

16,872

-508

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/

Industrial production increased 0.6 percent in Aug 2019 and decreased 0.1 percent in Jul 2019 after increasing 0.1 percent in Jun 2019, with all data seasonally adjusted, as shown in Table I-1. The Board of Governors of the Federal Reserve System conducted the annual revision of industrial production released on Mar 27, 2019 (https://www.federalreserve.gov/releases/g17/revisions/Current/DefaultRev.htm):

“The Federal Reserve has revised its index of industrial production (IP) and the related measures of capacity and capacity utilization.[1] On net, the revisions to the growth rates for total IP for recent years were small and positive, with the estimates for 2016 and 2017 a bit higher and the estimates for 2015 and 2018 slightly lower.[2] Total IP is still reported to have increased from the end of the recession in mid-2009 through late 2014 before declining in 2015 and rebounding in mid-2016. Subsequently, the index advanced around 7 1/2 percent over 2017 and 2018.

Capacity for total industry expanded modestly in each year from 2015 to 2017 before advancing 1 1/2 percent in 2018; it is expected to advance about 2 percent in 2019. Revisions for recent years were very small and showed slightly less expansion in most years relative to earlier reports.

In the fourth quarter of 2018, capacity utilization for total industry stood at 79.4 percent, about 3/4 percentage point above its previous estimate and about 1/2 percentage point below its long-run (1972–2018) average. The utilization rate in 2017 is also higher than its previous estimate.”

The report of the Board of Governors of the Federal Reserve System states (https://www.federalreserve.gov/releases/g17/Current/default.htm):

“Industrial production rose 0.6 percent in August after declining 0.1 percent in July. Manufacturing production increased 0.5 percent, more than reversing its decrease in July. Factory output has increased 0.2 percent per month over the past four months after having decreased 0.5 percent per month during the first four months of the year. In August, the indexes for utilities and mining moved up 0.6 percent and 1.4 percent, respectively. At 109.9 percent of its 2012 average, total industrial production was 0.4 percent higher in August than it was a year earlier. Capacity utilization for the industrial sector increased 0.4 percentage point in August to 77.9 percent, a rate that is 1.9 percentage points below its long-run (1972–2018) average.” In the six months ending in Aug 2019, United States national industrial production accumulated change of 0.3 percent at the annual equivalent rate of 0.6 percent, which is higher than growth of 0.4 percent in the 12 months ending in Aug 2019. Excluding growth of 0.6 percent in Aug 2019, growth in the remaining five months from Mar 2019 to Aug 2019 accumulated to minus 0.3 percent or minus 0.7 percent annual equivalent. Industrial production increased 0.6 percent in one of the past six months, increased 0.2 percent in one month, 0.1 percent in two months, minus 0.6 minus in one month and minus 0.1 percent in one month. Industrial production increased at annual equivalent 2.4 percent in the most recent quarter from Jun 2019 to Aug 2019 and decreased at 1.2 percent annual equivalent in the prior quarter from Mar to May 2019. Business equipment accumulated change of 0.5 percent in the six months from Mar 2018 to Aug 2019, at the annual equivalent rate of 0.9 percent, which is higher than growth of 0.4 percent in the 12 months ending in Aug 2019. The Fed analyzes capacity utilization of total industry in its report (https://www.federalreserve.gov/releases/g17/Current/default.htm): ” Capacity utilization for the industrial sector increased 0.4 percentage point in August to 77.9 percent, a rate that is 1.9 percentage points below its long-run (1972–2018) average.” United States industry apparently decelerated to a lower growth rate followed by possible acceleration and weakening growth in past months. There could be renewed growth with oscillations.

Manufacturing jobs not seasonally adjusted increased 112,000 from Sep 2018 to
Sep 2019 or at the average monthly rate of 9,333 Industrial production decreased 0.2 percent in Jul 2019 and increased 0.2 percent in Jun 2019 after increasing 0.2 percent in May 2019, with all data seasonally adjusted. The Board of Governors of the Federal Reserve System conducted the annual revision of industrial production released on Mar 27, 2019 (https://www.federalreserve.gov/releases/g17/revisions/Current/DefaultRev.htm):

“The Federal Reserve has revised its index of industrial production (IP) and the related measures of capacity and capacity utilization.[1] On net, the revisions to the growth rates for total IP for recent years were small and positive, with the estimates for 2016 and 2017 a bit higher and the estimates for 2015 and 2018 slightly lower.[2] Total IP is still reported to have increased from the end of the recession in mid-2009 through late 2014 before declining in 2015 and rebounding in mid-2016. Subsequently, the index advanced around 7 1/2 percent over 2017 and 2018.

Capacity for total industry expanded modestly in each year from 2015 to 2017 before advancing 1 1/2 percent in 2018; it is expected to advance about 2 percent in 2019. Revisions for recent years were very small and showed slightly less expansion in most years relative to earlier reports.

In the fourth quarter of 2018, capacity utilization for total industry stood at 79.4 percent, about 3/4 percentage point above its previous estimate and about 1/2 percentage point below its long-run (1972–2018) average. The utilization rate in 2017 is also higher than its previous estimate.”

Manufacturing decreased 22.3 percent from the peak in Jun 2007 to the trough in Apr 2009 and decreased 19.7 percent from the trough in Apr 2009 to Dec 2018. Manufacturing grew 22.3 percent from the trough in Apr 2009 to Aug 2019. Manufacturing in Aug 2019 is lower by 4.9 percent relative to 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 IIQ2019 would have accumulated to 40.5 percent. GDP in IIQ2019 would be $22,145.6 billion (in constant dollars of 2012) if the US had grown at trend, which is higher by $3123.7 billion than actual $19,021.9 billion. There are more than three trillion dollars of GDP less than at trend, explaining the 18.7 million unemployed or underemployed equivalent to actual unemployment/underemployment of 10.9 percent of the effective labor force (Section I and earlier https://cmpassocregulationblog.blogspot.com/2019/09/increase-in-valuations-of-risk.html). US GDP in IIQ2019 is 14.1 percent lower than at trend. US GDP grew from $15,762.0 billion in IVQ2007 in constant dollars to $19,021.9 billion in IIQ2019 or 20.7 percent at the average annual equivalent rate of 1.6 percent. Professor John H. Cochrane (2014Jul2) estimates US GDP at more than 10 percent below trend. Cochrane (2016May02) measures GDP growth in the US at average 3.5 percent per year from 1950 to 2000 and only at 1.76 percent per year from 2000 to 2015 with only at 2.0 percent annual equivalent in the current expansion. Cochrane (2016May02) proposes drastic changes in regulation and legal obstacles to private economic activity. 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 of manufacturing at average 3.0 percent per year from Aug 1919 to Aug 2019. Growth at 3.0 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 108.2987 in Dec 2007 to 152.8943 in Aug 2019. The actual index NSA in Aug 2019 is 106.7670, which is 30.2 percent below trend. Manufacturing grew at the average annual rate of 3.3 percent between Dec 1986 and Dec 2006. Growth at 3.3 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 108.2987 in Dec 2007 to 158.1712 in Aug 2019. The actual index NSA in Aug 2019 is 106.7670, which is 32.5 percent below trend. Manufacturing output grew at average 2.0 percent between Dec 1986 and Aug 2019. Using trend growth of 2.0 percent per year, the index would increase to 136.4454 in Aug 2019. The output of manufacturing at 106.7670 in Aug 2019 is 21.8 percent below trend under this alternative calculation. Using the NAICS (North American Industry Classification System), manufacturing output fell from the high of 110.5147 in Jun 2007 to the low of 86.3800 in Apr 2009 or 21.8 percent. The NAICS manufacturing index increased from 86.3800 in Apr 2009 to 107.5806 in Aug 2019 or 24.5 percent. The NAICS manufacturing index increased at the annual equivalent rate of 3.5 percent from Dec 1986 to Dec 2006. Growth at 3.5 percent would increase the NAICS manufacturing output index from 106.6777 in Dec 2007 to 159.3596 in Aug 2019. The NAICS index at 107.5806 in Aug 2019 is 32.5 below trend. The NAICS manufacturing output index grew at 1.7 percent annual equivalent from Dec 1999 to Dec 2006. Growth at 1.7 percent would raise the NAICS manufacturing output index from 106.6777 in Dec 2007 to 129.8629 in Aug 2019. The NAICS index at 107.5806 in Aug 2019 is 17.2 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 86.9 percent in IIQ2019. Most of US national income is in the form of services. In Sep 2019, there were 151.949 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 129.312 million NSA in Sep 2019 accounted for 85.1 percent of total nonfarm jobs of 151.949 million, of which 12.884 million, or 10.0 percent of total private jobs and 8.5 percent of total nonfarm jobs, were in manufacturing. Private service-providing jobs were 107.985 million NSA in Sep 2019, or 71.1 percent of total nonfarm jobs and 83.5 percent of total private-sector jobs. Manufacturing has share of 9.3 percent in US national income in IIQ2019 and durable goods 5.6 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 IQ2019

% Total

SAAR IIQ2019

% Total

National Income WCCA

17,562.3

100.0

17,797.6

100.0

Domestic Industries

17,304.5

98.5

17,496.6

98.3

Private Industries

15,288.2

87.1

15,465.6

86.9

Agriculture

115.7

0.7

121.5

0.7

Mining

196.0

1.1

204.1

1.1

Utilities

162.4

0.9

165.6

0.9

Construction

931.7

5.3

938.2

5.3

Manufacturing

1645.8

9.4

1661.0

9.3

Durable Goods

997.4

5.7

1000.9

5.6

Nondurable Goods

648.4

3.7

660.1

3.7

Wholesale Trade

1006.1

5.7

1013.9

5.7

Retail Trade

1161.7

6.6

1179.7

6.6

Transportation & WH

576.1

3.3

572.9

3.2

Information

624.9

3.6

625.3

3.5

Finance, Insurance, RE

3116.1

17.7

3159.8

17.8

Professional & Business Services

2638.5

15.0

2689.8

15.1

Education, Health Care

1819.2

10.4

1829.2

10.3

Arts, Entertainment

774.3

4.4

782.1

4.4

Other Services

519.6

3.0

522.6

2.9

Government

2016.3

11.5

2031.0

11.4

Rest of the World

257.9

1.5

301.0

1.7

Notes: SSAR: Seasonally-Adjusted Annual Rate; Percentages Calculates from Unrounded Data; 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

Chart I-42 provides output of durable manufacturing from 1972 to 2019. Output fell sharply during the global recession, recovering at relatively high pace. Output is lower than extrapolation of trend.

clip_image039

Chart I-42, US, Output of Durable Manufacturing, 1972-2019

Source: Board of Governors of the Federal Reserve

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

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 7.637 million in 2010 relative to 2007 and fell by 951,000 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 137.999 million in 2007 to 136.381 million in 2013, by 1.618 million or 1.2 percent. Nonfarm jobs increased from 137.999 million in 2007 to 149,041 million in 2018, by 11.042 million or 8.0 percent. The US noninstitutional population or in condition to work increased from 231.867 million in 2007 to 257.791 million in 2018, by 25.924 million or 11.2 percent. The ratio of nonfarm jobs of 137.999 million in 2007 to the noninstitutional population of 231.867 was 59.5. Nonfarm jobs in 2018 corresponding to the ratio of 59.5 of nonfarm jobs/noninstitutional population would be 153.386 million (0.595x257.791). The difference between actual nonfarm jobs of 149.073 million in 2018 and nonfarm jobs of 153.386 million that are equivalent to 59.5 percent of the noninstitutional population as in 2007 is 4.313 million fewer jobs. The proper explanation for this loss of work opportunities is not in secular stagnation but in cyclically slow growth. 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). 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 IIQ2019 would have accumulated to 40.5 percent. GDP in IIQ2019 would be $22,145.6 billion (in constant dollars of 2012) if the US had grown at trend, which is higher by $3123.7 billion than actual $19,021.9 billion. There are more than three trillion dollars of GDP less than at trend, explaining the 18.7 million unemployed or underemployed equivalent to actual unemployment/underemployment of 10.9 percent of the effective labor force (Section I and earlier https://cmpassocregulationblog.blogspot.com/2019/09/increase-in-valuations-of-risk.html). US GDP in IIQ2019 is 14.1 percent lower than at trend. US GDP grew from $15,762.0 billion in IVQ2007 in constant dollars to $19,021.9 billion in IIQ2019 or 20.7 percent at the average annual equivalent rate of 1.6 percent. Professor John H. Cochrane (2014Jul2) estimates US GDP at more than 10 percent below trend. Cochrane (2016May02) measures GDP growth in the US at average 3.5 percent per year from 1950 to 2000 and only at 1.76 percent per year from 2000 to 2015 with only at 2.0 percent annual equivalent in the current expansion. Cochrane (2016May02) proposes drastic changes in regulation and legal obstacles to private economic activity. 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 of manufacturing at average 3.0 percent per year from Aug 1919 to Aug 2019. Growth at 3.0 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 108.2987 in Dec 2007 to 152.8943 in Aug 2019. The actual index NSA in Aug 2019 is 106.7670, which is 30.2 percent below trend. Manufacturing grew at the average annual rate of 3.3 percent between Dec 1986 and Dec 2006. Growth at 3.3 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 108.2987 in Dec 2007 to 158.1712 in Aug 2019. The actual index NSA in Aug 2019 is 106.7670, which is 32.5 percent below trend. Manufacturing output grew at average 2.0 percent between Dec 1986 and Aug 2019. Using trend growth of 2.0 percent per year, the index would increase to 136.4454 in Aug 2019. The output of manufacturing at 106.7670 in Aug 2019 is 21.8 percent below trend under this alternative calculation. Using the NAICS (North American Industry Classification System), manufacturing output fell from the high of 110.5147 in Jun 2007 to the low of 86.3800 in Apr 2009 or 21.8 percent. The NAICS manufacturing index increased from 86.3800 in Apr 2009 to 107.5806 in Aug 2019 or 24.5 percent. The NAICS manufacturing index increased at the annual equivalent rate of 3.5 percent from Dec 1986 to Dec 2006. Growth at 3.5 percent would increase the NAICS manufacturing output index from 106.6777 in Dec 2007 to 159.3596 in Aug 2019. The NAICS index at 107.5806 in Aug 2019 is 32.5 below trend. The NAICS manufacturing output index grew at 1.7 percent annual equivalent from Dec 1999 to Dec 2006. Growth at 1.7 percent would raise the NAICS manufacturing output index from 106.6777 in Dec 2007 to 129.8629 in Aug 2019. The NAICS index at 107.5806 in Aug 2019 is 17.2 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

132,024

1981

91,297

2001

132,087

1982

89,689

2002

130,649

1983

90,295

2003

130,347

1984

94,548

2004

131,787

1985

97,532

2005

134,051

1986

99,500

2006

136,453

1987

102,116

2007

137,999

1988

105,378

2008

137,241

1989

108,051

2009

131,313

1990

109,527

2010

130,362

1991

108,427

2011

131,932

1992

108,802

2012

134,175

1993

110,935

2013

136,381

1994

114,399

2014

138,958

1995

117,407

2015

141,843

1996

119,836

2016

144,352

1997

122,951

2017

146,624

1998

126,157

2018

149,074

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

Chart I-43 provides annual nonfarm jobs from 2000 to 2018. Cyclically slow growth in the expansion since IIIQ2009 has not been sufficient to recover nonfarm jobs. Because of population growth, there are 4.345 fewer nonfarm jobs in the US in 2018 than in 2007.

clip_image040

Chart I-43, US, Annual Nonfarm Jobs, NSA, Thousands, 2000-2019

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

Chart I-44 provides annual nonfarm jobs in the US from 1979 to 1998. 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.

clip_image041

Chart I-44, US, Annual Nonfarm Jobs, NSA, Thousands, 1980-1998

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

Chart I-43, US, Annual Nonfarm Jobs, NSA, Thousands, 2000-2017

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

Chart I-44, US, Annual Nonfarm Jobs, NSA, Thousands, 1980-1997

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: US Bureau of Labor Statistics 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 $27.30/hour in Sep 2018 to $28.09/hour in Sep 2019, or by 2.9 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 68.0 percent of GDP (Table I-10 at https://cmpassocregulationblog.blogspot.com/2019/09/dollar-appreciation-decreasing.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), Section II and earlier https://cmpassocregulationblog.blogspot.com/2019/09/increase-in-valuations-of-risk.html and earlier https://cmpassocregulationblog.blogspot.com/2019/08/dollar-appreciation-contraction-of.html and earlier https://cmpassocregulationblog.blogspot.com/2019/07/twenty-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2019/06/contraction-of-risk-financial-assets.html and earlier https://cmpassocregulationblog.blogspot.com/2019/05/fluctuating-valuations-of-risk.html and earlier https://cmpassocregulationblog.blogspot.com/2019/04/flattening-yield-curve-of-treasury.html and earlier https://cmpassocregulationblog.blogspot.com/2019/03/dollar-revaluation-twenty-one-million.html and earlier https://cmpassocregulationblog.blogspot.com/2018/12/mediocre-cyclical-united-states.html and earlier https://cmpassocregulationblog.blogspot.com/2018/11/fluctuations-of-valuations-of-risk.html and earlier https://cmpassocregulationblog.blogspot.com/2018/09/fomc-increases-policy-interest-rate.html and earlier https://cmpassocregulationblog.blogspot.com/2018/09/revision-of-united-states-national.html and earlier https://cmpassocregulationblog.blogspot.com/2018/09/twenty-one-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2018/08/revision-of-united-states-national.html and earlier and earlier https://cmpassocregulationblog.blogspot.com/2018/07/twenty-one-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2018/06/stronger-dollar-mediocre-cyclical.html and earlier https://cmpassocregulationblog.blogspot.com/2018/05/twenty-one-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2018/04/twenty-two-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2018/03/twenty-three-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2018/02/twenty-four-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/12/dollar-devaluation-cyclically.html and earlier https://cmpassocregulationblog.blogspot.com/2017/12/twenty-one-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/11/unchanged-fomc-policy-rate-gradual.html and earlier https://cmpassocregulationblog.blogspot.com/2017/10/twenty-one-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/09/twenty-two-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/08/data-dependent-monetary-policy-with.html and earlier https://cmpassocregulationblog.blogspot.com/2017/07/rising-yields-twenty-two-million.html and earlier https://cmpassocregulationblog.blogspot.com/2017/06/twenty-two-million-unemployed-or.html https://cmpassocregulationblog.blogspot.com/2017/05/twenty-two-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/04/twenty-three-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/03/rising-valuations-of-risk-financial.html and earlier https://cmpassocregulationblog.blogspot.com/2017/02/twenty-six-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2017/01/twenty-four-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2016/12/rising-yields-and-dollar-revaluation.html and earlier (http://cmpassocregulationblog.blogspot.com/2016/12/mediocre-cyclical-united-states.html and earlier http://cmpassocregulationblog.blogspot.com/2016/12/rising-yields-and-dollar-revaluation.html and earlier http://cmpassocregulationblog.blogspot.com/2016/11/the-case-for-increase-in-federal-funds.html and earlier http://cmpassocregulationblog.blogspot.com/2016/09/interest-rates-and-valuations-of-risk.html and earlier http://cmpassocregulationblog.blogspot.com/2016/08/global-competitive-easing-or.html http://cmpassocregulationblog.blogspot.com/2016/07/financial-asset-values-rebound-from.html and earlier http://cmpassocregulationblog.blogspot.com/2016/05/twenty-four-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2016/04/proceeding-cautiously-in-monetary.html and earlier http://cmpassocregulationblog.blogspot.com/2016/03/twenty-five-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2016/01/closely-monitoring-global-economic-and.html and earlier http://cmpassocregulationblog.blogspot.com/2015/12/dollar-revaluation-and-decreasing.html and earlier http://cmpassocregulationblog.blogspot.com/2015/11/dollar-revaluation-constraining.html and earlier (http://cmpassocregulationblog.blogspot.com/2015/11/live-possibility-of-interest-rates.html and earlier http://cmpassocregulationblog.blogspot.com/2015/10/labor-market-uncertainty-and-interest.html and earlier http://cmpassocregulationblog.blogspot.com/2015/09/interest-rate-policy-dependent-on-what.html http://cmpassocregulationblog.blogspot.com/2015/09/interest-rate-policy-dependent-on-what.html http://cmpassocregulationblog.blogspot.com/2015/08/fluctuating-risk-financial-assets.html and earlier http://cmpassocregulationblog.blogspot.com/2015/06/international-valuations-of-financial.html and earlier http://cmpassocregulationblog.blogspot.com/2015/06/higher-volatility-of-asset-prices-at.html and earlier 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 changed 0.0 percent from $28.10 in Aug 2019 to $28.09 in Sep 2019. Average private weekly earnings increased $24.45 from $941.85 in Sep 2018 to $966.30 in Sep 2019 or 2.6 percent and increased $5.66 from $960.64 in Aug 2019 to $966.30 in Sep 2019 or 0.6 percent. The inflation-adjusted wage bill can only be calculated for Aug, 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 $27.00 in Aug 2018 to $27.88 in Aug 2019 or by 3.3 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 34.6 in

Aug 2018 and 34.5 in Aug 2019 (http://www.bls.gov/data/; see Table IB-2 below). The wage bill increased 3.0 percent in the 12 months ending in Aug 2019:

{[(wage bill in Aug 2019)/(wage bill in Aug 2018)]-1}100 =

{[($27.88x34.5)/($27.00x34.6)]-1]}100

= {[($961.86)/($934.2)]-1}100 = 3.0%

CPI inflation was 1.7 percent in the 12 months ending in Aug 2019 (http://www.bls.gov/cpi/) for an inflation-adjusted wage-bill change of 1.2 percent: {[(1.0296/1.017)-1]100 = 1.2%} (see Table IB-5 below for Aug 2019 with minor rounding difference). The wage bill for Sep 2019 before inflation adjustment increased 2.6 percent relative to the wage bill for Sep 2018:

{[(wage bill in Sep 2019)/(wage bill in Sep 2018)]-1}100 =

{[($28.24x34.7)/($27.44x34.8)]-1]}100

= {[$979.93)/$954.91]-1}100 = 2.6%}

Average hourly earnings increased 2.9 percent from Sep 2018 to Sep 2019 {[($28.24/$27.44) – 1]100 = 2.9%} while hours worked changed minus 0.3 percent {[(34.7/34.8) – 1]100 = -0.3%}. The increase of the wage bill is the product of the increase of hourly earnings of 2.9 percent and change of hours worked of minus 0.3 percent {[(1.029x0.997) -1]100 = 2.6%} with small rounding error. 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 (https://cmpassocregulationblog.blogspot.com/2019/09/uncertain-fomc-outlook-of-monetary.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

Sep 2018

Jul 2019

Aug 2019

Sep 2019

Total Private

$27.30

$27.99

$28.10

$28.09

Goods Producing

$28.40

$29.05

$29.12

$29.15

Service Providing

$27.03

$27.74

$27.86

$27.84

Average Weekly Earnings

Total Private

$941,85

$960.06

$960.64

$966.30

Goods Producing

$1,147.36

$1,167.81

$1,173.54

$1,180.58

Service Providing

$900.10

$920.97

$924.95

$924.29

Average Weekly Hours

Total Private

34.5

34.3

34.4

34.4

Goods Producing

40.4

40.2

40.3

40.5

Service Providing

33.3

33.2

33.2

33.2

Source: US Bureau of Labor Statistics

http://www.bls.gov/

Average weekly hours in Table IB-2 fell from 34.8 in Dec 2007 at the beginning of the contraction to 33.7 in Jun 2009, which was the last month of the contraction. Average weekly hours rose to 34.4 in Dec 2011 and oscillated to 34.8 in Dec 2012 and 34.7 in Dec 2013. Average weekly hours of all employees decreased to 34.6 in Dec 2014 and 34.5 in Dec 2015. Average weekly hours stood at 34.3 in Dec 2016. Average weekly hours reached 34.5 in Dec 2017, increasing to 34.8 in Dec 2018. Average weekly hours moved to 34.7 in Dec 2019. The BLS is revising the data from 2006 to 2009 (http://www.bls.gov/ces/#notices) now available in the release for Jan 2016 and subsequent months.

Table IB-2, US, Average Weekly Hours of All Employees, NSA 2006-2019

Year

May

Jun

Jul

Aug

Sep

Dec

Annual

2006

34.1

34.5

34.8

34.5

34.3

34.4

2007

34.3

34.5

34.8

34.5

34.8

34.8

34.4

2008

34.2

34.8

34.3

34.5

34.2

33.9

34.3

2009

33.6

33.7

33.8

34.3

33.7

33.8

33.8

2010

34.4

34.1

34.2

34.7

34.1

34.2

34.1

2011

34.6

34.3

34.4

34.4

34.3

34.4

34.3

2012

34.2

34.4

34.7

34.5

34.8

34.8

34.5

2013

34.3

34.9

34.3

34.5

34.9

34.7

34.4

2014

34.4

34.9

34.5

34.6

34.5

34.6

34.5

2015

34.4

34.5

34.5

35.1

34.3

34.5

34.5

2016

34.6

34.4

34.4

34.4

34.4

34.3

34.4

2017

34.3

34.4

34.8

34.4

34.3

34.5

34.4

2018

34.4

34.6

34.9

34.6

34.8

34.8

34.5

2019

34.3

34.9

34.3

34.5

34.7

Source: US Bureau of Labor Statistics

http://www.bls.gov/

Chart IB-1 provides average weekly hours of all employees seasonally adjusted. There was sharp contract during the global recession. Hours returned to levels before the contraction.

clip_image042

Chart IB-1, US, Average Weekly Hours of All Employees, SA 2006-2019

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 0.2 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 1.0 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 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 0.3 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 1.9 percent in the 12 months ending in Feb 2015 and 2.3 percent in the 12 months ending in Mar 2015. Real hourly earnings increased 2.4 percent in the 12 months ending in Apr 2015 and increased 2.4 percent in the 12 months ending in May 2015. Real hourly earnings increased 1.3 percent in the 12 months ending in Jun 2015 and increased 1.9 percent in the 12 months ending in Jul 2015. Real hourly earnings increased 2.8 percent in the 12 months ending in Aug 2015 and increased 2.2 percent in the 12 months ending in Sep 2015. Real hourly earnings increased 2.3 percent in the 12 months ending in Oct 2015 and increased 1.9 percent in the 12 months ending in Nov 2015. Real hourly earnings increased 1.8 percent in the 12 months ending in Dec 2015 and increased 1.1 percent in the 12 months ending in Jan 2016. Real hourly earnings increased 0.8 percent in the 12 months ending in Feb 2016 and increased 0.9 percent in the 12 months ending in Mar 2016. Real hourly earnings increased 1.5 percent in the 12 months ending in Apr 2016 and increased 2.2 percent in the 12 months ending in May 2016. Real hourly earnings increased 1.6 percent in the 12 months ending in Jun 2016 and increased 2.0 percent in the 12 months ending in Jul 2016. Real hourly earnings increased 0.8 percent in the 12 months ending in Aug 2016 and increased 1.2 percent in the 12 months ending in Sep 2016. Real hourly earnings increased 1.9 percent in the 12 months ending in Oct 2016 and increased 0.2 percent in the 12 months ending in Nov 2016. Real hourly earnings increased 0.5 percent in the 12 months ending in Dec 2016 and increased 0.7 percent in the 12 months ending in Jan 2017. Real hourly earnings changed 0.0 percent in the 12 months ending in Feb 2017 and increased 0.2 percent in the 12 months ending in Mar 2017. Real hourly earnings increased 1.0 percent in the 12 months ending in Apr 2017 and decreased 0.1 percent in the 12 months ending in May 2017. Real hourly earnings increased 0.9 percent in the 12 months ending in Jun 2017 and increased 1.6 percent in the 12 months ending in Jul 2017. Real hourly earnings increased 0.7 percent in the 12 months ending in Aug 2017 and increased 0.7 percent in the 12 months ending in Sep 2017. Real hourly earnings increased 0.3 percent in the 12 months ending in Oct 2017 and increased 0.2 percent in the 12 months ending in Nov 2017. Real hourly earnings increased 0.6 percent in the 12 months ending in Dec 2017. Real hourly earnings changed 0.0 percent in the 12 months ending in Jan 2018 and increased 0.4 percent in the 12 months ending in Feb 2018. Real hourly earnings increased 0.4 percent in the 12 months ending in Mar 2018 and increased 0.3 percent in the 12 months ending in Apr 2018. Real hourly earnings increased 0.1 percent in the 12 months ending in May 2018, changing 0.0 percent in the 12 months ending in Jun 2018. Real hourly earnings decreased 0.1 percent in the 12 months ending in Jul 2018. Real hourly earnings increased 0.5 percent in the 12 months ending in Aug 2018 and increased 1.4 percent in the 12 months ending in Sep 2013. Real hourly earnings changed 0.0 percent in the 12 months ending in Oct 2018. Real hourly earnings increased 1.1 percent in the 12 months ending in Nov 2018. Real hourly earnings increased 2.2 percent in the 12 months ending in Dec 2018. Real hourly earnings increased 1.5 percent in the 12 months ending in Jan 2019. Real hourly earnings increased 2.0 percent in the 12 months ending in Feb 2019. Real hourly earnings increased 1.3 percent in the 12 months ending in Mar 2019. Real hourly earnings increased 0.4 percent in the 12 months ending in Apr 2019. Real hourly earnings increased 1.3 percent in the 12 months ending in May 2019. Real hourly earnings increased 2.4 percent in the 12 months ending in Jun 2019. Real hourly earnings increased 0.9 percent in the 12 months ending in Jul 2019. Real hourly earnings increased 1.6 percent in the 12 months ending in Aug 2019. Real hourly earnings are oscillating in part because of world inflation waves caused by carry trades from zero interest rates to commodity futures (https://cmpassocregulationblog.blogspot.com/2019/09/uncertain-fomc-outlook-of-monetary.html and earlier https://cmpassocregulationblog.blogspot.com/2019/08/contraction-of-valuations-of-risk.html) and also by weak economic growth (https://cmpassocregulationblog.blogspot.com/2019/09/dollar-appreciation-decreasing.html and earlier https://cmpassocregulationblog.blogspot.com/2019/08/revaluation-of-us-dollar-falling-yields.html). The BLS is revising the data from 2006 to 2009 (http://www.bls.gov/ces/#notices) now available in the release for Jan 2016 and subsequent releases.

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*

$20.78*

4.1*

2.4

1.7*

Mar

$20.75

3.4

2.8

0.6

Apr

$20.99

3.1

2.6

0.5

May

$20.77

3.5

2.7

0.8

Jun

$20.77

3.6

2.7

0.9

Jul

$20.94

3.3

2.4

0.9

Aug

$20.80

3.3

2.0

1.3

Sep

$21.13

3.8

2.8

1.0

Oct

$21.01

2.4

3.5

-1.1

Nov

$21.07

3.1

4.3

-1.2

Dec

$21.31

3.4

4.1

-0.7

2010

Jan

$22.51

2.1

2.6

-0.5

Feb

$22.57

1.6

2.1

-0.5

Mar

$22.48

1.2

2.3

-1.1

Apr

$22.53

1.8

2.2

-0.4

May

$22.60

2.5

2.0

0.5

Jun

$22.34

1.7

1.1

0.6

Jul

$22.41

1.9

1.2

0.7

Aug

$22.55

1.8

1.1

0.7

Sep

$22.60

1.8

1.1

0.7

Oct

$22.70

1.9

1.2

0.7

Nov

$22.69

1.1

1.1

0.0

Dec

$22.76

1.7

1.5

0.2

2011

Jan

$23.16

2.9

1.6

1.3

Feb

$22.99

1.9

2.1

-0.2

Mar

$22.90

1.9

2.7

-0.8

Apr

$22.96

1.9

3.2

-1.3

May

$23.06

2.0

3.6

-1.5

Jun

$22.81

2.1

3.6

-1.4

Jul

$22.94

2.4

3.6

-1.2

Aug

$22.85

1.3

3.8

-2.4

Sep

$23.05

2.0

3.9

-1.8

Oct

$23.30

2.6

3.5

-0.9

Nov

$23.15

2.0

3.4

-1.4

Dec

$23.22

2.0

3.0

-1.0

2012

Jan

$23.56

1.7

2.9

-1.2

Feb

$23.40

1.8

2.9

-1.1

Mar

$23.39

2.1

2.7

-0.6

Apr

$23.61

2.8

2.3

0.5

May

$23.32

1.1

1.7

-0.6

Jun

$23.27

2.0

1.7

0.3

Jul

$23.48

2.4

1.4

1.0

Aug

$23.26

1.8

1.7

0.1

Sep

$23.67

2.7

2.0

0.7

Oct

$23.52

0.9

2.2

-1.3

Nov

$23.58

1.9

1.8

0.1

Dec

$23.85

2.7

1.7

1.0

2013

Jan

$23.88

1.4

1.6

-0.2

Feb

$23.90

2.1

2.0

0.2

Mar

$23.84

1.9

1.5

0.4

Apr

$23.92

1.3

1.1

0.2

May

$23.80

2.1

1.4

0.7

Jun

$23.92

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

$24.16

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

$24.30

2.1

2.1

0.0

Jun

$24.42

2.1

2.1

0.0

Jul

$24.31

2.1

2.0

0.1

Aug

$24.32

2.2

1.7

0.5

Sep

$24.50

1.4

1.7

-0.3

Oct

$24.52

2.0

1.7

0.3

Nov

$24.78

2.8

1.3

1.5

Dec

$24.59

1.2

0.8

0.4

2015

Jan

$24.88

2.2

-0.1

2.3

Feb

$25.05

1.9

0.0

1.9

Mar

$25.04

2.2

-0.1

2.3

Apr

$24.94

2.2

-0.2

2.4

May

$24.88

2.4

0.0

2.4

Jun

$24.77

1.4

0.1

1.3

Jul

$24.83

2.1

0.2

1.9

Aug

$25.04

3.0

0.2

2.8

Sep

$25.05

2.2

0.0

2.2

Oct

$25.14

2.5

0.2

2.3

Nov

$25.38

2.4

0.5

1.9

Dec

$25.21

2.5

0.7

1.8

2016

Jan

$25.50

2.5

1.4

1.1

Feb

$25.49

1.8

1.0

0.8

Mar

$25.49

1.8

0.9

0.9

Apr

$25.59

2.6

1.1

1.5

May

$25.68

3.2

1.0

2.2

Jun

$25.41

2.6

1.0

1.6

Jul

$25.52

2.8

0.8

2.0

Aug

$25.51

1.9

1.1

0.8

Sep

$25.73

2.7

1.5

1.2

Oct

$26.02

3.5

1.6

1.9

Nov

$25.85

1.9

1.7

0.2

Dec

$25.87

2.6

2.1

0.5

2017

Jan

$26.31

3.2

2.5

0.7

Feb

$26.17

2.7

2.7

0.0

Mar

$26.14

2.6

2.4

0.2

Apr

$26.42

3.2

2.2

1.0

May

$26.14

1.8

1.9

-0.1

Jun

$26.04

2.5

1.6

0.9

Jul

$26.35

3.3

1.7

1.6

Aug

$26.17

2.6

1.9

0.7

Sep

$26.47

2.9

2.2

0.7

Oct

$26.63

2.3

2.0

0.3

Nov

$26.47

2.4

2.2

0.2

Dec

$26.58

2.7

2.1

0.6

2018

Jan

$26.87

2.1

2.1

0.0

Feb

$26.84

2.6

2.2

0.4

Mar

$26.87

2.8

2.4

0.4

Apr

$27.16

2.8

2.5

0.3

May

$26.90

2.9

2.8

0.1

Jun

$26.79

2.9

2.9

0.0

Jul

$27.10

2.8

2.9

-0.1

Aug

$27.00

3.2

2.7

0.5

Sep

$27.44

3.7

2.3

1.4

Oct

$27.30

2.5

2.5

0.0

Nov

$27.34

3.3

2.2

1.1

Dec

$27.68

4.1

1.9

2.2

2019

Jan

$27.71

3.1

1.6

1.5

Feb

$27.77

3.5

1.5

2.0

Mar

$27.74

3.2

1.9

1.3

Apr

$27.81

2.4

2.0

0.4

May

$27.73

3.1

1.8

1.3

Jun

$27.85

4.0

1.6

2.4

Jul

$27.82

2.7

1.8

0.9

Aug

$27.88

3.3

1.7

1.6

Sep

$28.24

2.9

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 0.5 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 1.2 percent in Oct 2012 and gained 1.0 percent in Dec 2012 but declined 0.2 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 0.3 percent in Apr 2013, increasing 0.7 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 changed 0.0 percent in the 12 months ending in Apr 2014. Real hourly decreased 0.1 percent in the 12 months ending in May 2014. Real hourly earnings increased 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 0.4 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 0.4 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 1.9 percent in the 12 months ending in Feb 2015. Real hourly earnings increased 2.2 percent in the 12 months ending in Mar 2015 and increased 2.4 percent in the 12 months ending in Apr 2015. Real hourly earnings increased 2.4 percent in the 12 months ending in May 2015 and 1.3 percent in the 12 months ending in Jun 2015. Real hourly earnings increased 2.0 percent in the 12 months ending in Jul 2015 and increased 2.8 percent in the 12 months ending in Aug 2015. Real hourly earnings increased 2.3 percent in the 12 months ending in Sep 2015. Real hourly earnings increased 2.3 percent in the 12 months ending in Oct 2015 and increased 1.9 percent in the 12 months ending in Nov 2015. Average hourly earnings increased 1.8 percent in the 12 months ending in Dec 2015 and increased 1.0 percent in the 12 months ending in Jan 2016. Real hourly earnings increased 0.7 percent in the 12 months ending in Feb 2016 and increased 0.9 percent in the 12 months ending in Mar 2016. Real hourly earnings increased 1.5 percent in the 12 months ending in Apr 2016 and increased 2.2 percent in the 12 months ending in May 2016. Real hourly earnings increased 1.5 percent in the 12 months ending in Jun 2016 and increased 2.0 percent in the 12 months ending in Jul 2016. Real hourly earnings increased 0.8 percent in the 12 months ending in Aug 2016 and increased 1.2 percent in the 12 months ending in Sep 2016. Real hourly earnings increased 1.8 percent in the 12 months ending in Oct 2016 and increased 0.2 percent in the 12 months ending in Nov 2016. Real hourly earnings increased 0.6 percent in the 12 months ending in Dec 2016 and increased 0.7 percent in the 12 months ending in Jan 2017.

Real hourly earnings decreased 0.1 percent in the 12 months ending in Feb 2017 and increased 0.2 percent in the 12 months ending in Mar 2017. Real hourly earnings increased 0.9 percent in the 12 months ending in Apr 2017 and decreased 0.1 percent in the 12 months ending in May 2017. Real hourly earnings increased 0.9 percent in the 12 months ending in Jun 2017 and increased 1.4 percent in the 12 months ending in Jul 2017. Real hourly earnings increased 0.7 percent in the 12 months ending in Aug 2017 and increased 0.6 percent in the 12 months ending in Sep 2017. Real hourly earnings increased 0.4 percent in the 12 months ending in Oct 2017 and increased 0.2 percent in the 12 months ending in Nov 2017. Real hourly earnings increased 0.6 percent in the 12 months ending in Dec 2017. Real hourly earnings increased 0.1 percent in the 12 months ending in Jan 2018 and increased 0.4 percent in the 12 months ending in Feb 2018. Real hourly earnings increased 0.5 percent in the 12 months ending in Mar 2018 and increased 0.4 percent in the 12 months ending in Apr 2018. Real hourly earnings increased 0.1 percent in the 12 months ending in May 2018 and changed 0.0 percent in the 12 months ending in Jun 2018. Real hourly earnings decreased 0.1 percent in the 12 months ending in Jul 2018 and increased 0.5 percent in the 12 months ending in Aug 2018. Real hourly earnings increased 1.4 percent in the 12 months ending in Sep 2018 and changed 0.0 percent in the 12 months ending in Oct 2018. Real hourly earnings increased 1.1 percent in the 12 months ending in Nov 2018 and increased 2.2 percent in the 12 months ending in Dec 2018. Real hourly earnings increased 1.6 percent in the 12 months ending in Jan 2019 and increased 1.9 percent in the 12 months ending in Feb 2019. Real hourly earnings increased 1.3 percent in the 12 months ending in Mar 2019 and increased 0.4 percent in the 12 months ending in Apr 2019. Real hourly earnings increased 1.3 percent in the 12 months ending in May 2019 and increased 2.3 percent in the 12 months ending in Jun 2019. Real hourly earnings increased 0.8 percent in the 12 months ending in Jul 2019 and increased 1.5 percent in the 12 months ending in Aug 2019. Real hourly earnings of US workers are crawling in a fractured labor market. The economic welfare or wellbeing of United States workers deteriorated in a recovery without hiring (https://cmpassocregulationblog.blogspot.com/2019/09/competitive-exchange-rate-and-interest.html and earlier https://cmpassocregulationblog.blogspot.com/2019/08/competitive-exchange-rate-policies.html), stagnating/declining real wages and 18.7 million unemployed or underemployed (Section I and earlier https://cmpassocregulationblog.blogspot.com/2019/09/increase-in-valuations-of-risk.html) because of mediocre economic growth (https://cmpassocregulationblog.blogspot.com/2019/09/dollar-appreciation-decreasing.html and earlier https://cmpassocregulationblog.blogspot.com/2019/08/revaluation-of-us-dollar-falling-yields.html). The BLS is revising the data from 2006 to 2009 (http://www.bls.gov/ces/#notices) now available in the release for Jan 2016 and subsequent releases.

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

Year

May

Jun

Jul

Aug

Dec

2006

9.91

9.88

9.97

9.87

10.21

2007

9.99

9.97

10.05

10.00

10.15

2008

9.88

9.82

9.75

9.81

10.45

2009

10.31

10.18

10.22

10.27

10.36

2010

10.36

10.25

10.28

10.33

10.38

2011

10.21

10.11

10.15

10.09

10.29

2012

10.15

10.14

10.25

10.10

10.39

∆%12M

-0.6

0.3

1.0

0.1

1.0

2013

10.22

10.24

10.19

10.18

10.43

∆%12M

0.7

1.0

-0.6

0.8

0.4

2014

10.21

10.25

10.20

10.22

10.47

∆%12M

-0.1

0.1

0.1

0.4

0.4

2015

10.46

10.38

10.40

10.51

10.66

∆%12M

2.4

1.3

2.0

2.8

1.8

2016

10.69

10.54

10.61

10.59

10.72

∆%12M

2.2

1.5

2.0

0.8

0.6

2017

10.68

10.63

10.76

10.66

10.78

∆%12M

-0.1

0.9

1.4

0.7

0.6

2018

10.69

10.63

10.75

10.71

11.02

∆%12M

0.1

0.0

-0.1

0.5

2.2

2019

10.83

10.87

10.84

10.87

∆%12M

1.3

2.3

0.8

1.5

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 $10.33 in 2009 and $10.35 in 2010 to $10.24 in 2011 and $10.23 in 2012 or loss of 1.0 percent (data in http://www.bls.gov/data/). Annual real hourly earnings increased 0.6 percent in 2013 relative to 2012 and increased 0.5 percent in 2014 relative to 2013. Annual real hourly earnings increased 2.1 percent in 2015 relative to 2014. Annual real hourly earnings increased 1.1 percent in 2016 relative to 2015. Annual real hourly earnings increased 0.6 percent in 2017. Annual hourly earnings increased 0.6 percent in 2018. Annual real hourly earnings increased 7.0 percent from 2007 to 2018 at the rate of 0.6 percent per year. Annual real hourly earnings increased 4.6 percent from 2009 to 2018 at the rate of 0.5 percent per year and increased 7.9 percent from 2008 to 2018 at the rate of 0.8 percent per year. Real hourly earnings of US workers are crawling in a fractured labor market. The economic welfare or wellbeing of United States workers deteriorated in a recovery without hiring (https://cmpassocregulationblog.blogspot.com/2019/09/competitive-exchange-rate-and-interest.html and earlier https://cmpassocregulationblog.blogspot.com/2019/08/competitive-exchange-rate-policies.html), stagnating/declining real wages and 18.7 million unemployed or underemployed (Section I and earlier https://cmpassocregulationblog.blogspot.com/2019/09/increase-in-valuations-of-risk.html) because of mediocre economic growth (https://cmpassocregulationblog.blogspot.com/2019/09/dollar-appreciation-decreasing.html and earlier https://cmpassocregulationblog.blogspot.com/2019/08/revaluation-of-us-dollar-falling-yields.html). The BLS is revising the data from 2006 to 2009 (http://www.bls.gov/ces/#notices) now available for the release of Jan 2016 and subsequent releases.

clip_image043

Chart IB-2, US, Average Hourly Earnings of All Employees in Constant Dollars of 1982-1984, SA 2006-2019

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 Sep 2014. Average hourly earnings adjusted for inflation increased in Oct-Dec 2014, Jan-Dec 2015, Jan-Dec 2016 and Jan-Apr 2017, stabilizing in May 2017 and increasing/decreasing in oscillations in Jun-Dec 2017. Average hourly earnings adjusted for inflation increased in Jan-Apr 2018. Average hourly earnings adjusted for inflation stagnated in May-Jun 2018 and decreased in Jul 2018. Average hourly earnings increased 0.5 percent in Aug 2018. Average hourly earnings increased 1.4 percent in Sep 2018 and changed 0.0 percent in Oct 2018, increasing 1.1 percent in Nov 2018. Average hourly earnings increased 2.2 percent in Dec 2018 and increased 1.6 percent in Jan 2019. Average hourly earnings increased 1.9 percent in Feb 2019 and increased 1.3 percent in Mar 2019. Average hourly earnings increased 0.4 percent in Apr 2019 and increased 1.3 percent in May 2019. Average hourly earnings increased 2.3 percent in Jun 2019 and increased 0.8 percent in Jul 2019. Average hourly earnings increased 1.5 percent in Aug 2019.

clip_image044

Chart IB-3, Average Hourly Earnings of All Employees NSA 12-Month Percent Change, 1982-1984 Dollars, NSA 2007-2019

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

Average weekly earnings of the dataset of the US Bureau of Labor Statistics (BLS) are 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 fell 0.3 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 fell 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 0.6 percent in the 12 months ending in Jun 2012 and 1.8 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 1.9 percent in the 12 months ending in Sep 2012. Real weekly earnings fell 2.6 percent in the 12 months ending in Oct 2012 and increased 0.1 percent in the 12 months ending in Nov 2012 and 2.1 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 0.6 percent in the 12 months ending in Apr 2013 and increased 1.0 percent in the 12 months ending in May 2013. Average weekly earnings increased 2.5 percent in the 12 months ending in Jun 2013 and fell 1.7 percent in the 12 months ending in Jul 2013. Real weekly earnings increased 0.8 percent in the 12 months ending in Aug 2013, 1.2 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 1.3 percent in the 12 months ending in Nov 2013 and increased 0.1 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 0.6 percent in the 12 months ending in Oct 2014. Average weekly earnings increased 2.9 percent in the 12 months ending in Nov 2014 and increased 0.1 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 2.5 percent in the 12 months ending in Feb 2015. Average weekly earnings adjusted for inflation increased 2.3 percent in the 12 months ending in Mar 2015 and increased 2.4 percent in the 12 months ending in Apr 2015. Average weekly earnings adjusted for inflation increased 2.4 percent in the 12 months ending in May 2015 and increased 0.1 percent in the 12 months ending in Jun 2015. Average weekly earnings increased 2.0 percent in the 12 months ending in Jul 2015 and 4.2 percent in the 12 months ending in Aug 2015. Average weekly earnings adjusted for inflation increased 1.7 percent in the 12 months ending in Sep 2015 and increased 2.4 percent in the 12 months ending in Oct 2015. Average weekly earnings adjusted for inflation increased 1.6 percent in the 12 months ending in Nov 2015 and increased 1.5 percent in the 12 months ending in Dec 2015. Average weekly earnings increased 1.1 percent in the 12 months ending in Jan 2016. Average weekly earnings contracted 0.7 percent in the 12 months ending in Feb 2015 and contracted 0.5 percent in the 12 months ending in Mar 2016. Average weekly earnings increased 1.2 percent in the 12 months ending in Apr 2016 and increased 2.8 percent in the 12 months ending in May 2016. Average weekly earnings increased 1.3 percent in the 12 months ending in Jun 2016 and increased 1.6 percent in the 12 months ending in Jul 2016. Average weekly earnings decreased 1.2 percent in the 12 months ending in Aug 2016 and increased 1.5 percent in the 12 months ending in Sep 2016. Average weekly earnings increased 2.7 percent in the 12 months ending in Oct 2016 and decreased 1.3 percent in the 12 months ending in Nov 2016. Average weekly earnings decreased 0.1 percent in the 12 months ending in Dec 2016 and increased 1.2 percent in the 12 months ending in Jan 2017. Average weekly earnings decreased 0.1 percent in the 12 months ending in Feb 2017. Average weekly earnings decreased 0.1 percent in the 12 months ending in Mar 2017 and increased 1.9 percent in the 12 months ending in Apr 2017. Average weekly earnings decreased 0.9 percent in the 12 months ending in May 2017 and increased 0.8 percent in the 12 months ending in Jun 2017. Average weekly earnings increased 2.7 percent in the 12 months ending in Jul 2017 and increased 0.6 percent in the 12 months ending in Aug 2017. Average weekly earnings increased 0.3 percent in the 12 months ending in Sep 2017 and increased 0.3 percent in the 12 months ending in Oct 2017. Average weekly earnings increased 0.5 percent in the 12 months ending in Nov 2017. Average weekly earnings increased 1.2 percent in the 12 months ending in Dec 2017. Average weekly earnings decreased 1.1 percent in the 12 months ending in Jan 2018 and increased 0.9 percent in the 12 months ending in Feb 2018. Average weekly earnings increased 1.0 percent in the 12 months ending in Mar 2018 and increased 0.9 percent in the 12 months ending in Apr 2018. Average weekly earnings increased 0.4 percent in the 12 months ending in May 2018 and increased 0.6 percent in the 12 months ending in Jun 2018. Average weekly earnings increased 0.2 percent in the 12 months ending in Jul 2018. Average weekly earnings increased 1.0 percent in the 12 months ending in Aug 2018. Average weekly earnings increased 2.8 percent in the 12 months ending in Sep 2018 and decreased 1.2 percent in the 12 months ending in Oct 2018. Average weekly earnings increased 1.1 percent in the 12 months ending in Nov 2018. Average weekly earnings increased 3.1 percent in the 12 months ending in Dec 2018. Average weekly earnings increased 1.8 percent in the 12 months ending in Jan 2019 and increased 1.3 percent in the 12 months ending in Feb 2019. Average weekly earnings increased 1.1 percent in the 12 months ending in Mar 2019. Average weekly earnings decreased 1.1 percent in the 12 months ending in Apr 2019. Average weekly earnings increased 1.0 percent in the 12 months ending in May 2019 and increased 3.2 percent in the 12 months ending in Jun 2019. Average weekly earnings decreased 0.9 percent in the 12 months ending in Jul 2019. Average weekly earnings increased 1.2 percent in the 12 months ending in Aug 2019. 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 (https://cmpassocregulationblog.blogspot.com/2019/09/uncertain-fomc-outlook-of-monetary.html and earlier https://cmpassocregulationblog.blogspot.com/2019/08/contraction-of-valuations-of-risk.html). On an annual basis, average weekly earnings in constant 1982-1984 dollars increased from $347.18 in 2007 to $354.15 in 2013, by 2.0 percent or at the average rate of 0.3 percent per year (data in http://www.bls.gov/data/). Annual average weekly earnings in constant dollars of $352.95 in 2010 fell 0.4 percent to $351.58 in 2011. Annual average weekly earnings increased from $347.18 in 2007 to $356.90 in 2014 or by 2.8 at the average rate of 0.4 percent. Annual average weekly earnings in constant dollars increased from $347.18 in 2007 to $364.62 in 2015 by 5.0 percent at the average rate of 0.6 percent per year. Annual average weekly earnings in constant dollar increased from $347.18 in 2007 to $367.16 in 2016 by 5.8 percent at the average rate of 0.6 percent per year. Average weekly earnings in constant dollars increased from $347.18 in 2007 to $369.74 in 2017 by 6.5 percent at the average rate of 0.6 percent per year. Average weekly earnings in constant dollars increased from $347.18 in 2007 to $372.77 in 2018 by 7.4 percent at the average rate of 0.6 percent per year. 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 18.7 million unemployed or underemployed (Section I and earlier https://cmpassocregulationblog.blogspot.com/2019/09/increase-in-valuations-of-risk.html) because of mediocre economic growth (https://cmpassocregulationblog.blogspot.com/2019/09/dollar-appreciation-decreasing.html and earlier https://cmpassocregulationblog.blogspot.com/2019/08/revaluation-of-us-dollar-falling-yields.html).The BLS is revising the data from 2006 to 2009 (http://www.bls.gov/ces/#notices) now available for the release of Jan 2016 and subsequent releases.

Table IB-5, US, Average Weekly Earnings of All Employees in Constant Dollars of 1982-1984, NSA 2006-2019

Year

Jun

Jul

Aug

Dec

2006

340.92

346.80

340.60

351.16

2007

343.92

349.84

345.14

353.08

2008

341.61

334.32

338.41

354.11

2009

343.10

345.30

352.16

350.29

2010

349.50

351.55

358.43

355.14

2011

346.61

349.30

346.97

353.95

2012

348.83

355.63

348.33

361.49

∆%12M

0.6

1.8

0.4

2.1

2013

357.51

349.61

351.08

361.82

∆%12M

2.5

-1.7

0.8

0.1

2014

357.58

352.03

353.78

362.34

∆%12M

0.0

0.7

0.8

0.1

2015

358.10

358.95

368.80

367.72

∆%12M

0.1

2.0

4.2

1.5

2016

362.67

364.83

364.35

367.53

∆%12M

1.3

1.6

-1.2

-0.1

2017

365.69

374.60

366.67

371.98

∆%12M

0.8

2.7

0.6

1.2

2018

367.85

375.30

370.50

383.41

∆%12M

0.6

0.2

1.0

3.1

2019

379.46

371.92

374.91

∆%12M

3.2

-0.9

1.2

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 2012-2019. The increase in the final segment is mostly because of collapse of commodity prices in reversals of carry trade exposures followed by reversal of carry trades and new decreases/stability. The BLS is revising the data from 2006 to 2009 (http://www.bls.gov/ces/#notices) available for the release of Jan 2016 and subsequent releases.

clip_image045

Chart IB-4, US, Average Weekly Earnings of All Employees in Constant Dollars of 1982-1984, SA 2006-2019

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. The BLS is revising the data from 2006 to 2009 (http://www.bls.gov/ces/#notices) available for the release of Jan 2016 and subsequent releases. There is the same pattern of contraction during the global recession in 2008 and then again weakness in the recovery without hiring and inflation waves https://cmpassocregulationblog.blogspot.com/2019/09/uncertain-fomc-outlook-of-monetary.html and earlier https://cmpassocregulationblog.blogspot.com/2019/08/contraction-of-valuations-of-risk.html and earlier https://cmpassocregulationblog.blogspot.com/2019/07/global-manufacturing-stress-world.html and earlier https://cmpassocregulationblog.blogspot.com/2019/06/fomc-outlook-uncertainty-central-bank.html and earlier https://cmpassocregulationblog.blogspot.com/2019/05/contraction-of-risk-financial-assets.html and earlier https://cmpassocregulationblog.blogspot.com/2019/04/increasing-valuations-of-risk-financial.html and earlier https://cmpassocregulationblog.blogspot.com/2019/03/inverted-yield-curve-of-treasury.html and https://cmpassocregulationblog.blogspot.com/2019/02/revaluation-of-yuanus-dollar-exchange.html earlier https://cmpassocregulationblog.blogspot.com/2019/01/world-inflation-waves-world-financial_24.html and earlier https://cmpassocregulationblog.blogspot.com/2018/12/increase-of-interest-rates-by-monetary.html and earlier https://cmpassocregulationblog.blogspot.com/2018/11/weakening-gdp-growth-in-major-economies.html and earlier https://cmpassocregulationblog.blogspot.com/2018/10/oscillation-of-valuations-of-risk.html and earlier https://cmpassocregulationblog.blogspot.com/2018/09/world-inflation-waves-united-states.html and earlier https://cmpassocregulationblog.blogspot.com/2018/08/world-inflation-waves-lost-economic.html https://cmpassocregulationblog.blogspot.com/2018/07/continuing-gradual-increases-in-fed.html and earlier https://cmpassocregulationblog.blogspot.com/2018/06/world-inflation-waves-united-states.html and earlier https://cmpassocregulationblog.blogspot.com/2018/05/dollar-strengthening-world-inflation.htm and earlier https://cmpassocregulationblog.blogspot.com/2018/04/rising-yields-world-inflation-waves.html and earlier https://cmpassocregulationblog.blogspot.com/2018/03/decreasing-valuations-of-risk-financial.html and earlier https://cmpassocregulationblog.blogspot.com/2018/02/world-inflation-waves-united-states.html and earlier https://cmpassocregulationblog.blogspot.com/2018/01/dollar-devaluation-and-increasing.html and earlier https://cmpassocregulationblog.blogspot.com/2017/12/fomc-increases-interest-rates-with.html and earlier https://cmpassocregulationblog.blogspot.com/2017/11/dollar-devaluation-and-decline-of.html and earlier https://cmpassocregulationblog.blogspot.com/2017/10/world-inflation-waves-long-term-and.html and earlier https://cmpassocregulationblog.blogspot.com/2017/09/dollar-devaluation-world-inflation.html (https://cmpassocregulationblog.blogspot.com/2017/08/fluctuating-valuations-of-risk.html and earlier (https://cmpassocregulationblog.blogspot.com/2017/07/dollar-devaluation-and-valuation-of.html and earlier https://cmpassocregulationblog.blogspot.com/2017/06/fomc-interest-rate-increase-planned.html and earlier https://cmpassocregulationblog.blogspot.com/2017/05/dollar-devaluation-world-inflation.html https://cmpassocregulationblog.blogspot.com/2017/04/world-inflation-waves-united-states.html and earlier https://cmpassocregulationblog.blogspot.com/2017/03/fomc-increases-interest-rates-world.html and earlier https://cmpassocregulationblog.blogspot.com/2017/02/world-inflation-waves-united-states.html and earlier http://cmpassocregulationblog.blogspot.com/2017/01/world-inflation-waves-united-states.html and earlier (http://cmpassocregulationblog.blogspot.com/2016/12/of-course-economic-outlook-is-highly.html and earlier http://cmpassocregulationblog.blogspot.com/2016/11/interest-rate-increase-could-well.html and earlier http://cmpassocregulationblog.blogspot.com/2016/10/dollar-revaluation-world-inflation.html and earlier http://cmpassocregulationblog.blogspot.com/2016/09/interest-rates-and-volatility-of-risk.html and earlier http://cmpassocregulationblog.blogspot.com/2016/08/interest-rate-policy-uncertainty-and.html and earlier http://cmpassocregulationblog.blogspot.com/2016/07/oscillating-valuations-of-risk.html and earlier http://cmpassocregulationblog.blogspot.com/2016/06/fomc-projections-world-inflation-waves.html and earlier http://cmpassocregulationblog.blogspot.com/2016/05/most-fomc-participants-judged-that-if.html and earlier http://cmpassocregulationblog.blogspot.com/2016/04/contracting-united-states-industrial.html and earlier http://cmpassocregulationblog.blogspot.com/2016/03/monetary-policy-and-competitive.html and earlier http://cmpassocregulationblog.blogspot.com/2016/02/squeeze-of-economic-activity-by-carry.html and earlier http://cmpassocregulationblog.blogspot.com/2016/01/uncertainty-of-valuations-of-risk.html and earlier http://cmpassocregulationblog.blogspot.com/2015/12/liftoff-of-interest-rates-with-monetary.html and earlier http://cmpassocregulationblog.blogspot.com/2015/11/interest-rate-liftoff-followed-by.html and earlier http://cmpassocregulationblog.blogspot.com/2015/10/interest-rate-policy-quagmire-world.html and earlier http://cmpassocregulationblog.blogspot.com/2015/09/interest-rate-increase-on-hold-because.html http://cmpassocregulationblog.blogspot.com/2015/08/global-decline-of-values-of-financial.html and earlier http://cmpassocregulationblog.blogspot.com/2015/07/fluctuating-risk-financial-assets.html http://cmpassocregulationblog.blogspot.com/2015/06/fluctuating-financial-asset-valuations.html http://cmpassocregulationblog.blogspot.com/2015/05/interest-rate-policy-and-dollar.html 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).

clip_image046

Chart IB-5, US, Average Weekly Earnings of All Employees NSA in Constant Dollars of 1982-1984 12-Month Percent Change, NSA 2007-2019

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

© Carlos M. Pelaez, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019.

Posted by at

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)