New Nonfarm Hires of 6.343 Million in Jul 2020, New 2.421 Million Full-Time Jobs Created in August 2020, Recovery Without Hiring in the Lost Economic Cycle of the Global Recession with Economic Growth Underperforming Below Trend Worldwide, Fifteen Million Fewer Full-Time Jobs In the Global Recession, with Output in the US Reaching a High in Feb 2020 (https://www.nber.org/cycles.html), in the Lockdown of Economic Activity in the COVID-19 Event, Youth and Middle-Age Unemployment, United States Inflation, World Cyclical Slow Growth, and Government Intervention in Globalization: Part I
Carlos M. Pelaez
© Carlos M. Pelaez, 2009,
2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019, 2020.
IA1 Hiring Collapse
IA2 Labor Underutilization
ICA3 Fifteen Million Fewer Full-time
Jobs
IA4 Theory and Reality of Cyclical Slow
Growth Not Secular Stagnation: Youth and Middle-Age Unemployment
IC United
States Inflation
IC Long-term US Inflation
ID Current US Inflation
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 Recovery without Hiring. Professor
Edward P. Lazear (2012Jan19) at Stanford University finds that recovery of
hiring in the US to peaks attained in 2007 requires an increase of hiring by 30
percent while hiring levels increased by only 4 percent from Jan 2009 to Jan
2012. The high level of unemployment with low level of hiring reduces the
statistical probability that the unemployed will find a job. According to
Lazear (2012Jan19), the probability of finding a new job in early 2012 is about
one third of the probability of finding a job in 2007. Improvements in labor
markets have not increased the probability of finding a new job. Lazear
(2012Jan19) quotes an essay coauthored with James R. Spletzer in the American Economic Review (Lazear and
Spletzer 2012Mar, 2012May) on the concept of churn. A dynamic labor market occurs when a similar number of
workers is hired as those who are separated. This replacement of separated
workers is called churn, which
explains about two-thirds of total hiring. Typically, wage increases received
in a new job are higher by 8 percent. Lazear (2012Jan19) argues that churn has
declined 35 percent from the level before the recession in IVQ2007. Because of
the collapse of churn, there are no opportunities in escaping falling real
wages by moving to another job. As this blog argues, there are meager chances
of escaping unemployment because of the collapse of hiring and those employed
cannot escape falling real wages by moving to another job (Section I and earlier https://cmpassocregulationblog.blogspot.com/2020/07/collapse-of-united-states-dynamism-of.html). Lazear and
Spletzer (2012Mar, 1) argue that reductions of churn reduce the operational
effectiveness of labor markets. Churn is part of the allocation of resources or
in this case labor to occupations of higher marginal returns. The decline in
churn can harm static and dynamic economic efficiency. Losses from decline of
churn during recessions can affect an economy over the long-term by preventing
optimal growth trajectories because resources are not used in the occupations
where they provide highest marginal returns. Lazear and Spletzer (2012Mar 7-8)
conclude that: “under a number of assumptions, we estimate that the loss in
output during the recession [of 2007 to 2009] and its aftermath resulting from
reduced churn equaled $208 billion. On an annual basis, this amounts to about
.4% of GDP for a period of 3½ years.”
There are two
additional facts discussed below: (1) there are about ten million fewer
full-time jobs currently than before the recession of 2008 and 2009; and (2)
the extremely high and rigid rate of youth unemployment is denying an early
start to young people ages 16 to 24 years while unemployment of ages 45 years
or over has swelled. There are four subsections. IA1 Hiring Collapse provides the data and analysis on the weakness of
hiring in the United States economy. IA2 Labor
Underutilization provides the measures of labor underutilization of the
Bureau of Labor Statistics (BLS). Statistics on the decline of full-time
employment are in IA3 Ten Million Fewer
Full-time Jobs. IA4 Theory and
Reality of Cyclical Slow Growth Not Secular Stagnation: Youth and Middle-Age
Unemployment provides the data on high unemployment of ages 16 to 24 years
and of ages 45 years or over.
IA1 Hiring Collapse. An important
characteristic of the current fractured labor market of the US is the closing
of the avenue for exiting unemployment and underemployment normally available
through dynamic hiring. Another avenue that is closed is the opportunity for
advancement in moving to new jobs that pay better salaries and benefits again
because of the collapse of hiring in the United States. Those who are
unemployed or underemployed cannot find a new job even accepting lower wages
and no benefits. The employed cannot escape declining inflation-adjusted
earnings because there is no hiring. The objective of this section is to
analyze hiring and labor underutilization in the United States.
Blanchard and
Katz (1997, 53 consider an appropriate measure of job stress:
“The right
measure of the state of the labor market is the exit rate from unemployment,
defined as the number of hires divided by the number unemployed, rather than
the unemployment rate itself. What matters to the unemployed is not how many of
them there are, but how many of them there are in relation to the number of
hires by firms.”
The natural rate
of unemployment and the similar NAIRU are quite difficult to estimate in
practice (Ibid; see Ball and Mankiw 2002).
The Bureau of
Labor Statistics (BLS) created the Job Openings and Labor Turnover Survey
(JOLTS) with the purpose that (https://www.bls.gov/jlt/jltover.htm#purpose):
“These data
serve as demand-side indicators of labor shortages at the national level. Prior
to JOLTS, there was no economic indicator of the unmet demand for labor with
which to assess the presence or extent of labor shortages in the United States.
The availability of unfilled jobs—the jobs opening rate—is an important measure
of tightness of job markets, parallel to existing measures of unemployment.”
The BLS collects data from about 16,000 US
business establishments in nonagricultural industries through the 50 states and
DC. The data are released monthly and constitute an important complement to
other data provided by the BLS (see also Lazear and Spletzer 2012Mar, 6-7).
Hiring in the nonfarm sector (HNF) has
increased from 64.873 million in 2006 to 69.943 million in 2019 or by 5.070
million while hiring in the private sector (HP) has increased from 60.540
million in 2006 to 65.567 million in 2019 or by 5.027 million, as shown in
Table I-1. The ratio of nonfarm hiring to employment (RNF) has fallen from 47.5
in 2005 to 46.3 in 2019 and in the private sector (RHP) from 53.2 in 2005 to
51.1 in 2019. Hiring has not recovered as in
previous cyclical expansions because of the low rate of economic growth in the
current cyclical expansion. The civilian noninstitutional population or those
in condition to work increased from 228.815 million in 2006 to 259.175 million
in 2019 or by 30.360 million. Hiring has not recovered prerecession levels
while needs of hiring multiplied because of growth of population by more than
30 million. Private hiring of 60.450 million in 2006 was equivalent to 26.4
percent of the civilian noninstitutional population of 228.815, or those in
condition of working, increasing to 65.567 million in 2019 or 25.3 percent of
the civilian noninstitutional population of 259.175 million in 2019. The
percentage of hiring in civilian noninstitutional population of 26.4 percent in
2006 would correspond to 68.422 million of hiring in 2019 (0.264x259.175),
which would be 2.855 million higher than actual 65.567 million in 2019. 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 1.2 percent on average in
the cyclical expansion in the 44 quarters from IIIQ2009 to IIQ2020 and in the
global recession with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the
lockdown of economic activity in the COVID-19 event. 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
second estimate of GDP for IIQ2020 (https://www.bea.gov/sites/default/files/2020-08/gdp2q20_2nd.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/2020/08/d-ollar-devaluation-and-yuan.html and earlier https://cmpassocregulationblog.blogspot.com/2020/08/contraction-of-united-states-gdp-at-32_57.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, 3.7 percent from IQ1983 to
IQ1993, 3.6 percent from IQ1983 to IIQ1993, 3.6 percent from IQ1983 to
IIIQ1993, 3.7 percent from IQ1983 to IVQ1993 and at 7.9 percent from IQ1983 to
IVQ1983 (https://cmpassocregulationblog.blogspot.com/2020/08/d-ollar-devaluation-and-yuan.html and earlier https://cmpassocregulationblog.blogspot.com/2020/08/contraction-of-united-states-gdp-at-32_57.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 IIQ2020 and in the global recession with output in the US
reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the
lockdown of economic activity in the COVID-19 event would have accumulated to
44.7 percent. GDP in IIQ2020 would be $22,807.6 billion (in constant dollars of
2012) if the US had grown at trend, which is higher by $5525.4 billion than
actual $17,282.2 billion. There are more than five trillion dollars of GDP less
than at trend, explaining the 34.8 million unemployed or underemployed
equivalent to actual unemployment/underemployment of 20.2 percent of the
effective labor force with the largest part originating in the global recession
with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the
lockdown of economic activity in the COVID-19 event (https://cmpassocregulationblog.blogspot.com/2020/09/exchange-rate-fluctuations-1.html and earlier https://cmpassocregulationblog.blogspot.com/2020/08/thirty-eight-million-unemployed-or.html). Unemployment is decreasing while employment is increasing in
initial adjustment of the lockdown of economic activity in the global recession
resulting from the COVID-19 event (https://www.bls.gov/cps/employment-situation-covid19-faq-june-2020.pdf). US GDP in IIQ2020 is 24.2 percent lower than at trend. US GDP
grew from $15,762.0 billion in IVQ2007 in constant dollars to $17,282.5
billion in IIQ2020 or 9.6 percent at the average annual equivalent rate of 0.7
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 2.9 percent per year from Jul 1919
to Jul 2020. Growth at 2.9 percent per year would raise the NSA index of
manufacturing output (SIC, Standard Industrial Classification) from 108.2987 in
Dec 2007 to 155.1850 in Jul 2020. The actual index NSA in Jul 2020 is 94.7916
which is 38.9 percent below trend. The underperformance of manufacturing in Jul
2020 originates partly in the earlier global recession augmented by the current
global recession with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown
of economic activity in the COVID-19. 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 162.9490 in Jul 2020.
The actual index NSA in Jul 2020 is 94.7916, which is 41.8 percent below trend.
Manufacturing output grew at average 1.6 percent between Dec 1986 and Jul 2020.
Using trend growth of 1.6 percent per year, the index would increase to
132.2418 in Jul 2020. The output of manufacturing at 94.7916 in Jul 2020 is
28.3 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 95.7434 in Jul 2020 or 10.8 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 164.4646 in Jul
2020. The NAICS index at 95.7434 in Jul 2020 is 41.8 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 131.8850 in Jul 2020. The NAICS index at
95.7434 in Jul 2020 is 27.4 percent below trend under this alternative
calculation.
Table I-1, US,
Annual Total Nonfarm Hiring (HNF) and Total Private Hiring (HP) in the US in
Thousands and Percentage of Total Employment
|
|
HNF |
Rate RNF |
HP |
Rate HP |
|
2001 |
62,569 |
47.4 |
58,463 |
52.7 |
|
2002 |
58,199 |
44.5 |
54,254 |
49.7 |
|
2003 |
56,852 |
43.6 |
53,295 |
49.0 |
|
2004 |
60,525 |
45.9 |
56,673 |
51.4 |
|
2005 |
63,697 |
47.5 |
59,760 |
53.2 |
|
2006 |
64,873 |
47.5 |
60,540 |
52.9 |
|
2007 |
63,864 |
46.3 |
59,431 |
51.3 |
|
2008 |
56,407 |
41.1 |
52,808 |
46.0 |
|
2009 |
46,750 |
35.6 |
43,391 |
39.9 |
|
2010 |
49,655 |
38.1 |
45,749 |
42.4 |
|
2011 |
51,655 |
39.2 |
48,550 |
44.2 |
|
2012 |
53,343 |
39.8 |
49,818 |
44.4 |
|
2013 |
54,947 |
40.3 |
51,519 |
45.0 |
|
2014 |
58,950 |
42.4 |
55,359 |
47.3 |
|
2015 |
62,589 |
44.1 |
58,528 |
48.8 |
|
2016 |
63,731 |
44.1 |
59,502 |
48.7 |
|
2017 |
65,638 |
44.8 |
61,502 |
49.5 |
|
2018 |
68,594 |
46.1 |
64,286 |
50.8 |
|
2019 |
69,943 |
46.3 |
65,567 |
51.1 |
Source: Bureau
of Labor Statistics
Chart I-1 shows the
annual level of total nonfarm hiring (HNF) that collapsed during the global
recession after 2007 in contrast with milder decline in the shallow recession
of 2001. Nonfarm hiring has not recovered, remaining at a depressed level. The
civilian noninstitutional population or those in condition to work increased
from 228.815 million in 2006 to 259.175 million in 2019 or by 30.360 million.
Hiring has not recovered precession levels while needs of hiring multiplied
because of growth of population by more than 28 million.
Chart I-1, US, Level Total Nonfarm Hiring (HNF), Annual,
2001-2019
Source: US Bureau of Labor Statistics
Chart I-2
shows the ratio or rate of nonfarm hiring to employment (RNF) that also fell
much more in the recession of 2007 to 2009 than in the shallow recession of
2001. Recovery is weak in the current environment of cyclical slow growth.
Chart I-2, US, Rate Total Nonfarm Hiring (HNF), Annual,
2001-2019
Source: US Bureau of Labor Statistics
Yearly
percentage changes of total nonfarm hiring (HNF) are provided in Table I-2.
There were much milder declines in 2002 of 7.0 percent and 2.3 percent in 2003
followed by strong rebounds of 6.5 percent in 2004 and 5.2 percent in 2005. In
contrast, the contractions of nonfarm hiring in the recession after 2007 were
much sharper in percentage points: 1.6 in 2007, 11.7 in 2008 and 17.1 percent
in 2009. On a yearly basis, nonfarm hiring grew 6.2 percent in 2010 relative to
2009, 4.0 percent in 2011, 3.3 percent in 2012 and 3.0 percent in 2013. Nonfarm
hiring grew 7.3 percent in 2014 and increased 6.2 percent in 2015. Nonfarm
hiring grew 1.8 percent in 2016, increasing 3.0 percent in 2017. Nonfarm hiring
increased 4.5 percent in 2018. Nonfarm hiring increased 2.0 percent in 2019.
The relatively large length of 39 quarters of the current expansion reduces the
likelihood of significant recovery of hiring levels in the United States
because lower rates of growth and hiring in the final phase of expansions.
Table I-2, US,
Annual Total Nonfarm Hiring (HNF), Annual Percentage Change, 2002-2018
|
Year |
Annual |
|
2002 |
-7 |
|
2003 |
-2.3 |
|
2004 |
6.5 |
|
2005 |
5.2 |
|
2006 |
1.8 |
|
2007 |
-1.6 |
|
2008 |
-11.7 |
|
2009 |
-17.1 |
|
2010 |
6.2 |
|
2011 |
4.0 |
|
2012 |
3.3 |
|
2013 |
3.0 |
|
2014 |
7.3 |
|
2015 |
6.2 |
|
2016 |
1.8 |
|
2017 |
3.0 |
|
2018 |
4.5 |
|
2019 |
2.0 |
Source: Bureau
of Labor Statistics
Total private hiring (HP) annual data are in Chart I-5. There
has been sharp contraction of total private hiring in the US and inadequate
recovery from 2010 to 2019.
Chart I-5, US, Total Private Hiring, Annual, 2001-2019
Source: Bureau of Labor Statistics
Chart I-5A shows the ratio or
rate of total private hiring to employment (RHP) that also fell much more in
the recession of 2007 to 2009 than in the shallow recession of 2001. Recovery
is weak in the current environment of cyclical slow growth.
Chart I-5A, US, Rate Total Private Hiring, Annual, 2001-2019
Source: Bureau of Labor Statistics
Total nonfarm hiring (HNF),
total private hiring (HP) and their respective rates are in Table I-3 for the
month of Jul in the years from 2001 to 2020. Hiring numbers are in thousands.
There is recovery in HNF from 4301 thousand in Jul 2009 to 4588 thousand in Jul
2010, 4676 thousand in Jul 2011, 4726 thousand in Jul 2012, 4940 thousand in Jul
2013, 5398 thousand in Jul 2014, 5581 thousand in Jul 2015, 5876 thousand in Jul
2016, 6000 thousand in Jul 2017, 6229 thousand in Jul 2018, 6551 in Jul 2019
and 6343 in Jul 2020 for cumulative increase of 47.5 percent at the average
yearly rate of 3.6 percent. HP rose from 4009 thousand in Jul 2009 to 4269
thousand in Jul 2010, 4401 thousand in Jul 2011, 4396 thousand in Jul 2012, 4637
thousand in Jul 2013, 5079 thousand in Jul 2014, 5189 thousand in Jul 2015, 5433
thousand in Jul 2016, 5616 thousand in Jul 2017, 5820 thousand in Jul 2018, 6131
thousand in Jul 2019 and 5962 in Jul 2020 for increase of 48.7 percent at the
average yearly rate of 3.7 percent. HNF has increased from 6092 thousand in Jul
2006 to 6343 thousand in Jul 2020 or by 4.1 percent. HP has increased from 5687
thousand in Jul 2006 to 5962 thousand in Jul 2020 or by 4.8 percent. The
civilian noninstitutional population of the US, or those in condition of
working, rose from 228.912 million in Jul 2006 to 260.373 million in Jul 2020,
by 31.461 million or 13.7 percent. There is often ignored fact that nonfarm
hiring increased by 4.1 percent and private hiring by 4.8 percent while
population available for working increased around 13.7 percent. There is major
deterioration in Mar-Apr 2020 in the global recession, with a peak of economic
activity in the United States reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the
lockdown of economic activity in the COVID-19 event. Private hiring of 60.450 million in 2006 was equivalent
to 26.4 percent of the civilian noninstitutional population of 228.815, or
those in condition of working, increasing to 65.567 million in 2019 or 25.3
percent of the civilian noninstitutional population of 259.175 million in 2019.
The percentage of hiring in civilian noninstitutional population of 26.4
percent in 2006 would correspond to 68.422 million of hiring in 2019
(0.264x259.175), which would be 2.855 million higher than actual 65.567 million
in 2019. 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. Cyclical slow growth over the entire business cycle from IVQ2007 to
the present in comparison with earlier cycles and long-term trend (https://cmpassocregulationblog.blogspot.com/2020/08/d-ollar-devaluation-and-yuan.html and earlier https://cmpassocregulationblog.blogspot.com/2020/08/contraction-of-united-states-gdp-at-32_57.html) explains the fact that there
are many million fewer hires in the US than before the global recession. The
labor market continues to be fractured, failing to provide an opportunity to
exit from unemployment/underemployment or to find an opportunity for
advancement away from declining inflation-adjusted earnings.
Table I-3, US,
Total Nonfarm Hiring (HNF) and Total Private Hiring (HP) in the US in
Thousands and
in Percentage of Total Employment Not Seasonally Adjusted
|
|
HNF |
Rate RNF |
HP |
Rate HP |
|
2001 Jul |
5795 |
4.4 |
5419 |
4.8 |
|
2002 Jul |
5489 |
4.2 |
5132 |
4.7 |
|
2003 Jul |
5167 |
4.0 |
4817 |
4.4 |
|
2004 Jul |
5414 |
4.1 |
5080 |
4.6 |
|
2005 Jul |
5845 |
4.4 |
5461 |
4.8 |
|
2006 Jul |
6092 |
4.5 |
5687 |
4.9 |
|
2007 Jul |
5734 |
4.2 |
5369 |
4.6 |
|
2008 Jul |
5119 |
3.7 |
5778 |
4.1 |
|
2009 Jul |
4301 |
3.3 |
4009 |
3.7 |
|
2010 Jul |
4588 |
3.5 |
4269 |
3.9 |
|
2011 Jul |
4676 |
3.6 |
4401 |
4.0 |
|
2012 Jul |
4726 |
3.5 |
4396 |
3.9 |
|
2013 Jul |
4940 |
3.6 |
4637 |
4.0 |
|
2014 Jul |
5398 |
3.9 |
5079 |
4.3 |
|
2015 Jul |
5581 |
3.9 |
5189 |
4.3 |
|
2016 Jul |
5876 |
4.1 |
5433 |
4.4 |
|
2017 Jul |
6000 |
4.1 |
5616 |
4.5 |
|
2018 Jul |
6229 |
4.2 |
5820 |
4.6 |
|
2019 Jul |
6551 |
4.3 |
6131 |
4.7 |
|
2020 Jul |
6343 |
4.6 |
5962 |
5.0 |
Source: Bureau
of Labor Statistics
Chart I-6
provides total nonfarm hiring monthly from 2001 to 2020. Nonfarm hiring
rebounded in early 2010 but then fell and stabilized at a lower level than the
early peak not-seasonally adjusted (NSA) of 4883 in May 2010 until it surpassed
it with 5051 in Jun 2011 but declined to 3206 in Dec 2012. Nonfarm hiring fell
to 3128 in Dec 2011 from 3956 in Nov 2011 and to revised 3744 in Feb 2012,
increasing to 4288 in Mar 2012, 3206 in Dec 2012 and 4279 in Jan 2013 and
declining to 3737 in Feb 2013. Nonfarm hires not seasonally adjusted increased
to 4274 in Nov 2013 and 3335 in Dec 2013.
Nonfarm hires reached 3822 in Dec 2014, 4136 in Dec 2015 and 3985 in Dec
2016. Nonfarm hires reached 4030 in Dec 2017, 4294 in Dec 2018 and 4407 in Dec
2019. Chart I-6 provides seasonally
adjusted (SA) monthly data. The number of seasonally adjusted hires in Oct 2011
was 4370 thousand, increasing to revised 4560 thousand in Feb 2012, or 4.3
percent, moving to 4452 in Dec 2012 for cumulative increase of 2.2 percent from
4356 in Dec 2011 and 4614 in Dec 2013 for increase of 3.6 percent relative to
4452 in Dec 2012. The number of hires not seasonally adjusted was 5051 in Jun
2011, falling to 3128 in Dec 2011 but increasing to 4250 in Jan 2012 and
declining to 3206 in Dec 2012. The number of nonfarm hiring not seasonally
adjusted fell by 38.1 percent from 5051 in Jun 2011 to 3128 in Dec 2011 and
fell 37.4 percent from 5120 in Jun 2012 to 3206 in Dec 2012 in a yearly-repeated
seasonal pattern. The number of nonfarm hires not seasonally adjusted fell from
5129 in Jun 2013 to 3335 in Dec 2013, or decline of 35.0 percent, showing
strong seasonality. The number of nonfarm hires not seasonally adjusted fell
from 5612 in Jun 2014 to 3822 in Dec 2014 or 31.9 percent. The level of nonfarm
hires fell from 5869 in Jun 2015 to 4136 in Dec 2015 or 29.5 percent. The level
of nonfarm hires not seasonally adjusted fell from 6055 in Jun 2016 to 3985 in
Dec 2016 or 34.2 percent. The level of nonfarm hires not seasonally adjusted
fell from 6470 in Jun 2017 to 4030 in Dec 2017 or 37.7 percent. The level of
nonfarm hires not seasonally adjusted fell from 6601 in Jun 2018 to 4294 in Dec
2018 or 34.9 percent. The level of nonfarm hires not seasonally adjusted fell
from 6564 in Jun 2019 to 4407 in Dec 2019 or 32.9 percent. There is sharp
contraction in Mar-Apr 2020 in the global recession, with output in the US
reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the
lockdown of economic activity in the COVID-19 event. There is sharp recovery in
May-Jul 2020.
Chart I-6, US, Total Nonfarm Hiring (HNF), 2001-2020 Month SA
Source: Bureau of Labor Statistics
Similar
behavior occurs in the rate of nonfarm hiring in Chart I-7. Recovery in early
2010 was followed by decline and stabilization at a lower level but with
stability in monthly SA estimates of 3.3 in Aug 2011 to 3.3 in Jan 2012,
increasing to 3.4 in May 2012 and stabilizing to 3.3 in Jun 2012. The rate
stabilized at 3.2 in Jul 2012, increasing to 3.3 in Aug 2012 but moving to 3.3
in Dec 2012 and 3.4 in Dec 2013. The rate not seasonally adjusted fell from 3.8
in Jun 2011 to 2.3 in Dec 2011, climbing to 3.8 in Jun 2012 but falling to 2.4 in
Dec 2012. The rate of nonfarm hires not seasonally adjusted fell from 3.7 in
Jun 2013 to 2.4 in Dec 2013. The NSA rate of nonfarm hiring fell from 4.0 in Jun
2014 to 2.7 in Dec 2014. The NSA rate fell from 4.1 in Jun 2015 to 2.9 in Dec
2015. The NSA rate fell from 4.2 in Jun 2016 to 2.7 in Dec 2016. The NSA rate
fell from 4.2 in Jun 2016 to 2.7 in Dec 2016. The NSA rate fell from 4.4 in Jun
2017 to 2.7 in Dec 2017. The NSA rate fell from 4.4 in Jun 2018 to 2.8 in Dec
2018. The NSA rate fell from 4.3 in Jun
2019 to 2.9 in Dec 2019. Rates of nonfarm hiring NSA were in the range of 2.8
(Dec) to 4.5 (Jun) in 2006. The rate of nonfarm hiring SA stood at 4.1 in Jul
2020 and at 4.6 NSA in the global recession, with output in the US reaching a
high in Feb 2020 (https://www.nber.org/cycles.html), in the
lockdown of economic activity in the COVID-19 event.
Chart I-7, US, Rate Total Nonfarm Hiring, Month SA 2001-2020
Source: Bureau of Labor Statistics
There is only milder
improvement in total private hiring shown in Chart I-8. Hiring private (HP)
rose in 2010 with stability and renewed increase in 2011 followed by almost
stationary series in 2012. The number of private hiring seasonally adjusted
fell from 4159 thousand in Sep 2011 to 4062 in Dec 2011 or by 2.3 percent,
increasing to 4172 in Jan 2012 or increase by 0.3 percent relative to the level
in Sep 2011. Private hiring fell to 4022 in Sep 2012 or lower by 3.3 percent
relative to Sep 2011, moving to 4162 in Dec 2012 for decrease of 0.2 percent
relative to 4172 in Jan 2012. The number of private hiring not seasonally
adjusted fell from 4670 in Jun 2011 to 2949 in Dec 2011 or by 36.9 percent,
reaching 3990 in Jan 2012 or decline of 14.6 percent relative to Jun 2011 and
moving to 3030 in Dec 2012 or 35.6 percent lower relative to 4708 in Jun 2012.
Hires not seasonally adjusted fell from 4791 in Jun 2013 to 3168 in Dec 2013,
or 33.9 percent. The level of private hiring NSA fell from 5199 in Jun 2014 to
3620 in Dec 2014 or 30.4 percent. The level of private hiring fell from 5449 in
Jun 2015 to 3914 in Dec 2015 or 28.2 percent. The level of private hiring not
seasonally adjusted fell from 5620 in Jun 2016 to 3789 in Dec 2016 or 32.6
percent. The level of private hiring not seasonally adjusted fell from 6034 in
Jun 2017 to 3822 in Dec 2017 or 36.7 percent. The level of private hiring not
seasonally adjusted fell from 6139 in Jun 2018 to 4087 in Dec 2018 or 33.4
percent. The level of private hiring not seasonally adjusted fell from 6148 in
Jun 2019 to 4199 in Dec 2019 or 31.7 percent. Companies reduce hiring in the
latter part of the year that explains the high seasonality in year-end
employment data. For example, NSA private hiring fell from 5716 in Jun 2006 to
3652 in Dec 2006 or by 36.1 percent. Private hiring NSA data are useful in
showing the huge declines from the period before the global recession. Hiring in the nonfarm sector (HNF) has increased from 64.873
million in 2006 to 69.943 million in 2019 or by 5.070 million while hiring in
the private sector (HP) has increased from 60.540 million in 2006 to 65.567
million in 2019 or by 5.027 million, as shown in Table I-1. The ratio of
nonfarm hiring to employment (RNF) has fallen from 47.5 in 2005 to 46.3 in 2019
and in the private sector (RHP) from 53.2 in 2005 to 51.1 in 2019. Hiring has not recovered as in previous cyclical
expansions because of the low rate of economic growth in the current cyclical
expansion. The civilian noninstitutional population or those in condition to
work increased from 228.815 million in 2006 to 259.175 million in 2019 or by
30.360 million. Hiring has not recovered prerecession levels while needs of
hiring multiplied because of growth of population by more than 30 million.
Private hiring of 60.450 million in 2006 was equivalent to 26.4 percent of the civilian
noninstitutional population of 228.815, or those in condition of working,
increasing to 65.567 million in 2019 or 25.3 percent of the civilian
noninstitutional population of 259.175 million in 2019. The percentage of
hiring in civilian noninstitutional population of 26.4 percent in 2006 would
correspond to 68.422 million of hiring in 2019 (0.264x259.175), which would be
2.855 million higher than actual 65.567 million in 2019.
Chart I-8, US, Total Private Hiring Month SA 2001-2020
Source: Bureau of Labor Statistics
Chart I-9 shows
similar behavior in the rate of private hiring. The rate in 2011 in monthly SA
data did not rise significantly above the peak in 2010. The rate seasonally adjusted
decreased from 3.8 in Sep 2011 to 3.7 in Dec 2011 and reached 3.7 in Dec 2012
and 3.7 in Dec 2013. The rate not seasonally adjusted (NSA) fell from 3.9 in
Sep 2011 to 2.6 in Dec 2011, increasing to 3.9 in Oct 2012 but falling to 2.7
in Dec 2012 and 3.5 in Mar 2013. The NSA rate of private hiring fell from 4.9
in Jul 2006 to 3.5 in Aug 2009 but recovery was insufficient to only 3.9 in Aug
2012, 2.7 in Dec 2012 and 2.7 in Dec 2013. The NSA rate increased to 3.2 in Dec
2015 and 3.1 in Dec 2016, 3.0 in Dec 2017, 3.2 in Dec 2018 and 3.2 in Dec 2019.
Chart I-9, US, Rate Total Private Hiring Month SA 2001-2020
Source: Bureau of Labor Statistics
The JOLTS report of the
Bureau of Labor Statistics also provides total nonfarm job openings (TNF JOB),
TNF JOB rate and TNF LD (layoffs and discharges) shown in Table I-4 for the month
of Jul from 2001 to 2020. The final column provides annual TNF LD for the years
from 2001 to 2019. Nonfarm job openings (TNF JOB) increased
from 4907 in Jul 2007 to 6949 in Jul 2020 or by 41.6 percent while the rate
increased from 3.4 to 4.8. There is deterioration from 7597 in Jul 2019 to 6949
in Jul 2020 in the global recession, with output
in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the
lockdown of economic activity in the COVID-19 event. This was mediocre
performance because the civilian noninstitutional population of the US, or
those in condition of working rose from 231.958 million in Jul 2007 to 260.373
million in Jul 2020, by 28.415 million or 12.3 percent. Nonfarm layoffs and
discharges (TNF LD) increased from 1866 in Jul 2006 to 2321 in Jul 2009 or 24.4
percent. The annual data show layoffs and discharges rising from 22.267 million
in 2006 to 27.434 million in 2009 or by 23.2 percent. Business
pruned payroll jobs to survive the global recession but there has not been sufficient
hiring because of the low rate of GDP growth. Long-term economic performance in
the United States consisted of trend growth of GDP at 3 percent per year and of
per capita GDP at 2 percent per year as measured for 1870 to 2010 by Robert E
Lucas (2011May). The economy returned to trend growth after adverse events such
as wars and recessions. The key characteristic of adversities such as
recessions was much higher rates of growth in expansion periods that permitted
the economy to recover output, income and employment losses that occurred
during the contractions. Over the business cycle, the economy compensated the
losses of contractions with higher growth in expansions to maintain trend
growth of GDP of 3 percent and of GDP per capita of 2 percent. The US
maintained growth at 3.0 percent on average over entire cycles with expansions
at higher rates compensating for contractions. Layoffs and discharges decreased
from 1768 thousand in Jul 2019 to 1643 thousand in Jul 2020 or by 7.1 percent in the global recession, with output in the US
reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the
lockdown of economic activity in the COVID-19 event.
Table I-4, US,
Total Nonfarm Job Openings and Total Nonfarm Layoffs and Discharges, Thousands
NSA
|
|
TNF JOB |
TNF JOB |
TNF LD |
TNF LD |
|
Jul 2001 |
4896 |
3.6 |
2076 |
24971 |
|
Jul 2002 |
3770 |
2.8 |
2132 |
23621 |
|
Jul 2003 |
3366 |
2.5 |
2113 |
24353 |
|
Jul 2004 |
4191 |
3.1 |
1884 |
23701 |
|
Jul 2005 |
4630 |
3.3 |
1903 |
23495 |
|
Jul 2006 |
4735 |
3.4 |
1866 |
22267 |
|
Jul 2007 |
4907 |
3.4 |
1936 |
23556 |
|
Jul 2008 |
4013 |
2.8 |
2091 |
25443 |
|
Jul 2009 |
2412 |
1.8 |
2321 |
27434 |
|
Jul 2010 |
3264 |
2.4 |
2169 |
22562 |
|
Jul 2011 |
3807 |
2.8 |
1874 |
22134 |
|
Jul 2012 |
3932 |
2.9 |
1695 |
22023 |
|
Jul 2013 |
4097 |
2.9 |
1684 |
20959 |
|
Jul 2014 |
5117 |
3.6 |
1734 |
21139 |
|
Jul 2015 |
6391 |
4.3 |
1661 |
21779 |
|
Jul 2016 |
6392 |
4.2 |
1706 |
21239 |
|
Jul 2017 |
6672 |
4.4 |
1805 |
21608 |
|
Jul 2018 |
7687 |
4.9 |
1735 |
21803 |
|
Jul 2019 |
7597 |
4.8 |
1768 |
21739 |
|
Jul 2020 |
6949 |
4.8 |
1643 |
|
Notes: TNF JOB:
Total Nonfarm Job Openings; LD: Layoffs and Discharges
Source: Bureau
of Labor Statistics
Chart I-10 shows monthly job openings rising from the
trough in 2009 to a high in the beginning of 2010. Job openings then stabilized
into 2011 but have surpassed the peak of 3217 seasonally adjusted in Apr 2010
with 3840 seasonally adjusted in Dec 2012, which is higher by 19.4 percent
relative to Apr 2010 but higher by 1.4 percent relative to 3787 in Nov 2012 and
lower by 3.4 percent than 3976 in Mar 2012. Nonfarm job openings increased from
3840 in Dec 2012 to 3996 in Dec 2013 or by 4.1 percent and to 4981 in Dec 2014
or 24.6 percent relative to Dec 2013. The high of job openings not seasonally
adjusted was 3460 in Apr 2010 that was surpassed by 3807 in Jul 2011,
increasing to 4128 in Oct 2012 but declining to 3404 in Dec 2012 and increasing
to 3520 in Dec 2013. The level of job
openings NSA increased to 5134 in Dec 2015. The level of job openings NSA increased
to 5284 in Dec 2016, reaching 5638 in Dec 2017, and 6699 in Dec 2018. The level
of job openings NSA decreased to 5974 in Dec 2019. The level of job openings
not seasonally adjusted fell to 3404 in Dec 2012 or by 18.9 percent relative to
4196 in Apr 2012. There is here again the strong seasonality of year-end labor
data. Job openings fell from 4421 in Apr 2013 to 3520 in Dec 2013 and from 5070
in Apr 2014 to 4467 in Dec 2014, showing strong seasonal effects. Nonfarm job openings (TNF
JOB) increased from 4907 in Jul 2007 to 6949 in Jul 2020 or by 41.6 percent
while the rate increased from 3.4 to 4.8. There is deterioration from 7597 in
Jul 2019 to 6949 in Jul 2020 in the global
recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the
lockdown of economic activity in the COVID-19 event. This was mediocre
performance because the civilian noninstitutional population of the US, or
those in condition of working rose from 231.958 million in Jul 2007 to 260.373
million in Jul 2020, by 28.415 million or 12.3 percent. Nonfarm layoffs and
discharges (TNF LD) increased from 1866 in Jul 2006 to 2321 in Jul 2009 or 24.4
percent. The annual data show layoffs and discharges rising from 22.267 million
in 2006 to 27.434 million in 2009 or by 23.2 percent. Business pruned payroll
jobs to survive the global recession but there has not been sufficient hiring
because of the low rate of GDP growth. Long-term economic performance in the
United States consisted of trend growth of GDP at 3 percent per year and of per
capita GDP at 2 percent per year as measured for 1870 to 2010 by Robert E Lucas
(2011May). The economy returned to trend growth after adverse events such as
wars and recessions. The key characteristic of adversities such as recessions
was much higher rates of growth in expansion periods that permitted the economy
to recover output, income and employment losses that occurred during the
contractions. Over the business cycle, the economy compensated the losses of
contractions with higher growth in expansions to maintain trend growth of GDP
of 3 percent and of GDP per capita of 2 percent. The US maintained growth at
3.0 percent on average over entire cycles with expansions at higher rates
compensating for contractions. 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 1.2 percent on average in
the cyclical expansion in the 44 quarters from IIIQ2009 to IIQ2020 and in the global
recession with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the
lockdown of economic activity in the COVID-19 event. 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
second estimate of GDP for IIQ2020 (https://www.bea.gov/sites/default/files/2020-08/gdp2q20_2nd.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/2020/08/d-ollar-devaluation-and-yuan.html and earlier https://cmpassocregulationblog.blogspot.com/2020/08/contraction-of-united-states-gdp-at-32_57.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, 3.7 percent from IQ1983 to
IQ1993, 3.6 percent from IQ1983 to IIQ1993, 3.6 percent from IQ1983 to
IIIQ1993, 3.7 percent from IQ1983 to IVQ1993 and at 7.9 percent from IQ1983 to
IVQ1983 (https://cmpassocregulationblog.blogspot.com/2020/08/d-ollar-devaluation-and-yuan.html and earlier https://cmpassocregulationblog.blogspot.com/2020/08/contraction-of-united-states-gdp-at-32_57.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 IIQ2020 and in the global recession with output in the US
reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the
lockdown of economic activity in the COVID-19 event would have accumulated to
44.7 percent. GDP in IIQ2020 would be $22,807.6 billion (in constant dollars of
2012) if the US had grown at trend, which is higher by $5525.4 billion than actual
$17,282.2 billion. There are more than five trillion dollars of GDP less than
at trend, explaining the 34.8 million unemployed or underemployed equivalent to
actual unemployment/underemployment of 20.2 percent of the effective labor
force with the largest part originating in the global recession with output in
the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the
lockdown of economic activity in the COVID-19 event (https://cmpassocregulationblog.blogspot.com/2020/09/exchange-rate-fluctuations-1.html and earlier https://cmpassocregulationblog.blogspot.com/2020/08/thirty-eight-million-unemployed-or.html). Unemployment is decreasing while employment is increasing in
initial adjustment of the lockdown of economic activity in the global recession
resulting from the COVID-19 event (https://www.bls.gov/cps/employment-situation-covid19-faq-june-2020.pdf). US GDP in IIQ2020 is 24.2 percent lower than at trend. US GDP
grew from $15,762.0 billion in IVQ2007 in constant dollars to $17,282.5
billion in IIQ2020 or 9.6 percent at the average annual equivalent rate of 0.7
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 2.9 percent per year from Jul 1919
to Jul 2020. Growth at 2.9 percent per year would raise the NSA index of
manufacturing output (SIC, Standard Industrial Classification) from 108.2987 in
Dec 2007 to 155.1850 in Jul 2020. The actual index NSA in Jul 2020 is 94.7916
which is 38.9 percent below trend. The underperformance of manufacturing in Jul
2020 originates partly in the earlier global recession augmented by the current
global recession with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the
lockdown of economic activity in the COVID-19. 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 162.9490 in Jul 2020.
The actual index NSA in Jul 2020 is 94.7916, which is 41.8 percent below trend.
Manufacturing output grew at average 1.6 percent between Dec 1986 and Jul 2020.
Using trend growth of 1.6 percent per year, the index would increase to
132.2418 in Jul 2020. The output of manufacturing at 94.7916 in Jul 2020 is
28.3 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 95.7434 in Jul 2020 or 10.8 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 164.4646 in Jul
2020. The NAICS index at 95.7434 in Jul 2020 is 41.8 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 131.8850 in Jul 2020. The NAICS index at
95.7434 in Jul 2020 is 27.4 percent below trend under this alternative
calculation.
Chart I-10, US Job Openings, Thousands NSA, 2001-2020
Source: US Bureau of Labor Statistics
The rate of
job openings in Chart I-11 shows similar behavior. The rate seasonally adjusted
increased from 2.3 in Jan 2011 to 2.7 in Dec 2011, 2.8 in Dec 2012, 2.8 in Dec
2013 and 3.4 in Dec 2014. The rate seasonally adjusted stood at 3.8 in Dec 2015
and 3.9 in Dec 2016. The rate seasonally adjusted reached 4.1 in Dec 2017 and
4.6 in Dec 2018. The rate not seasonally adjusted reached 3.8 in Dec 2019. The
rate SA stood at 4.5 in Jul 2020 in the lockdown of economic activity in the
COVID-19 event. The rate not seasonally adjusted rose from the high of 2.6 in
Apr 2010 to 3.1 in Apr 2013, easing to 2.5 in Dec 2013. The rate of job
openings NSA fell from 3.4 in Jul 2007 to 1.7 in Nov 2009 and 1.6 in Dec 2009,
recovering to 3.4 in Dec 2015. The rate of job opening NSA stood at 3.5 in Dec
2016, reaching 3.7 in Dec 2017 and 4.3 in Dec 2018. The rate of job openings
NSA was 3.8 in Dec 2019. The rate of job openings NSA was 4.8 in Jul 2020.
Chart I-11, US, Rate of Job Openings, NSA, 2001-2020
Source: US Bureau of Labor Statistics
Total separations are in Chart I-12. Separations
are lower in 2012-17 than before the global recession but hiring has not
recovered. Separations increased in the final segment.
Chart I-12, US, Total Nonfarm Separations, Month Thousands
SA, 2001-2020
Source: US Bureau of Labor Statistics
Chart I-12A shows total separations in the
US increased from 4531 thousand NSA in Feb 2020 to 13,999 thousand in Mar 2020
and 9,670 thousand NSA in Apr 2020 in the global recession, with output in the
US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the
lockdown of economic activity in the COVID-19 event, decreasing to 4156
thousand in May 2020, increasing 5077 in Jun 2020 and 5405 in Jul 2020.
Chart I-12, US, Total Nonfarm Separations, Month Thousands
SA, 2001-2020
Source: US Bureau of Labor Statistics
Chart
I-13 provides annual total separations. Separations fell sharply during the
global recession but hiring has not recovered relative to population growth.
Chart I-13, US, Total Separations, Annual, Thousands,
2001-2019
Source: US Bureau of Labor Statistics
Table
I-5 provides total nonfarm total separations from 2001 to 2019 Separations fell
from 62.632 million in 2006 to 48.671 million in 2010 or by 13.961 million and
49.614 million in 2011 or by 13.018 million. Total separations increased from
49.614 million in 2011 to 52.564 million in 2013 or by 2.950 million and to
55.928 million in 2014 or by 6.314 million relative to 2011. Total separations
increased to 59.930 million in 2015 or by 10.316 million relative to 2011.
Total separations increased to 61.512 million in 2016 or 11.898 million
relative to 2011. Total separations increased to 63.497 million in 2017 or
13.883 million relative to 2011.Total separations increased to 66.199 million
in 2018 or 16.585 million relative to 2011. Total separations increased to
67.856 million in 2019 or 18.242 million relative to 2011.
Table I-5, US,
Total Nonfarm Total Separations, Thousands, 2001-2019
|
Year |
Annual |
|
2001 |
64348 |
|
2002 |
58719 |
|
2003 |
56918 |
|
2004 |
58459 |
|
2005 |
61185 |
|
2006 |
62632 |
|
2007 |
62652 |
|
2008 |
59882 |
|
2009 |
51939 |
|
2010 |
48671 |
|
2011 |
49614 |
|
2012 |
51093 |
|
2013 |
52564 |
|
2014 |
55928 |
|
2015 |
59930 |
|
2016 |
61512 |
|
2017 |
63497 |
|
2018 |
66199 |
|
2019 |
67856 |
Source: US
Bureau of Labor Statistics
Monthly data of layoffs and discharges reach a peak
in early 2009, as shown in Chart I-14. Layoffs and discharges dropped sharply
with the recovery of the economy in 2010 and 2011 once employers reduced their
job count to what was required for cost reductions and loss of business. 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. Growth rates
have been unusually low in the expansion of the current economic cycle.
Chart I-14, US, Total Nonfarm Layoffs and Discharges, Monthly
Thousands SA, 2001-2020
Source: US Bureau of Labor Statistics
Chart I-14A shows the jump in layoffs and discharges
from 1433 thousand in Feb 2020 to 11207 thousand million in Mar 2020 and 7560
thousand in Apr 2020 in the global recession, with output in the US reaching a
high in Feb 2020 (https://www.nber.org/cycles.html), in the
lockdown of economic activity in the COVID-19 event. Layoffs and discharges
decreased to 1802 thousand in May 2020, increasing to 1971 thousand in Jun
2020. Layoffs and discharges decreased to 1643 thousand in Jul 2020.
Chart I-14A, US, Total Nonfarm Layoffs and Discharges,
Monthly Thousands SA, 2001-2020
Source: US Bureau of Labor Statistics
Layoffs and discharges in Chart I-15 rose sharply to
a peak in 2009. There was pronounced drop into 2010 and 2011 with mild increase
into 2012 and renewed decline into 2013. There is mild increase into 2014-2015
followed by decline in 2016 and stability/decline in 2017-2019.
Chart I-15, US, Total Nonfarm Layoffs and Discharges, Annual,
2001-2019
Source: US Bureau of Labor Statistics
Annual layoff and discharges are in Table
I-6. Layoffs and discharges increased sharply from 22.267 million in 2006 to
27.434 million in 2009 or 23.2 percent. Layoff and discharges fell to 20.959
million in 2013 or 23.6 percent relative to 2009 and increased to 21.147
million in 2014 or 0.9 percent relative to 2013. Layoffs and discharges
increased to 21.779 million in 2015 or 3.0 percent relative to 2014. Layoffs
and discharges fell to 21.239 in 2016 or 2.5 percent relative to 2015. Layoffs
and discharges increased to 21.608 million in 2017 or 1.7 percent relative to
2016. Layoffs and discharges increased to 21.803 million in 2018 or 0.9 percent
relative to 2017. Layoffs and discharges decreased to 21.739 million in 2019 or
0.3 percent.
Table I-6, US,
Total Nonfarm Layoffs and Discharges, Thousands, 2001-2019
|
Year |
Annual |
|
2001 |
24971 |
|
2002 |
23621 |
|
2003 |
24353 |
|
2004 |
23701 |
|
2005 |
23495 |
|
2006 |
22267 |
|
2007 |
23556 |
|
2008 |
25443 |
|
2009 |
27434 |
|
2010 |
22562 |
|
2011 |
22134 |
|
2012 |
22023 |
|
2013 |
20959 |
|
2014 |
21139 |
|
2015 |
21779 |
|
2016 |
21239 |
|
2017 |
21608 |
|
2018 |
21803 |
|
2019 |
21739 |
Source: US
Bureau of Labor Statistics
© Carlos M. Pelaez, 2009,
2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019, 2020.
No comments:
Post a Comment