Payrolls Jun10.pngEvery day, the word “unexpected” appears next to a downbeat economic report. The latest example was yesterday’s US employment report, where the consensus forecast was for a jobs gain of 180k. Yet it has been clear for months that this has been a ‘jobless recovery’, and so the actual figure of only 41k new jobs should not have been a real surprise.
This chart above, from thechartstore, shows US payrolls from 1939, and highlights how:
• Payroll growth was very steady until 2001, through wars and recessions
• The recovery from the 2001 downturn was followed by only a slow, and relatively small gain in payrolls
• The current downturn has taken payrolls back below the 2001 level
• 1 in 6 Americans is currently unemployed according to the U6 measure
Equally worrying is that the average jobless person is now unemployed for 34 weeks. This is the highest level seen since records began in 1950. The previous high was just 22 weeks, in 1984.
70% of US GDP comes from consumer spending, and it is a key driver for global chemical demand. Unemployed people don’t have much money to spend, whilst fear of unemployment makes others more cautious.
Sadly, nothing is likely to change for the better, whilst policymakers and analysts continue to fool themselves that every piece of bad news is “unexpected”.