As reported by the Bureau of Labor Statistics this morning (link to the report provided above), the economy shed 131,000 jobs in July while the unemployment rate held steady at 9.5%. (Already sounds a little fishy, doesn’t it?) It was expected that this report would show a net loss of jobs because of the exodus of census workers, but the loss was bigger than expected because of weaker-than-expected hiring in the private sector.
Dig into the details and you’ll find that the news is even worse. The unemployment rate held steady at 9.5% thanks to another 181,000 workers mysteriously vanishing from the labor force in spite of the fact that population growth piled on another 120,000 workers. Worst of all is that the employment level fell by another 159,000 workers – the third straight monthly decline. The employment level is now little changed from its level exactly one year ago in July.
If we hold the labor force at a steady percentage of the population, the real unemployment rate actually rose in July by 0.2% to 11.7%, while the more inclusive measure, U6, rose to 20.7%. The number of unemployed Americans rose by almost 300,000 to 18.377 million.
Here’s the calculation and the charts:
Here’s a summary of job gains/losses in various sectors of the economy in July (extracted from the BLS report):
- Manufacturing: + 36,000
- Health care: + 27,000
- Transportation & Warehousing: + 12,000
- Mining: + 7,000
- Construction: – 11,000
- Professional & business services: – 13,000
- Financial services: – 17,000
- Government: – 202,000
Manufacturing continues to be a bright spot, but at far too slow a pace. And much of this hiring has been due to inventory rebuilding, which can’t go on forever.
The U.S. tends to think of itself as a “services” economy. If that’s true, the trend in services employment isn’t a good omen.
Is it any wonder that the reported departure of Christine Romer from the president’s economic team comes on the same morning that this report was released? Heads have started to roll. Look for Larry Summers to be the next one to leave. After all, the president has to at least appear to be doing something, right?
And let’s not forget that, regardless of how you feel about the “stimulus plan,” that spending has no doubt propped up employment. And that stimulus spending will soon be coming to an end. Then what? Look for the employment picture to get even uglier unless the president comes up with a new stimulus plan or unless he actually does something to fix our incredibly stupid trade policy. But that’s not going to happen.
If you have a job out there, you’d better hold on tight.