(What’s Left of) Our Economy: The New U.S. Inflation Slowdown Still Leaves Lots of Questions

Tags

CCP Virus, core inflation, coronavirus, COVID 19, Immigration, inflation, inflation-adjusted wages, jobs report, Labor Department, New York Fed, productivity, real wages, transitory, wages, Wuhan virus, {What's Left of) Our Economy

Given how the U.S. economy could still face some major ups and downs in the next few months, largely because no one really knows what will happen with the CCP Virus and the responses from government, business, and consumers, only an idiot would confidently declare that this morning’s official report shows that the recent inflation burst is over. 

So even though I’ve been in that inflation-is-transitory camp – and therefore, that price trends haven’t yet provided the government to use its taxing, spending, and monetary policy tools to slow the economy’s expansion – I’ll just note how the inflation situation has changed in recent months.

What matters most is that the monthly inflation rate has come way down since June. During the first half of this year, the sequential pace of all price increases sped up from 0.3 percen to 0.9 percent. July’s result was down to 0.5 percent and the August figure just released by the Labor Department was just 0.3 percent – right back where it was in January, when the virus’ last powerful winter wave was cresting.

Also important: The so-called core inflation rate (this measure strips out food and energy prices, supposedly because they can be volatile for reasons having nothing to do with the level of overall national economic activity, and how fundamentally inflation-prone it is) has lost major momentum, too. Between January and June the monthly rise in prices increased from 0.1 percent to 0.9 percent . Since then, it fell to 0.3 percent in July and back to 0.1 percent last month.

Inflation pessimists can still point to year-on-year inflation rates that remain elevated by historic standards (5.3 percent for the total measure and four percent for the core). But the statistical curve is bending in the right direction on these two counts also, and as I’ve written previously, the annual numbers are still distorted – and therefore rendered useless – by the unusually weak inflation reads generated by last year’s short but steep virus-induced recession.

Further, that slowing monthly momentum counts for a lot because the biggest fear surrounding inflation is that it could feed on itself and spiral out of control, as higher and higher prices convince all sorts of customers for goods and services that prices will only keep increasing. As a result, they can fuel further inflation by stepping up purchases and pushing prices still higher (because greater demand for anything, all else equal, will enable producers and providers to charge more). Weaker monthly inflation figures indicate that these pressures have been easing lately.

Focusing singlemindedly on the core carries risks, though. Principally, food and energy prices may well belong in their own analytical category when it comes to measuring inflation. But when it comes to living life day-to-day, it’s another story altogether – since it’s hard to imagine living without them. So price trends could still be hammering consumers and businesses, and in turn the broader economy, even though the core inflation rate is signaling that all’s well.

Just as important, food and energy costs are so important that, if they last long enough, they could feed persistent inflationary fires throughout that broader economy.   

Another potential reason to check inflation optimism: The Labor Department also reported today that price-adjusted hourly wages climbed month-to-month by 0.4 percent. That’s the first positive monthly number since December’s 0.8 percent. A single data point proves little, especially in the pandemic era, but if wages begin advancing faster than overall price increases, many businesses will try to respond to these higher costs by hiking their prices – potentially adding new momentum to inflation.

The consistent drop in inflation-adjusted wages, however, between January and July shows that nothing of the kind had been happening, even though most businesses seem to keep complaining about labor shortages (which should be forcing wages – the price workers can command for their services – up strongly).

Moreover, as I’ve repeatedly pointed out, historically, American employers overall have responded to perceived or actual labor shortages by boosting their productivity – that is, using new technologies (like labor-saving equipment or software) or better management, or both, to improve efficiency and better enable themselves to absorb higher prices rather than pass them on to customers.

This scenario may sound bad for workers, and for some over various periods of time it will be. But to me, anyway, the clear lesson of history is that higher productivity does indeed, as the economic conventional wisdom holds, raise living standards (including wages) in general over time by (a) fostering the emergence of wholly new industries (which invariably need new workers); and (b) boosting existing industries’ ability to turn out more goods and services (which invariably creates the need for new workers, too).

At the same time, clearly not all businesses will take this tack. In fact, many are trying to keep wages low for many employees by agitating for more mass immigration. So far, this lobbying hasn’t succeeded, but it’s still way too early to say that workers have now regained enough bargaining leverage to ensure that their after-inflation pay continues rising robustly.

Wage increases (which I believe are long overdue) may also come to an end, or slow significantly, if weaker recent inflation stems from weaker economic growth – which would be bad for just about everyone. Unfortunately, the last monthly jobs report (also for August) and two important growth forecast series indicate that that’s precisely the case. (See here and here.)

But let’s close on a highly revealing note: One of the sources of these forecasts, the Federal Reserve Bank of New York, has just decided to suspend releasing these projections until it can figure out how to adequately take into account “The uncertainty around the pandemic and the consequent volatility in the data….” If this august institution, with its legions of Ph.D. economists, is telling us that assessing the economy’s direction and fundamental health is currently a mug’s game, that seems like a pretty good reason for caution in interpreting the new inflation report, too.

(What’s Left of) Our Economy: The Big Missing Reason for the Big Jobs Miss

Tags

Anthony S. Fauci, automation, Biden, Build Back Better, CCP Virus, CDC, Centers for Disease Control and Prevention, child care, children, coronavirus, COVID 19, FDR, Franklin D. Roosevelt, immunity, Jobs, jobs report, lockdowns, New Deal, parents, productivity, reopening, school closings, skills, skills gap, teachers, unemployment, unemployment benefits, vaccinations, Wuhan virus, {What's Left of) Our Economy

As reported widely, the big miss marking last Friday’s official monthly U.S. jobs report (for April) ignited a heated debate among politicians, economists, and many others over why the U.S. economy created so much less new employment that month (266,000 net new positions overall) than generally estimated (in the million neighborhood). At the heart of this debate: Do the many positions employers consistently say they’re struggling to fill amid a continuingly high jobless rate mean that the enhanced unemployment benefits offered throughout the pandemic are discouraging Americans from returning to the workplace?

What I’m not seeing, however, is anyone asking whether this is the right debate. It’s increasingly obvious to me that it’s not.

It’s easy to see why those who answer yes are viewing the issue far too narrowly. Surely some unemployed workers are content to stay at home because they’re currently making more from jobless payments than they were making from their previous employer. That should be clear from the number of businesses raising wages to fill the shortages they’re experiencing. (I’m not saying that these raises are or aren’t long overdue or otherwise deserved; simply that the higher pay and other incentives employers are offering can only be interpreted as companies recognizing that the enhanced benefits have, to a degree, increased the relative attraction of remaining on the employment sidelines versus reentering the job market.)

At the same time, is it reasonable to ignore all the other major reasons for this big labor market anomaly? Like ongoing fears of catching the CCP Virus at the workplace, or the need to stay home with school-age children forced to learn remotely? And don’t forget all the uncertainties created by the sudden stop-start nature of the virus-era lockdowns on the economy.

Yes, a rapid U.S. reopening is taking place now. But all over the world, infection surges are producing new economic curbs. Can you blame workers for wondering whether shortly after they leave the unemployment and benefits rolls, their new workplace will need to close, or cut back on its operations, leaving them in the lurch while they either seek other jobs or file for new benefits?

It’s easy to see that all of these developments and circumstances and uncertainties and outright fears are keeping U.S. labor seemingly scarce. You can also add to the list the likelihood of growing skills mismatches in the American economy – that is, the numbers of jobs requiring more or different skills outgrowing the number of workers possessing these skills, and the numbers of companies replacing low-skill jobs with automation of some kind. Not that the resulting mismatches inevitably will be with the nation forever, or even long term. But they’re unmistakably present now.

So maybe the problem is simply too complicated for government to address? Or we’ll simply need to wait until a stable post-CCP Virus normality returns and labor markets start clearing as usual? It seems reasonable that the purely skills-based mismatches will defy ready solutions – unless America’s education system suddenly gets a lot better at preparing students for the economy they’ll be facing, and businesses get more serious about training and retraining workers, and turn  away from needlessly insisting on lofty credentials for jobs that don’t require anything close.

It’s also possible – though that’s the most I’m willing to say – that spreading automation will eventually help businesses become so much more productive that they’ll be able to turn out more products and services, and that this very success will generate all sorts of new jobs whose appearance can’t be predicted with any precision now. (My reservations stem from concerns that the newest forms of automation, especially artificial intelligence and super-sophisticated robotics, are qualitatively more capable of displacing many more kinds of labor than previous technological breakthroughs.)

As long as the federal government and the states remain willing to provide generous unemployment benefits (and other supports), the resulting situation would at least keep most of the jobless adequately fed, clothed, and housed. That’s a big “if,” though, for reasons economic (e.g., maybe Washington can’t keep borrowing and spending massively much longer?) and social and cultural (e.g., maybe ever longer term unemployment will start to produce more in the way of pathological behavior like drug abuse, violent crime, and worse classroom performance from students from families on the dole?).

Consequently, the more progress can be made returning the unemployed to work, the better, and however difficult the challenge of eliminating the purely or largely skills-based mismatches, Americans and their leaders shouldn’t overlook where policy can make a big difference. And the above analysis indicates that one big difference can be made by the U.S. government, and especially its public health authorities.

Specifically, they need finally to stop their CCP Virus alarmism and energetically spread the word that due to a combination of high and mounting degrees of various kinds of immunity, mass vaccinations, and the highly varying nature of the virus’ infectiousness and lethality, normality is unquestionably returning. Further, and crucially, although certain groups of Americans – like the elderly, and those with certain underlying medical conditions – are still too vulnerable and must be protected with special measures, the Biden administration and its health experts should acknowledge that nearly all others can safely return to normal activities because the already low odds of even getting the disease, much less suffering significantly from it, have now plunged to rock bottom.

In other words, Washington should announce that work places are safe to return to, bricks and mortars businesses are now safe to patronize, in-person schooling is just fine for both students and teachers and administrative staff alike, (thus solving the childcare dilemma), and that lockdowns have become a thing of the past.

Instead, of course, you’ve got a Centers for Disease Control and Prevention (CDC) that seems stuck in hyper- (and increasingly unscientific) caution territory, not to mention decimating its own message about vaccines’ effectivness by admitting almost no behavior payoff whatever; and a President and leading figures of his own party continuing to wear facemasks even in settings that “the science” had made crystal clear are as safe as they can be for the fully vaccinated.

To top if off, the President’s chief medical adviser, Dr. Anthony S. Fauci, has just taken pains to speculate that Americans may start wearing facemasks to guard against all sorts of respiratory diseases on a seasonal basis. Given this administration’s record so far, it doesn’t seem all that far-fetched to worry that new CDC guidelines along these lines, plus recommendations to resume some forms of social distancing, and even new business curbs, could quickly follow if this kind of Chicken Little-ism isn’t stopped. For now, though, no wonder so many Americans are still scared stiff of the virus.

It’s becoming more and more common to compare President Biden and his ambitious plans for “Building the U.S. Economy Back Better” with Franklin D. Roosevelt and his New Deal programs.  (See, e.g., here and here.) But it’s hard to imagine Mr. Biden succeeding to any lasting degree if his CCP Virus policy doesn’t start reflecting one of FDR’s most and most deservedly famous insights: “[T]he only thing we have to fear is fear itself.”

Making News: Economy Views Quoted in The Guardian & on Breitbart!

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Breitbart.com, Jobs, jobs report, John Carney, manufacturing, NFP, The Guardian

I’m pleased to announce two recent media appearances.  The first came on June 23, when the United Kingdom’s The Guardian newspaper’s survey of “What the experts” were saying about some major reports on manufacturing featured a tweet of mine on the subject.  Here’s the link.

The second came this morning, when Breitbart.com‘s John Carney spotlighted my views on the monthly U.S. jobs figures (for June) that were released today.  Click on this link to read.

And keep checking in with RealityChek for news of upcoming media appearances and other developments

 

Making News: Two Podcasts of National Radio Trade War & Economy Interviews…& an Eye-Opening Look at Amazon.com!

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Amazon.com, Breitbart News Tonight, economy, election 2020, Gordon G. Chang, Henry George School of Social Science, Hong Kong protests, Jobs, jobs report, Making News, manufacturing, publishing, Rebecca Mansour, Rick Manning, Robin Gaster, Smart Talk, The John Batchelor Show, Trade, trade war, Trump

I’m pleased to announce that just out on-line are two podcasts of national radio interviews on the Trump trade wars and a video on an especially startling aspect of Amazon.com’s stunning rise to business titan status.

The latest interview now available was conducted last night on “Breitbart News Tonight” and can be found at this link.  Once you’re there, scroll down a fair ways till you see my name on a December 6 segment – a discussion with hosts Rebecca Mansour and Rick Manning that ranged from the last (excellent) U.S. jobs report to the Hong Kong protests to the intensifying presidential election campaign.

The previous interview was broadcast Wednesday night on “The John Batchelor Show.”  Click here to listen to a conversation with John and co-host Gordon G. Chang on how well the U.S. manufacturing sector is faring as President Trump keeps trying to revamp U.S. trade policy.

The video shows me reversing roles and interviewing economist Robin Gaster on the implications of Amazon.com’s efforts to disrupt yet another major U.S. industry, and one playing an especially important role in American culture – the book publishing industry.  Click here to watch, and keep in mind that the interview is posted in two parts.

Incidentally, this interview is the latest in the “Smart Talk” series sponsored by the Henry George School of Social Science – a New York City-based economic research and education institute on whose Board I’ve served as a Trustee for several years.  “Smart Talk” has featured some of the world’s leading economic thinkers, and if you search around its section on the website, I’m sure you’ll find some fascinating and important material.

And keep checking in with RealityChek for news of upcoming media appearances and other developments.

(What’s Left of) Our Economy: The Manufacturing Jobs Recession Drags On

Tags

Bureau of Labor Statistics, Employment, inflation-adjusted wages, Jobs, jobs report, manufacturing, recession, wages, {What's Left of) Our Economy

American domestic manufacturing employment fell sequentially in August for the first time since May, and the 14,000 drop, along with lower June and July gains, prolonged industry’s longest jobs recession since the Great Recession. Manufacturing payrolls have fallen by 13,000 cumulatively since December, 2014, and its share of total non-farm employment plunged to its latest record low – 8.49 percent. Wages increased month-to-month for the seventh month in the last eight. Year-on-year increases remained strong but August’s 2.48 percent increase was the smallest since February.

Here’s my analysis of the latest monthly (August) manufacturing figures contained in this morning’s employment report from the Bureau of Labor Statistics:

>American domestic manufacturing employment saw its two-month winning streak snapped in August as the sector lost 14,000 jobs compared with July levels. This decline combined with downward revisions to extend a manufacturing jobs recession that has lasted since December, 2014.

>Over that twenty-month stretch, American manufacturing payrolls have declined by a cumulative 13,000.

>July’s 9,000 initially monthly employment gain, meanwhile, was revised down to a still preliminary 6,000, and June’s upwardly revised 15,000 improvement was nearly cut in half – to 8,000.

>The new data also pushed manufacturing employment as a share of total non-farm employment down to 8.49 percent – its latest record low.

>By contrast, wages remained a manufacturing bright spot. They rose by 0.04 percent in pre-inflation terms sequentially in August, the seventh such improvement in the last eight.

> Revisions were slightly positive. July’s 0.12 percent advance was upgraded to 0.19 percent. June’s1 Aug is 0.04 July is now 0.19 (from 0.12) June’s upwardly revised 0.19 decrease and May’s upwardly revised 0.46 gain both remained the same.

>Although manufacturing’s August monthly pre-inflation pay increase trailed the private sector’s (0.12 percent), manufacturing recorded a higher year-on-year wage increase: 2.48 percent versus the private sector’s 2.32 percent. At the same time, that annual manufacturing increase was industry’s lowest since March, and the second weakest figure for the calendar year.

>Another key indicator of poor manufacturing employment performance – the year-on-year changes – remained weak as well. The August annual decline of 37,000 was the sixth straight, and extended a string that has been the sector’s worst since 2010.

>Between the previous Augusts, manufacturing added 113,000 net new jobs.

>Since its 2010 employment bottom, manufacturing has regained 828,000 (36.11 percent) of the 2.293 million jobs it lost during the recession and its aftermath. By contrast, the private sector overall lost 8.801 million jobs from the recession’s December, 2007 onset through its February, 2010 absolute employment low. Since then, it has increased net employment by 15.128 million.

>In fact, whereas total private sector employment is now 5.47 percent higher than at the recession’s beginning, manufacturing employment is still 10.66 percent lower.

>Despite strong relative recent performance, since the recovery’ June, 2009 onset, manufacturing’s pre-inflation wage gains still trail those of the private sector as a whole by 16.03 percent to 12.95 percent.

>Examining manufacturing’s inflation-adjusted wages reveals a more complicated picture. The latest Labor Department figures are from July, and show that manufacturing’s month-on-month performance (rising 0.28 percent) trailed that of the private sector (0.37 percent).

>Year-on-year, however, July’s real manufacturing’s wage performance (up 2.17 percent) beat the private sector’s (1.80 percent).

>And since the recovery began in mid-2009 – nearly seven years ago – inflation-adjusted manufacturing wages have risen only 1.21 percent. Real private sector wages have increased considerably faster – though not fast (by 3.98 percent).

Making News: New Lifezette Article on Today’s Jobs Report

Tags

Employment, Jobs, jobs report, Lifezette.com, Making News, manufacturing, private sector, real private sector, subsidized private sector

I’m pleased to announce that Lifezette.com has just posted my latest freelance article. It analyzes this morning’s August U.S. jobs report with a special focus on weakening employment creation in the economy’s “real” private sector, and the latest, discouraging, news about manufacturing payrolls.  Click on this link to read.

Keep checking in at RealityChek for news of recent and upcoming media appearances and other events.  And happy Labor Day weekend to all!

 

(What’s Left of) Our Economy: A Halt in the Subsidized Private Sector’s Hiring Momentum?

Tags

Employment, Great Recession, health care services, Jobs, jobs report, private sector, recovery, subsidized private sector, {What's Left of) Our Economy

Since the next U.S. jobs report (covering August) won’t be out until a week from Friday, it seems like a good idea to take stock of where the economy stands in terms of the employment being created during this weak recovery by industries that depend heavily on government subsidies for their levels of activity – and therefore hiring. (Think, in particular, “healthcare services.”) Distinguishing these jobs from those in what I call the “real private sector” matters because America’s best bet for lasting prosperity is an economy where the lead roles are played by sectors whose vibrancy is determined mainly by market forces, not government decisions.

The message being sent by the last jobs report (which covered July) and revisions for June and May mixes good news with bad news. The good: After surging through the spring, the relative growth of subsidized private sector jobs seems to be leveling off. The bad: On a January-July basis, these jobs are still a more important part of the national hiring picture than during the first seven months of last year, and their prominence remains way up over the last four years.

July’s numbers are still preliminary (as are June’s). But they show that the subsidized private sector accounted for 15.73 percent of total non-farm jobs (the Labor Department’s employment universe) and 18.58 percent of the jobs classified as private sector. The former figure was unchanged over the June level (which itself was unrevised) after a long period of steady increases. The latter was also unchanged from June, but that June figure was revised down from 18.59 percent – which also happened to be the May number.

Similarly, the subsidized private sector accounted for only 14.90 percent of July’s total monthly job gains. That’s down from 19.86 percent in June and completely different from the situation during the (apparently anomalous) month of May,. That’s when the entire non-farm economy only created 24,000 net new jobs and the subsidized private sector increased payrolls by 46,000

Of course, these shifts aren’t big (except for those involving seeming outlier May). But even small changes in direction following years of unmistakable movement one way or another can signal bigger changes down the road. So stay tuned.

As indicated, though, over the longer term, the subsidized private sector is still pacing the nation in relative employment gains by a wide margin. During the first seven months of this year, these industries were responsible for 25.96 percent of the net new jobs created by the entire economy, and 28.99 percent of the jobs conventionally defined as private sector. Those numbers are up from 24.72 percent and 25.87 percent, respectively, in 2015, and all the way up from 15.10 percent and 14.26 percent in 2013.

Viewed from another perspective, four years ago, the real private sector – the part of the economy we want to absolutely dominate hiring – generated nearly 91 percent of the total economy’s net job increase during the first seven months of the year. Since then, that share during comparable seven-month stretches has declined to 81.55 percent, 70.82 percent, and only 63.59 percent so far this year.

And even though the stand-still numbers cited above have been improving month-on-month so far this year, the subsidized private sector’s hiring employment is still much higher nowadays than at the start of the (Great) recession. In December, 2007, it stood at just 13.63 percent of all non-farm jobs and 16.26 percent of conventionally defined private sector jobs.

When the recovery began, in June, 2009, these numbers were 14.97 percent and 18.09 percent, respectively – because the private sector without subsidies was had taken such a huge jobs hit during the recession. To remind, the latest (July) figures are 15.73 percent and 18.58 percent.

Netscape founder Marc Andreessen captured a major technology, business, and economic trend a few years ago when he said that “software is eating the world.” It’s an exaggeration to say that the subsidized private sector is eating the American jobs market. But “munching on it” may not be so far off the mark.

(What’s Left of) Our Economy: Worst Monthly Manufacturing Job Losses in Six-Plus Years Lengthen Industry’s Employment Recession

Tags

Employment, Jobs, jobs report, manufacturing, non-farm payrolls, recession, recovery, wages, {What's Left of) Our Economy

In March, manufacturing suffered its worst monthly jobs losses (29,000) since December, 2009 (34,000). In tandem with negative revisions, these figures sank the sector into an employment recession that’s now lasted 16 months – its longest such stretch since the recession. Manufacturing also experienced its first yearly jobs decrease since September, 2010, and its share of total non-farm employment fell to another historic low – 8.55 percent.

Manufacturing’s February and January jobs revisions were both downgrades, but the sector’s pre-inflation wages rose sequentially for the third straight month (due in part to upward revisions). Its year-on-year gains (2.35 percent), moreover, topped those of the overall private sector (2.25 percent).

Here’s my analysis of the latest monthly (March) manufacturing figures contained in this morning’s employment report from the Bureau of Labor Statistics:

>A 29,000 monthly jobs loss in March – the worst since December, 2009’s 34,000 early in the current economic recovery – extended manufacturing’s employment recession to 16 months. The span of cumulative job loss stretching back to December, 2014 is the sector’s longest since the previous national economic downturn.

>The March decrease coupled with negative revisions also produced manufacturing’s first year-on-year employment shrinkages since September, 2010 (-28,000). A monthly February downgrade resulted in that month’s employment shrinking annually by 5,000, and March’s preliminary figure was -27,000.

>Between March, 2014 and March, 2015, manufacturing gained 193,000 net jobs.

>All these developments combined to push industry’s share of total non-farm employment as a share of total non-farm jobs down to another low since records have been kept – 8.55 percent.

>The new data changed February’s 16,000 job loss to 18,000, and January’s already downwardly revised 23,000 gain to 18,000. December’s downwardly revised 6,000 monthly gain remained unchanged.

>Since manufacturing hit its 2010 employment bottom, the sector has regained 838,000 (36.54 percent) of the 2.293 million jobs it lost during the recession and its aftermath. By contrast, the private sector overall lost 8.801 million jobs from the recession’s December, 2007 onset through its February, 2010 absolute employment low. Since then, it has increased net employment by a 14.435 million.

>In fact, whereas total private sector employment is now 4.87 percent higher than at the recession’s beginning, manufacturing employment is still 10.58 percent lower.

>The manufacturing wage figures in the new jobs report were better than the employment figures. Before adjusting for inflation, manufacturing wages rose 0.27 percent in March over February levels, and the February sequential change was revised from a 0.08 percent decline to a 0.08 percent gain. January’s 0.35 percent gain remained unchanged.

>The March manufacturing monthly wage gain only slightly trailed the 0.28 percent improvement for the private sector as a whole.

>Manufacturing’s yearly March wage increase of 2.35 percent actually exceeded that for the overall private sector (2.25 percent). It was also significantly higher than the 1.50 percent advance between the previous Marches.

>Yet the March manufacturing wage increase was smaller than February’s upwardly revised 2.40 percent, and the lowest since November’s 2.33 percent.

>Longer term, manufacturing’s wage-laggard status remained intact.. Since the current economic recovery began, in mid-2009, its pre-inflation wages are up less (11.60 percent) than overall private sector wages (14.86 percent).

>Over the long run, manufacturing’s wages have under-performed after adjusting for inflation as well. The latest Labor Department figures are from February, and actually showed that in real terms, manufacturing wages rose sequentially by 0.09 percent from January levels, whereas overall private sector wages flat-lined..

>Year-on-year, though, manufacturing’s 1.22 percent real wage increase slightly trailed the private sector’s 1.23 percent.

>And since the recovery began in mid-2009, real manufacturing wages are up only 0.37 percent, whereas inflation-adjusted pay in the private sector is up 3.39 percent.

(What’s Left of) Our Economy: Manufacturing Job Creation in March…On Net, Wasn’t

Tags

Bureau of Labor Statistics, employent, Jobs, jobs report, Labor Department, manufacturing, manufacturing renaissance, real wages, wages, {What's Left of) Our Economy

Manufacturing jobs fell in March month-to-month for the first time since July, 2013, the new Labor Department jobs report showed.  In addition, the sector’s January and February figures were revised down, and March’s year-on-year improvement was the smallest since last June.  Wage growth in manufacturing picked up slightly (though not in inflation-adjusted terms) but the sector remains a major recovery pay laggard.

These resumed job losses and ongoing wage lag keep mocking the manufacturing renaissance claims of President Obama and other cheerleaders.  And Congressional passage of the president’s Pacific Rim trade deal can only worsen the troubles of this vital, productivity-leading sector by exposing it to even more predatory foreign competition.

Here’s my full analysis of the manufacturing highlights of this morning’s March employment report from the Bureau of Labor Statistics:

>Today’s preliminary March jobs figures show that manufacturing lost net jobs on month for the first time since July, 2013.

>Last month, the sector lost 1,000 jobs on net. Moreover, February’s initially reported 8,000 increase was revised down to a still-preliminary 2,000, and January’s downwardly revised 21,000 number was lowered further, to 17,000.

>As a result, March’s year-on-year manufacturing job gains (188,000) were the sector’s lowest since June’s 172,000. Annual manufacturing job growth has now fallen each month this year.

>At the same time, March’s year-on-year manufacturing job increase was still much better than 2014-15’s 125,000, and 2013-14’s 107,000.

>The March Labor Department figures also confirm manufacturing’s status as a serious wage laggard during the current economic recovery.

>The sector’s pre-inflation wages actually rose more on a monthly basis in March (0.28 percent) than in February (0.16 percent), but not as fast as in January (0.40 percent). (The February and March figures are still preliminary).

>Further, manufacturing’s 0.28 percent March wage hike matched that of the overall private sector, and its February 0.16 percent increase beat the 0.12 percent private sector improvement.

>Year-on-year, however, private sector wages increased by 2.14 percent in March versus manufacturing’s 1.42 percent. In February, yearly manufacturing wages rose by 1.26 percent, also much less than the private sector’s 2.02 percent.

>In addition, manufacturing’s March 1.42 percent year-on-year wage growth was dwarfed by its 2.53 percent advance between March, 2013 and March, 2014, though it topped the 1.09 percent rise of 2012-2013.

>Over the longer term, however, pre-inflation manufacturing wages have performed even worse. They are up only 8.95 percent since the current recovery began in mid-2009. Overall private sector wages have risen by 12.18 percent during this period.

‘>An even sorrier manufacturing wage performance emerges after adjusting for inflation. In real terms, manufacturing wages dipped by 0.09 percent on month in February (the latest available figures), after soaring by 1.04 percent in January. The February decrease matched that of the private sector, but the January pop trailed the private sector’s 1.25 percent jump.

>Moreover, as of these preliminary February figures, inflation-adjusted manufacturing wages have risen by 1.33 percent on year, versus January’s 1.53 percent. That’s much higher than the fractional (at best) gains seen for most of 2014. But this latest manufacturing increase was less than the 2.13 percent February yearly advance for all private sector workers.

>In addition, since the recovery, real manufacturing wages are down 0.84 percent. Private sector wages on the whole are up 2.13 percent after inflation.

>Despite the recent improvement, because total non-farm employment keeps growing strongly, too, manufacturing also remains a job-creation laggard during the current economic recovery.

>From the start of the recession in December, 2007 through its employment bottom in February, 2010, total non-farm jobs shrank by 8.695 million. Since then, such employment has grown by 11.534 million.

>By contrast, manufacturing lost 2.293 million jobs from December, 2007 through February, 2010. Since then, it has regained only 866,000 net new jobs (37.77 percent) Manufacturing, therefore, has generated only 7.51 percent of the total jobs regained by the economy since that trough.

>As a result, although manufacturing still represented 10.69 percent of all non-farm jobs in February, 2010, its share as of March is down to 8.73 percent.

 

 

(What’s Left of) Our Economy: February Snaps Manufacturing’s Short Strong Job Creation Streak

Tags

Employment, Jobs, jobs report, Labor Department, manufacturing, real wages, wages, {What's Left of) Our Economy

This morning’s new Labor Department jobs report showed that manufacturing employment’s recent run of strong monthly employment creation ended in February, with industry’s net new hiring hitting its lowest level since July, 2013 (when it fell by 22,000). The preliminary February figures also revealed a four-month low (208,000) in year-on-year manufacturing job creation.

In addition, the report revealed that February’s manufacturing wage growth fell following January’s small spike, and even topped the private sector’s improvement month-to-month. But manufacturing workers’ pay increases continued to lag those of their other private sector counterparts during the current economic recovery. In fact, despite a large monthly inflation-adjusted wage increase recently reported for January, real manufacturing wages are still down since the last recession technically ended in the second quarter of 2009.

Here’s my full analysis of the manufacturing data contained in this morning’s Labor Department jobs report:

>Manufacturing added only 8,000 net new jobs in February – many fewer than the 27,000 average improvement from October through January. (Both the January and February employment figures are still preliminary.)

>Moreover, January’s originally reported 22,000 hiring increase was revised down to 21,000, and December’s advance was revised down from 26,000 to 19,000.

>As a result, February’s year-on-year manufacturing job gains (208,000) were the sector’s lowest improvement since October’s 197,000.

>Manufacturing’s preliminary February employment level of 12.330 million was still its highest since February, 2009 – when it totaled 12.380 million.

>The February Labor Department figures (which are preliminary), moreover, confirm manufacturing’s status as a serious wage laggard during the current economic recovery.

>The sector’s pre-inflation wages actually rose more over January levels (0.16 percent) than those for the private sector overall (0.12 percent). But that’s less than January’s 0.40 percent monthly increase for manufacturing (which was revised up from 0.28 percent).

>Moreover, pre-inflation manufacturing wages are only up 8.64 percent since the current recovery began in mid-2009. Overall private sector wages have risen by 11.82 percent during this period.

>Year-on-year, manufacturing wages in current dollars were up 1.26 percent in February. Overall private sector wages were up 1.98 percent.

‘>Adjusted for inflation, however, manufacturing’s wage performance since the recession’s end is even worse. In real terms, manufacturing wages increased in January (the latest available figures) by 1.04 percent over December levels. But that impressive gain – following December’s flat-line – trailed the comparable 1.25 percent for the overall private sector.

>Moreover, as of January’s preliminary figures, inflation-adjusted manufacturing wages have risen 2.29 percent year on year. That’s much higher than the fractional gains seen for most of 2014. But this latest manufacturing increase was less than the 2.43 percent advance for all private sector workers.

>In addition, since the recovery, real manufacturing wages are down 0.75 percent. Private sector wages on the whole are up 2.23 percent after inflation.

>Despite the recent improvement, because total non-farm employment keeps growing strongly, too, manufacturing also remains a job-creation laggard during the current economic recovery.

>From the start of the recession in December, 2007 through its employment bottom in February, 2010, total non-farm jobs shrank by 8.695 million. Since then, such employment has grown by 11.477 million.

>By contrast, manufacturing lost 2.293 million jobs from December, 2007 through February, 2010. Since then, it has regained only 877,000 net new jobs (38.25 percent) Manufacturing, therefore, has generated only 7.64 percent of the total jobs regained by the economy since that trough.

>As a result, although manufacturing still represented 10.69 percent of all non-farm jobs in February, 2010, its share today is down to 8.74 percent.