Three Important Things to Know About Today’s Employment Report

Summary:  Looking at today’s employment report (PDF here) we can draw three big conclusions. Oddly enough, these are not obvious to all.


  1. The change in June was statistically about zero
  2. The cumulative change over the past year was very small
  3. This is bad news; worse might lie ahead
  4. For more information

(1)  The change in June was statistically about zero

Compare the June employment report results to the 90% confidence level for the monthly employment reports:

(a)  The household survey (CPS, source of the unemployment rate): 128,000 + or – 280,000 (essentially unchanged).

(b)  The establishment survey of non-farm employment (CES): 80,000 +or – 100,000 (ditto). This has been the case for quite a while. Looking at the recent CES monthly changes:

  • April:  +68,000
  • May:  +77,000
  • June:  +80,000

(2)  The cumulative change over the past year was very small

(a)  The not seasonally adjusted change over the past 12 months of non-farm jobs per the establishment survey: 1.8 million (1.3%).  Due to revisions to the data, year-over-changes in the household survey are too complex for us to do here.

(b) Look at the changes this year, the seasonally adjusted change from January to June (in thousands). Note both surveys agree on the change in jobs.

The establishment survey:

Jan-12 Jun-12 Change % Change
132,461 133,088 627 0.5%

The household survey provides a broader context:

Class Jan-12 Jun-12 Change % Change Annualized
Population 242,269 243,155 886 0.4% 0.9%
Not in labor force 87,874 87,992 118 0.1% 0.3%
Labor Force 154,395 155,163 768 0.5% 1.2%
Employed 141,637 142,415 778 0.5% 1.3%
Unemployed 12,758 12,749 -9 -0.1% -0.2%

Population = civilian, non-institutionalized, age 16+.

(3)  This is bad news; worse might lie ahead

Many who look at these numbers debate the tiny details, but ignore the large fact: both measures show slow recovery from the depths of the recovery. Very slow recovery.

We are applying powerful fiscal and monetary stimulus to get this slow recovery.  Near-zero interest rates plus borrowing $1.3 trillion dollars over the past 12 months (data here), and we get only a 1.3% increase in jobs.  The annualized increase so far this year runs at roughly the same rate — with no evidence of the powerful sustainable recovery the optimists have promised so many times since the trough in Spring 2009. The reason is obvious: the stimulus provided first aid. It stabilized the economy, buying time for measures to rebalance our warped somewhat dysfunctional economy. We wasted that time (as we squandered the stimulus spending).

Now for the bad news: the world economy is slowing.  The economic and social stress of a slowly growing world might be heavenly compared to what lies ahead if the world slumps again into recession in its weak condition.

For More Information about the US economy

  1. A status report about the US economy (we party so hard we cannot hear the alarms ringing), 27 March 2012
  2. About America’s economic recovery: the good news and the bad, 1 May 2012
  3. About the May jobs report – a few new jobs, bought at great cost, 1 June 2012
  4. The Titanic’s lessons for us about the coming economic crisis, 4 June 2012
  5. America is rich and powerful because we can borrow. Will this debt build a stronger America?, 5 June 2012
  6. US economic update. Everything that follows is a result of what you see here., 8 June 2012

This post originally appeared at Fabius Maximus and is posted with permission.


3 Responses to "Three Important Things to Know About Today’s Employment Report"

  1. benleet   July 7, 2012 at 10:21 am

    Employment to population ratio has not moved significantly in almost 3 years, still at low levels not seen since 1984. In August 2000 there were more private sector jobs than today. (data bls, private sector employment) while working age population has increased from 217 million to 242 million, 25 million gain — but no private sector job gain. 1980 to 2000 had 35 million new private sector job increase. 2000-2010 had 3.4 million loss in private sector jobs. In 3 years after Obama took office, only 1.4 million private sector growth, which is a little more than one year's normal labor force growth. My blog:

  2. Harry   October 18, 2012 at 9:27 pm

    The part where the worst has yet to come sounds really scary. It almost makes me want to check out even foreign umbrella companies for openings.

  3. Mike Bosch   October 30, 2012 at 12:08 am

    These stats are alarming. UK umbrella companies, and other companies for that matter, should innovate schemes that can alleviate this stagnant performance and that better be fast.