Friday, February 12, 2010

Another Look at the Employment Stats

The recent monthly data on employment is often quite cumbersome to go through for a variety of reasons the most significant being that the Labor Department only issues it in pdf format which takes hours to convert to Excel format. It is straightforward yet time consuming.

Now to the most compelling chart seen below. Here we depict the annualized rates of change of Government, Education and Health Care and Manufacturing. It is clear that we are starting to pull out of the dip even in January 2009, which was the lowest month. That being the case the White House assertions to the contrary, we have looked at prior recessions and it appears that there is reason to believe that the actions of the White House may actually have prolonged this one, yet not deepened it. The Romer analysis of over a year ago is what most likely started all of this off since she appeared to conform her report to purely political ends. Thus the chart below is one of key importance.

Now the following two charts show the division of labor between January 2007 and January 2010. The first is the 2007 baseline as shown below.

Second we have 2010 below and clearly we see the growth of Government and Health Care and Education.

We now show the employment in the key sectors over this period by month (in 000s).

Goods Producing and Trade, the core elements of the economy, show drops which are dramatic but Government and Health Care and Education continue to grow. This should be of great concern because this is the first time in our economy that Goods Producing ever was less than Government and Ed & HC! We now have less people creating value than spending its rewards! This very fact should be of monumental concern to the people!

At the other extreme where utilities and the like reside the chart below shows the results:

In all there has been some decline but not to the extreme we have seen in core business.

The conclusions are quite clear:

1. The turn started at the end of the last administration.

2. The actions of the current administration may not have improved things they may very well have prolonged them

3. The loss of manufacturing base and the expansion of government means that we have less people working making things than we have government employees regulating them! We are becoming Greece and we know where that goes.