Earlier we looked at non-farm payrolls, which come from the BLS the Current Employment Statistics Survey or CES, a survey of business establishments. The BLS also does a survey of households. The household survey or CPS — Current Population Survey– sometimes tells a different story from the establishment survey. It’s also important in that it breaks out full time employment from total employment so that we can analyze that important metric separately.
When the Fed began QE3 in late 2012, it added more fuel to an engine that was already running at its natural capacity. As a result, job growth has not accelerated in response to the flood of money printing. House prices and stock prices have inflated, thanks to too many dollars chasing too few assets.
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The Fed is blowing massive asset bubbles while the economy plods along at a growth rate little different from when it was during a long pause in QE in 2011 and 2012. Money printing works to inflate asset prices, but it does nothing to stimulate job growth. Making matters worse, the data shows that full time jobs are growing even more slowly than the tepid growth rate of total jobs. The US is becoming a nation of part timers. Just 48% of Americans hold full time jobs today, down from 54% in 2000.
The actual NSA (not seasonally adjusted) number of persons reported in the CPS as employed in July rose by 272,000 from June. Over the previous 10 years, July virtually always had an increase, except for July 2012, which had a decline of 76,000. The average gain for the last 10 Julys was 337,000.
The year over year gain in total employment under the CPS was 1.4%, up from 1.1% in June. The annual growth rate has decelerated from 2.2% last October. The growth rates were actually stronger before the Fed started pumping money into the economy in November, when it settled its first MBS purchases in QE3.
Full time employment in the CPS rose by 288,000 in July, which is always an up month for full time jobs in the household survey. More high school and college kids get summer jobs, but total payrolls don’t increase. The issue is how this July compares to the past. This year’s gain was stronger than last year’s but weaker than the average gain of 541,000 for July over the previous 10 years. The annual gain was 1.3%, up from 1.2% in June. That remains below the 2.4% rate when QE3 was announced in September and 2.1% when the cash started hitting the system in November. It’s clear that the resumption of QE last fall spurred neither total jobs, nor full time jobs.
The slowing of the growth rate does hint that the fecal cliff and secastration and the approach of the full implementation of Obamacare may have had a negative effect. It is impossible to say which of these factors, if any, had a greater influence. There was no difference in the before and after readings in the Establishment survey data. There’s no sign of any before and after difference in other data as well. So I have to take this data with a grain of salt. However, it’s there, and I present it for your consideration.
The chart above gives some perspective on how far total employment and full time employment fell in the first stage of the 2008-09 depression, and how much they have yet to recover. Total employment is nearing the 2007 peak and could reach that level in a year or two assuming nothing changes. However, this is in the context of population being 6% greater today than in 2007. Full time jobs are even farther behind. Part time jobs have accounted for a disproportionate increase in total jobs.
While the number of jobs is growing, the full time employment to population ratio has barely budged since the recovery began in 2009. The economy seems to barely be keeping pace with population growth. The full time employment to population ratio bottomed at 46% in January 2010, and it’s at 47.9% today. That compares with 47.7% a year ago. There has been virtually no improvement in the past 12 months. This ratio is still at levels last seen in 1982 and 1983 at the bottom of a horrible recession. This is just more evidence that massive money printing resulting in massive asset inflation enriching the banksters and plutocrats, has done nothing to increase jobs, or to help stem the disappearance of the middle class.
The number of unemployed persons is growing right along with the number of people who do have jobs. It is a sad state of affairs for the US, but markets don’t care about that. They respond to the amount of cash in securities dealer accounts, which, thanks to the Fed (and lately the BoJ), continues to grow. As long as the Fed continues to pump more money into the markets than deflating asset sectors can destroy, slow employment growth will not matter. In fact, the slower it is, the less the Fed is likely to cut QE by more than nominal amounts.
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