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.
This post is essentially a repeat of what I wrote about this last month. Only the names have been changed to protect the innocent. The data has also been updated.
When the Fed began QE3 in late 2012, it added more fuel to an engine that was already running at its natural capacity. 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. But job growth has been slow– growing more or less steadily at slightly above the rate of population growth.
Why economists expect it to grow any faster than that is a mystery to me. Why the Fed thinks that devaluing money and subsidizing bankster gambling, with the Fed guaranteeing the profits with ZIRP, QE, and the abomination of forward guidance blowing moral hazard out to monstrous proportions, is an even bigger mystery. The only rational explanation I can reach is that they are out of touch with reality–that they are clinically insane.
While the Fed is blowing massive asset bubbles in housing and stock prices, 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.
The actual NSA (not seasonally adjusted) number of persons reported in the CPS as employed in September rose by 142,000 from August. Over the previous 10 years, September was sometimes an up month and sometimes down, with no clear pattern evident. Last year in September there was an increase of 775,000, which was way outside the prior range of -995,000 to +167,000. The average September change for the 10 year period was a decline of -273,000, but the numbers were widely scattered.
The year over year gain in total employment under the CPS was +0.9%, down from 1.4% in August. 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 2012, when it settled its first MBS purchases in QE3, than since QE has been flowing.
Full time jobs have recently been growing at a slightly faster pace than the near stall growth rate of total jobs. But the trend is toward the US becoming a nation of part timers. Just 48% of Americans hold full time jobs today, down from 54% in 2000.
Full time employment in the CPS fell by 560,000 in September from August. That in itself is not alarming. September historically has always been a down month for full time jobs in this survey. This year’s drop was slightly larger than last year’s September downtick of -536,000, but significantly better than the 10 year average of a decline of 1.3 million for that month. The most recent two years have been much stronger than the prior range of -1.1 million to -1.9 million for September 2003-2012.
The annual percentage gain in full time jobs was 1.4%, unchanged from 1.4% in August. But it remains below the 2.4% rate when QE3 was announced in September 2012 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.
However, the growth rate is is better now than the 0.8% growth rate in March. The Federal budget sequestration cuts started in April with most taking effect in June. The rate of job growth rose over that period. So much for the theory that the “secastration” caused the economy to slow. It’s just more BS from the chattering class of economic polemicists and their media charlatan publicists who masquerade as journalists.
The Fed apparently has finally awakened to the fact that the only thing QE has done is caused financial market distortions, aka bubbles. The San Francisco Fed put out a paper essentially admitting that, while couching it in terms that would be more palatable to the Fed’s boss of bosses Bernanke, and his capos at the FOMC. The FOMC hawk cadre has complained about QE from its beginning, and their complaints have continued. Fisher, Plosser, Lacker, and George are the only sane Fed District Presidents. The rest are megalomanic tinkerers who think that they can guide the economy to do what they want. Bernanke is their leader. The data keeps proving them wrong, but they are undeterred. Some even go so far as to suggest that the Fed should print even more money.
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 hardly 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 47.7% today. That compares with 47.5% 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 is resulting in asset inflation, enriching the banksters and plutocrats while it has done nothing to increase jobs and help stem the steady 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 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 .
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