Don't Get Excited

Wall Street is carrying on as if we have turned the corner in the Jobs Department. The U.S. Bureau of Labor Statistics this morning released its monthly assessment of the Employment Situation (as in, we have a "situation" here), and the numbers were not quite as bad has had been feared in the days leading up to the announcement. The private sector actually created 67,000 jobs in August, though that number was more than offset by the loss of temporary census jobs, resulting in a negative net number (-54,000). That was only half the whisper number, so--wooHOO!--let's party.

Even a cursory glance at the chart above shows that the current malaise bears no resemblance to a typical post-WW2 recession. The losses are steeper, and the recovery will be more protracted. The total number of jobs in the economy is little changed from a year ago and down from three months ago, when the fertilizer got taken away from all those green shoots. Looking at the Household Survey data, David Rosenberg of Gluskin Sheff counts over a quarter-million full-time jobs lost in August. Rosenberg, derided as a perma-bear, no longer talks about a double dip. He looks at a chart like the one above and calls it a "single scoop" instead.

Put away the vuvuzelas.

[update, 09-07-10:]

"At the end of the day, the real mystery is why presumably numerate Wall Street economists and strategists have taken any comfort at all from the modest blip in the headline job count since last December. An economy that shed more than 8 million jobs during the two-year recession has now recovered the grand sum of 425,000 positions outside of the HES Complex [health, education, and social services], Core Government Operations, and the soon-to-be-completed 2010 Census.

Among this miniscule total, there were 160,000 half jobs in the leisure and hospitality sector, and 200,000 jobs at temporary employment agencies. These are the lowest paying, least stable jobs in the entire economy, and can't conceivably serve as a foundation for the recovery of private incomes and spending."

--David Stockman, "Now the Bad News: Those August Jobs Were Rented" [full article]