More on NFP

Saturday, August 06, 2005 | 09:30 AM

"It looks like the U.S. economy is now dominated by housing, shopping, eating and drinking (with some help from very expensive health care). These don't look like core productive sectors," our dynamic duo comments. But they add, "We'll take it for now." Which in some ways demonstrates just how low expectations for employment have sunk, thanks to long years of straggly recovery.

Above is the money quote from Barron's Alan Abelson, citing the Liscio Report. It turns out that I am not the only curmudgeon looking askance at the NFP report.  

Abelson notes that NFP "was good, [b]ut, alas, it was still a sizable piece from great." Further, he takes up another subject readers of this blog should be all too familiar with: the misleadlingly low unemployment rate and the declining labor participation rate

"A more comprehensive -- and we feel more accurate -- reading suggests the real jobless rate is 6%, not 5%. And if you include everyone who should be working full time but isn't, the rate approaches 9%."

I do not recall ever seeing this seriously discussed in any mainstream media prior. (Please disavuseme of this notion if you have links proving otherwise).

Abelson continues:

"Our friends at the Liscio Report, Philippa Dunne and Doug Henwood, concur that while solidly positive, July's showing didn't smack of "boomtime." They note the largest contributor by sector was retailing, up 50,000 jobs, paced by car dealerships (nothing like giving away cars to attract a crowd), clothing and department stores. Health care again came through with 29,00 new jobs, and bars and restaurants, which have been responsible for one of every eight slots added this year (we'll drink to that), swelled last month's payrolls by 30,000. Housing, directly or indirectly, chipped in another slug.

To Philippa and Doug, the job data, while a pleasant surprise, failed to erase their long-term concerns. For one thing, the gain was still below the 50-year average. They also found somewhat worrying that over the last year "construction, health care, retail trade and eating and drinking establishments" have contributed nearly half the jobs added, even though these sectors account for just a third of total employment."

This is a perfect example of data that is not fabricated, but merely misleading.

Ours is an anemic post-bubble recovery, not organic but rather artificially stimulated by every possible mechanism at the government's disposal. It is not healthy. It is not natural. And its "coming around the clubhouse turn" . . .


Extreme Rhetoric

Saturday, August 06, 2005 | 09:30 AM | Permalink | Comments (7) | TrackBack (0) add to | digg digg this! | technorati add to technorati | email email this post



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Barry - I think the Abelson remark is off-base. If you are waiting for job growth in manufacturing, you will be waiting a very long time. In the now-iconic heyday of labor market performance of the latter-1990s, average labor growth in the manufacturing sector was zero -- which, on reflection, we all know. What Abelson has identified is the major sectors in the non-manufacturing side of the economy. That is where the job growth has been since at least the mid-60s, and where it will be in the U.S. economy evermore. My reading of the employment report is that the employment growth in that part of the economy was fairly broad. There may be reasons to remain cautious, but I don't think Abelson has identified one of them.

Posted by: Dave Altig | Aug 6, 2005 11:50:33 AM

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