Private sector employment growth in the US has been in a trend
decline for a number of years now. And, when you factor out one
strong sector -- health care jobs -- the trend looks even worse.
Main factors behind the decline are: slower labor force growth,
jobs outsourcing abroad, growth in market share for imported
goods and services, and more recently, a slowing of foreign, jobs
creating business investment in the US reflecting a weaker dollar
over the past decade. In keeping with the down trend of jobs
growth, the US has also experienced a deceleration of growth in
real consumption as well, with the latter also reflecting demographic
The very deep recession we experienced recently produced the
largest % decline in jobs measured yr/yr in many years. The
reversal in momentum from deep downtrend has been faster than
in recent recessions, but not nearly as quick as in the early post
As you will spot in viewing the chart linked to below, a positive
change in the growth of employment of more than 2% when
measured yr/yr, would be a significant achievement during this
economic recovery (chart).
Now, the longer term trend of the momentum of employment
growth suggests clearly that it could take an extended period of
time to bring the unemployed back into the fold if the factors
which underlie the trend remain in force. The issue is made the
worse by the fact that the US safety net programs have a short
term focus and work on the assumption that folks who lose their
jobs will be rapidly re-absorbed in to the ranks of the employed
as the recovery progresses.
There is talk about "structural" i.e. long term joblessness going
forward and that policies may need to be adopted to ameliorate
the problem. For my part, I would like to see how the economy
progresses over the next year or so before moving into that
activist camp because I think we need to see if companies are
going to continue to hold back on hiring as order backlogs reach
a larger scale.
- Peter Richardson
- Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!