In Depth Analysis: CalculatedRisk Newsletter on Real Estate (Ad Free) Read it here.

Sunday, June 03, 2012

Sluggish Growth and Payroll Employment: An Update

by Calculated Risk on 6/03/2012 04:15:00 PM

Last November I posted a graph showing two possible paths for payroll employment if sluggish growth continued. I've received several requests to update that graph.

The two rates were 125,000 jobs added per month, and 200,000 jobs added per month.

Since I posted that graph, payroll growth has averaged 172,000 jobs per month. Also, with the annual benchmark revision, the previous year was revised up - so at 125,000 per month from November 2011, it would have taken 48 months just to get back to the pre-recession level of payroll employment. From the current level, at 125,000 per month, it will take an additional 40 months (Sept 2015).

At 200,000 payroll jobs per month, it will take an additional 25 months (June 2014) to get back to the pre-recession level from the current level. (The graph shows April 2014 at 200,000 per month, but that is from November 2011, and we are behind that pace).

The following two graphs show these projections from last November.

The dashed red line is 125,000 payroll jobs added per month. The dashed blue line is 200,000 payroll jobs per month.

Employment Projection Click on graph for larger image.

If we followed the red line path from last year, payroll jobs would return to the pre-recession level in November 2015. The dashed blue line returns to the pre-recession level in April 2014.

And this doesn't include population growth and new entrants into the workforce (the workforce has continued to grow).

Employment Projection Aligned The second graph shows the same data but aligned at peak job losses.

Last November the debate was been between another recession and sluggish growth - and I correctly took sluggish growth. But as I noted last year, even sluggish growth is a disaster for payroll employment.