by Calculated Risk on 12/05/2014 01:29:00 PM

By request, here is an update on an earlier post through the November employment report.

Important: There are many differences between these periods. Overall employment was smaller in the '80s, however the participation rate was increasing in the '80s (younger population and women joining the labor force), and the participation rate is generally declining now.  But these graphs give an overview of employment changes.

First, here is a table for private sector jobs. The top two private sector terms were both under President Clinton.  Reagan's 2nd term saw about the same job growth as during Carter's term.  Note: There was a severe recession at the beginning of Reagan's first term (when Volcker raised rates to slow inflation) and a recession near the end of Carter's term (gas prices increased sharply and there was an oil embargo).

Term	Private Sector Jobs Added (000s)
Carter	9,041
Reagan 1	5,360
Reagan 2	9,357
GHW Bush	1,510
Clinton 1	10,885
Clinton 2	10,070
GW Bush 1	-841
GW Bush 2	379
Obama 1	1,998
Obama 2	4,7171
122 months into 2nd term: 10,290 pace.

¹Currently Obama's 2nd term is on pace to be the 2nd best ever - only trailing Clinton's 1st term.

The first graph shows the change in private sector payroll jobs from when each president took office until the end of their term(s). President George H.W. Bush only served one term, and President Obama is in the second year of his second term.

Mr. G.W. Bush (red) took office following the bursting of the stock market bubble, and left during the bursting of the housing bubble. Mr. Obama (blue) took office during the financial crisis and great recession. There was also a significant recession in the early '80s right after Mr. Reagan (yellow) took office.

There was a recession towards the end of President G.H.W. Bush (purple) term, and Mr Clinton (light blue) served for eight years without a recession.

Click on graph for larger image.

The first graph is for private employment only.

The employment recovery during Mr. G.W. Bush's (red) first term was sluggish, and private employment was down 841,000 jobs at the end of his first term.   At the end of Mr. Bush's second term, private employment was collapsing, and there were net 462,000 private sector jobs lost during Mr. Bush's two terms. 

Private sector employment increased slightly under President G.H.W. Bush (purple), with 1,510,000 private sector jobs added.

Private sector employment increased by 20,955,000 under President Clinton (light blue), by 14,717,000 under President Reagan (yellow), and 9,041,000 under President Carter (dashed green).

There were only 1,998,000 more private sector jobs at the end of Mr. Obama's first term.  Twenty months into Mr. Obama's second term, there are now 6,715,000 more private sector jobs than when he initially took office.

 A big difference between the presidencies has been public sector employment.  Note the bumps in public sector employment due to the decennial Census in 1980, 1990, 2000, and 2010. 

The public sector grew during Mr. Carter's term (up 1,304,000), during Mr. Reagan's terms (up 1,414,000), during Mr. G.H.W. Bush's term (up 1,127,000), during Mr. Clinton's terms (up 1,934,000), and during Mr. G.W. Bush's terms (up 1,744,000 jobs).

However the public sector has declined significantly since Mr. Obama took office (down 646,000 jobs). These job losses have mostly been at the state and local level, but more recently at the Federal level.  This has been a significant drag on overall employment.

And a table for public sector jobs. Public sector jobs declined the most during Obama's first term, and increased the most during Reagan's 2nd term.

Term	Public Sector Jobs Added (000s)
Carter	1,304
Reagan 1	-24
Reagan 2	1,438
GHW Bush	1,127
Clinton 1	692
Clinton 2	1,242
GW Bush 1	900
GW Bush 2	844
Obama 1	-713
Obama 2	671
122 months into 2nd term, 146 pace

Looking forward, I expect the economy to continue to expand for the next few years, so I don't expect a sharp decline in private employment as happened at the end of Mr. Bush's 2nd term (In 2005 and 2006 I was warning of a coming recession due to the bursting of the housing bubble).

A big question is if the public sector layoffs have ended.  The cutbacks are clearly over at the state and local levels, and it appears cutbacks at the Federal level have slowed.  Right now I'm expecting some increase in public employment during Obama's 2nd term, but nothing like what happened during Reagan's second term.

by Calculated Risk on 12/05/2014 11:43:00 AM

Earlier the Department of Commerce reported:

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $43.4 billion in October, down $0.2 billion from $43.6 billion in September, revised. October exports were $197.5 billion, $2.3 billion more than September exports. October imports were $241.0 billion, $2.1 billion more than September imports.

The trade deficit was larger than the consensus forecast of $41.5 billion.

The first graph shows the monthly U.S. exports and imports in dollars through October 2014.

Click on graph for larger image.

Both imports and exports increased in October.

Exports are 19% above the pre-recession peak and up 2% compared to October 2013; imports are 4% above the pre-recession peak, and up about 3% compared to October 2013. 

The second graph shows the U.S. trade deficit, with and without petroleum, through October.

The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

Oil imports averaged $88.47 in October, down from $92.54 in September, and down from $99.96 in October 2013.  The petroleum deficit has generally been declining and is the major reason the overall deficit has declined since early 2012.

Note: There is a lag due to shipping and long term contracts, but oil prices will really decline over the next several reports!

The trade deficit with China increased to $32.5 billion in October, from $28.7 billion in October 2013.  The deficit with China is a large portion of the overall deficit.

by Calculated Risk on 12/05/2014 09:44:00 AM

Earlier: November Employment Report: 321,000 Jobs, 5.8% Unemployment Rate

Last month I posted a possible list of economic words for the year since I started this blog. This included "bubble", "subprime", "bailout" and more. For 2014 I suggested "employment", and for 2015 I'm hoping for "wages".  2014 has definitely been about jobs!

This was a strong employment report with 321,000 jobs added, and job gains for September and October were revised up.  This was the tenth consecutive month over 200,000, and an all time record 50th consecutive month of job gains.

As always we shouldn't read too much into one month of data, but at the current pace (through November), the economy will add 2.89 million jobs this year (2.80 million private sector jobs).  This is the best year since 1999 (and, for private employment, this might be the best year since 1997).

A few other positives: U-6 declined to 11.4% (an alternative measure for labor underutilization) and was at the lowest level since 2008, the number of part time workers for economic reasons declined  (lowest since October 2008), and the number of long term unemployed declined to the lowest level since January 2009.

And there might even be an early hint of wage growth, from the BLS: "Average hourly earnings for all employees on private nonfarm payrolls rose by 9 cents to $24.66 in November. Over the year, average hourly earnings have risen by 2.1 percent. In November, average hourly earnings of private-sector production and nonsupervisory employees increased by 4 cents to $20.74."

With the unemployment rate at 5.8%, there is still little upward pressure on wages. Hopefully wage growth will pick up as the unemployment rate falls over the next couple of years.

A few more numbers:

Total employment increased 321,000 from October to November and is now 1.7 million above the previous peak.  Total employment is up 10.4 million from the employment recession low.

Private payroll employment increased 314,000 from October to November, and private employment is now 2.1 million above the previous peak. Private employment is up 10.9 million from the recession low.

Through the first eleven months of 2014, the economy has added 2,650,000 payroll jobs - up from 2,247,000 added during the same period in 2013.   My expectation at the beginning of the year was the economy would add between 2.4 and 2.7 million payroll jobs this year - I was a little low!

Year-over-year Change in Employment

This graph shows the year-over-year change in total non-farm employment since 1968.

In November, the year-over-year change was 2.73 million jobs, and it appears the pace of hiring is increasing.

It seems very likely that 2014 will be the best year since 1999 for both total nonfarm and private sector employment growth.

Seasonal Retail Hiring

According to the BLS employment report, retailers hired seasonal workers in November at a solid pace, although slightly lower than in 2012.

Click on graph for larger image.

Typically retail companies start hiring for the holiday season in October, and really increase hiring in November. Here is a graph that shows the historical net retail jobs added for October, November and December by year.

This graph really shows the collapse in retail hiring in 2008. Since then seasonal hiring has increased back close to more normal levels. Note: I expect the long term trend will be down with more and more internet holiday shopping.

This suggests retailers are reasonably optimistic about the holiday season.  Note: There is a decent correlation between October seasonal retail hiring and holiday retail sales.

Employment-Population Ratio, 25 to 54 years old

Since the overall participation rate declined recently due to cyclical (recession) and demographic (aging population, younger people staying in school) reasons, an important graph is the employment-population ratio for the key working age group: 25 to 54 years old.

In the earlier period the participation rate for this group was trending up as women joined the labor force. Since the early '90s, the participation rate moved more sideways, with a downward drift starting around '00 - and with ups and downs related to the business cycle.

The 25 to 54 participation rate was unchanged in November at 80.8%, and the 25 to 54 employment population ratio was unchanged at 76.9%.  As the recovery continues, I expect the participation rate for this group to increase a little - although the participation rate has been trending down for this group since the late '90s.

Part Time for Economic Reasons

From the BLS report:

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers), at 6.9 million, changed little in November.

The number of persons working part time for economic reasons decreased in November to 6.850 million from 7.027 million in October.  This suggests slack still in the labor market.  These workers are included in the alternate measure of labor underutilization (U-6) that decreased to 11.4% in November from 11.5% in October.

This is the lowest level for U-6 since September 2008.

Unemployed over 26 Weeks

This graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 2.815 million workers who have been unemployed for more than 26 weeks and still want a job. This was down from 2.916 in October. This is trending down, but is still very high.

This is the lowest level for long term unemployed since January 2009.

State and Local Government

This graph shows total state and government payroll employment since January 2007. State and local governments lost jobs for four straight years. (Note: Scale doesn't start at zero to better show the change.)

In November 2014, state and local governments added 2,000 jobs.  State and local government employment is now up 157,000 from the bottom, but still 587,000 below the peak.

Clearly state and local employment is now increasing.  And Federal government layoffs have slowed (payroll increased by 5 thousand in November), but Federal employment is still down 17,000 for the year.

by Calculated Risk on 12/05/2014 08:30:00 AM

From the BLS:

Total nonfarm payroll employment increased by 321,000 in November, and the unemployment rate was unchanged at 5.8 percent, the U.S. Bureau of Labor Statistics reported today.
...
The change in total nonfarm payroll employment for September was revised from +256,000 to +271,000, and the change for October was revised from +214,000 to +243,000. With these revisions, employment gains in September and October combined were 44,000 more than previously reported.

Click on graph for larger image.

The first graph shows the monthly change in payroll jobs, ex-Census (meaning the impact of the decennial Census temporary hires and layoffs is removed to show the underlying payroll changes).

Ten consecutive months over 200 thousand.

Employment is now up 2.73 million year-over-year.

Total employment is now 1.7 million above the pre-recession peak.

The second graph shows the employment population ratio and the participation rate.

The Labor Force Participation Rate was unchanged in November at 62.8%. This is the percentage of the working age population in the labor force.   A large portion of the recent decline in the participation rate is due to demographics.

The Employment-Population ratio was unchanged at 59.2% (black line).

I'll post the 25 to 54 age group employment-population ratio graph later.

The third graph shows the unemployment rate.

The unemployment rate was unchanged in November at 5.8%.

This was well above expectations, and with the upward revisions to prior months, this was a strong report.  Party like it's 1999!

I'll have much more later ...

by Calculated Risk on 12/04/2014 06:33:00 PM

A few employment previews:

From me: Preview: Employment Report for November (reviewing the numbers for the month)

From Tim Duy on the employment report and the Fed Ahead of the November Employment Report

As I have said before, predicting the monthly nonfarm payroll change is a fool's errand, yet an errand we all undertake. I would pick 235k with an upside risk. More important is what happens to wage growth. I expect that to pick up over the next six months, but would be surprised to see any large gain this month.

From Andy Kierz at Business Insider: It Could Take Months Before We Find Out Friday's Jobs Report Was Great

One big factor that could weigh on the jobs number is the recent tendency for revisions to the November payroll numbers to be quite a bit larger than for other months ... Sheperdson points out that "over the past five years, the median revision between the first estimate for November and the third, published two months later, is a hefty 71K. The median for the other 11 months of the year is just +23K."

If that trend continues, we could see the November jobs number increase by tens of thousands in the later revisions early next year.

The seasonal factor for November might have been skewed by the huge job losses in 2008 and early 2009, and that might be less of a factor now. But it will take some time to know!

Friday:
• At 8:30 AM ET, the Employment Report for November. The consensus is for an increase of 230,000 non-farm payroll jobs added in November, up from the 214,000 non-farm payroll jobs added in October. The consensus is for the unemployment rate to be unchanged at 5.8% in November.

• Also at 8:30 AM, the Trade Balance report for October from the Census Bureau. The consensus is for the U.S. trade deficit to be at $41.5 billion in October from $43.0 billion in September.

• At 10:00 AM, Manufacturers' Shipments, Inventories and Orders (Factory Orders) for October. The consensus is for a 0.1 decrease in October orders.

• At 3:00 PM, Consumer Credit for October from the Federal Reserve. The consensus is for credit to increase $16.3 billion.