Saturday, January 5, 2013

41.1 Million Missing Jobs

Long-Term


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@#$%!


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@#$%!


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@#$%!

Short-Term


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@#$%!


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@#$%!


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@#$%!

Let's take it back to 1984 yet again.


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@#$%!

Those who miraculously can't believe in "new normal" theories ought to at least brace for the old normal theories. As seen in the chart above, we're at the top of the old normal's frickin' channel. It therefore seems incredibly unlikely that the job market is on the verge of spewing candy mountain goodness.

Put another way, got kidney? I believe with every fiber of my being that we will not see 4% year over year payroll growth again in my lifetime. In fact, I'd be pleasantly surprised if we ever hit 2% again (unless we got there through a massive employment crash first of course).

As a side note, what kind of denial drug must one be taking to not believe in new normal theories? And how did I miss out? I can't say it would help my financial health but perhaps I'd at least be sleeping better. They say ignorance is bliss!

I dare the optimists to come up with one reasonable scenario which returns us to the long-term employment trend that spans from 1939 to 2000. It's just not mathematically possible without incredible leaps of irrational faith. A quadrillion in national debt *and* cheap energy? Not reasonable. Each worker has two jobs in an increasingly automated world? Not reasonable. The Fed has permanently put a stop to recessions? Not reasonable.

The old normal theories are about as provably dead as anything in economics could possibly be. Over the long-term, we cannot grow like we once did. In fact, we can barely grow during this economic expansion. How much will the next economic contraction undo? I suspect it will be more than most are willing to believe. And let's not even talk about our massive trade deficit and the sucking sound it is making. Sigh.

See Also:
41.0 Million Missing Jobs

Source Data:
St. Louis Fed: All Employees: Total nonfarm

14 comments:

mab said...

I dare the optimists to come up with one reasonable scenario which returns us to the long-term employment trend that spans from 1939 to 2000.

What if we start building and exporting large trojan rabbits? Or even wooden badgers?

Craig M. Brandenburg said...

I would expect the United States' Economy to lag behind the red trend line these days, even in good times, if for no other reason than our country's demographic changes. Firstly, the population isn't growing as fast as it did during the second half of the 20th century. Secondly, many Baby Boomers have retired in recent years and many more will do so in the coming years.

I believe “job growth” is an obsolete metric for comparing the overall health of the modern Economy to that in the 20th century. There are many indications that our Economy is sputtering and in bad shape, but I don't see how anyone can reasonably expect 20th century job growth to happen when we have 21st century population growth.

Stagflationary Mark said...

mab,

Yes! Wooden badgers!

If that doesn't work then nothing will, lol.

Stagflationary Mark said...

Craig M. Brandenburg,

There are many indications that our Economy is sputtering and in bad shape, but I don't see how anyone can reasonably expect 20th century job growth to happen when we have 21st century population growth.

And yet there are still people out there who scoff at "new normal" theories. Some even manage pension funds no doubt. Sigh.

Stagflationary Mark said...

I would also like to point out that demographics alone probably can't explain the sharpness of the exponential trend failure. It was like someone flipped on a switch in 2000. Or perhaps robots did (think Amazon.com's new automated retail sales). Sigh.

Fritz_O said...

I was browsing around the 'net tonight contemplating the "new normal" when I came across this:

Baltic Dry Index

Set the "Period" to 10 years!! Yikes!

We've settled in to a trend that coincides with the depths of the Financial Crisis!

My, my.

Stagflationary Mark said...

Fritz_O,

Ah, yes. The old Baltic Dry Index looks like something out of the Great Depression gambit.

Well played sir.

Craig M. Brandenburg said...

Mark,

I would also like to point out that demographics alone probably can't explain the sharpness of the exponential trend failure. It was like someone flipped on a switch in 2000.

I wouldn't be surprised if there's bad news hidden somewhere in the job growth stat, but in order to avoid an apples to oranges comparison, such a stat should at least take into account demographic changes. How about dividing the number of jobs by the number of people of traditionally employable age, say 18 to 65? That would be a start.

I dare the optimists to come up with one reasonable scenario which returns us to the long-term employment trend that spans from 1939 to 2000.

Even an optimist ought to expect the "job growth" exponential trend failure you charted because demographics can't be trumped—not without resorting to negative unemployment rates. My point is that if you want to declare economic bad times based on the absolute number of jobs in this country then you ought to do a little more digging with the data.

Stagflationary Mark said...

Craig M. Brandenburg,

If real long-term real GDP growth is tied to real long-term total wage growth, which I claim it is...

If we are growing our debts based on historical real long-term GDP growth, which I claim we are...

Then we should be heeding what the 40 million missing jobs has to say about our sustainable future, which I claim very few are willing to talk about.

That's especially true of people like Jeremy Siegel who will extrapolate 200+ years of economic past into the distant future. I am clearly not in that camp.

Stagflationary Mark said...

Put another way...

In a perfect world we should all be able to prosper without growing our population (and jobs) from here.

In a ponzi scheme world, we require growth just to keep the wheels from falling off.

I claim we live in the latter world. I hope I'm wrong. Sigh.

Craig M. Brandenburg said...

Mark, I see what you're saying, and now I better understand how the missing jobs stat fits into your overall view of the Economy. Thanks for clarifying!


Stagflationary Mark said...

Craig M. Brandenburg,

I understand your point as well. We really shouldn't need to grow exponentially from here in order for each person to prosper.

As it relates to debt, I'm just concerned that our economy may be in the end stages of an unsustainanle locust swarm. At what point does an individual locust say, "I think our long-term business model has a flaw."

Sigh.

That said, if there had been no growth and there were just 100 people in the world, we would probably not even be having this conversation. It took a lot of cumulative manpower to get us to this level of technology.

I'm not so much judging as I am simply trying to adapt to what the future might bring. Let's just say that I'm not at all confident that median real net worth can grow from here.

mab said...

In a ponzi scheme world, we require growth just to keep the wheels from falling off.

Mark,

If I didn't know better, I'd think you weren't comfortable letting banksters create a quadrillion dollar derivatives "safety" net!

The Grenanke Feds took us so far into ponzi land that it amounts to a criminal act imo.

"Fun"damentally, how can such a giant ponzi scheme not result in undue misery for the majority?

The same financial crooks, wealth extractors and meddlers are not only still in charge, they actually have more economic and political power than ever. And look at their record in regards to how they have served the majority!

As if inflating asset prices to bubble levels today won't have negative effects in the future.

And just look at how we choose to use our deficit spending ability - destructive wars, welfare, bailouts..........GRRRRRRR! As if such bad eCONomic behavior won't have negative consequences!

The beatings will continue even if morale improves.

Stagflationary Mark said...

mab,

And just look at how we choose to use our deficit spending ability - destructive wars, welfare, bailouts..........GRRRRRRR! As if such bad eCONomic behavior won't have negative consequences!

I joked to my sister years ago that we should bomb Iraq with Detroit's automobiles and therefore kill two birds with one stone.

Perhaps someone heard me.

1. We got cash for clunkers.
2. Where did all that metal go?

Gallows humor!

Well, maybe. I can't actually disprove the theory. Sigh.