Tapping Our Strategic Unemployment Reserves

The household survey is amusing, to say the least.

Employment Situation Summary Table A. Household data, seasonally adjusted

Month over Month Change

Civilian labor force: +119,000
Employed: +4,000
Unemployed: +115,000

How does one look at this month's household survey and make any sense of it? At best, it looks like very bad joke. Even as a permabear, I don't believe this noisy data. I told my girlfriend yesterday that I thought the employment report would be good (short-term thinking). As seen in the following chart, I expected the unemployed parabola to continue.


Click to enlarge.

I think it has continued. We just can't see it due to the noise.

Let's look at the year over year changes instead. That way much of the noise will be filtered out.

Year over Year Change

Civilian labor force: +1,113,000
Employed: +2,844,000
Unemployed: -1,731,000

We are tapping our unemployment reserves to boost growth. That's what the data shows.

1,731,000 / 2,844,000 = 61%

Most of the growth is coming from simply putting people back to work. When they are back to work, then what?

We cannot continue to grow the employment by 2.844 million per year if the civilian labor force only grows by 1.113 million per year.

How can anyone think the employment growth we are seeing is sustainable over the long-term or that it will somehow magically accelerate from here? Once we've run out of unemployed to put back to work, our employment growth engine will slow dramatically. Heaven help us if the Fed is raising interest rates when it happens. The Fed seems very determined to do so, but as we all know, talk is cheap.