Sunday, September 19, 2010

Households vs. Payrolls

Click to enlarge.

This chart shows the number of U.S. households each year compared to the total nonfarm payroll employment in each year (an average of the 12 months of employment data).

Household formation isn't about population growth to me. It is about job growth.

See that point farthest to the right and well below the trend line? That's where we are as of 2009.

There are either way too many households and/or not nearly enough jobs. I believe with near certainty that it is a combination of both.

Source Data:
U.S. Census Bureau: Families and Living Arrangements
St. Louis Fed: Total Nonfarm Payrolls


Stagflationary Mark said...

For those interested...

In 1999, the opposite could have been argued. There were either way too few households and/or way too many jobs.

104 million households
129 million jobs

117 million households
131 million jobs

13 million households added with just 2 million jobs added. Go figure.

It isn't 1999 now though. That's for sure.

We've got 130 million jobs as of August 2010. That's another 1 million jobs missing over the average in 2009.

Anonymous said...

Illegal and possibly legal immigration will become a big issue if we keep this glut up. Obviously, the fastest way to reduce households would be to export them.


Stagflationary Mark said...


Too bad we can't just place housing units on cargo ships and send them to China. It would help reduce our glut and help reduce our trade deficit. Win win. Something tells me that they'd want to haggle on the price though. Go figure.

Anonymous said...

They too have a housing glut. We could make it easier for Chinese to immigrate to the USA. I figure if a factory owner sends their kid to the US for schooling, buys a house here, and sets them up, we get around a million bucks a head. That's a lot of t-shirts and toys.

Kidding aside, this is why I do not agree with those who say its okay if they keep their currency low. Its a subsidy to our consumer's - true, but its also sending bad price signals to markets. It affects interest rates in the USA. It affects investment decisions. Malinvesttment on both sides was and is still building up. Now, China can't get out of the trap without taking a big loss.


Stagflationary Mark said...


I agree.

I'm not a fan of any government backed distortions, other than perhaps for very temporary reasons to address problems that are only cyclical in nature.

Of course, no amount of government distortions can resolve the huge wage disparity between Chinese factory workers and US factory workers.

Hopefully I am way off base on this and the entire world can have our standard of living someday. I'm just so skeptical though.