Monday, August 23, 2010

Why The Current Job Market Recovery Is Stronger Than You Think; Stronger Than Last Two Recessions

In its annual Labor Day outlook, global outplacement consultancy Challenger, Gray & Christmas reports that the U.S. job market is well on the road to recovery and is actually rebounding sooner and faster compared to the jobless recoveries that followed the previous two recessions (1990-1991 and 2001).  Here are some highlights:

1. At this point in the previous two recoveries – following the 1990-1991 and 2001 recessions – the job market was actually getting worse. Many people are so caught up looking at the weekly and monthly numbers, that they fail to look at the bigger trends, which indicate just how much the job market has improved over the last 12 months.  The statistics indicate that the job market has made great strides over the last 12 months and appears to be rebounding sooner compared to the previous two recessions.

2. Monthly job cuts have numbered fewer than 100,000 for 14 consecutive months, a streak that has not been achieved since 1999-2000.  The current 12-month moving average, which stands at 52,778 as of the end of July, is already well below the lowest annual average achieved during the last period of economic expansion, when the moving average bottomed out around 64,000 (see chart above). 

3. Job losses due to the recession turned to gains as of January 2010, with payrolls experiencing five consecutive months of net growth that saw more than one million new jobs added to the economy. The gains slowed in June and July as the government shed tens of thousands of temporary Census workers, resulting in overall total non-farm job losses of 352,000 over the two-month period. Despite those losses, payrolls have still seen net growth totaling 654,000 jobs so far this year, due in large part to steady job gains in the private sector. The private sector has had seven consecutive months of job gains, adding a net total of 630,000 new jobs to the economy since January 1.  While the payroll gains remain weak, they are occurring much sooner when compared to the 2001 recession, when it took 21 months before the economy began to add jobs on a consistent basis.

4. While the unemployment rate remains historically high and the decline is not occurring fast enough for most, it definitely appears to be heading in the right direction. If the economy were following the same pattern as the early 1990s recession or the 2001 recession, we would be facing another three to six months of rising unemployment.

5. When you look at any of the employment statistics on a month-to-month or week-to-week basis, there are going to be ups and downs; particularly at this stage of the recovery. However, when you look at the overall trend since June 2009, everything is headed in a positive direction.

6. Hiring will accelerate in the coming months, but not before employers maximize the productivity of their existing workers by adding new technology and increasing hours. In the meantime, the job market will remain fiercely competitive as the recently unemployed square off against the long-term unemployed as well as with job seekers re-entering the labor pool after abandoning it out of frustration.  Job seekers should view Labor Day as the beginning of the workplace New Year and make a resolution to abandon all passive job-search strategies for ones that are far more aggressive. 

12 Comments:

At 8/23/2010 5:10 PM, Blogger Monkeesfan said...

So how long before The Man On The Way Up starts assigning credit for this to his "Stimulus Package?"

 
At 8/23/2010 10:09 PM, Blogger OBloodyHell said...

> Hiring will accelerate in the coming months, but not before employers maximize the productivity of their existing workers by adding new technology and increasing hours.


This is presumptuous based on the idea that there is no healthcare tax looming, no healthcare paperwork burden looming, and so forth.

Things aren't going to improve until November when the Dems get booted out on their fat stupid asses.

 
At 8/23/2010 10:22 PM, Blogger Marko said...

Just in time for raising taxes! Yeah! I am sure that will help.

 
At 8/23/2010 11:46 PM, Blogger Irrippi said...

There are no jobs left to cut and still remain in production.

Job losses slowing down or ceasing is not the measure of a recovery. The job gains are dismal and temporary. We'll see how well the "recovery" holds up in the coming quarter.

Retail has done fairly well because of stimulus spending which is winding down. Business services made some gains, but mostly from temporary jobs. Unlike previous recessions, these temps will not transition to perm.

The rise in initial unemployment claims is a staggering defeat. Claims have remained steady since November of last year - the gasps of a struggling work force.

There is a long way to go to dig out of this hole.

 
At 8/24/2010 4:23 AM, Blogger niknaknoo said...

Three words spring to mind... cloud cuckoo land.

 
At 8/24/2010 7:25 AM, Blogger juandos said...

"This is presumptuous based on the idea that there is no healthcare tax looming, no healthcare paperwork burden looming, and so forth"...

Hey OBH, you just love this bit from the Tax Foundation then:

Effect of Expiration of Bush-Era Tax Cuts on Average Middle-Income Family, by State and Congressional District

 
At 8/24/2010 10:25 AM, Blogger juandos said...

I'm thinking that jobs related to the housing industry won't fare quite as well...

From Bloomberg: Sales of U.S. Existing Homes Drop More Than Forecast

Sales of U.S. previously owned homes plunged 27 percent in July, twice as much as forecast, evidence foreclosures and limited job growth are depressing the market...

 
At 8/24/2010 10:48 AM, Blogger morganovich said...

that seems a deliberately misleading way to look at employment. yes, job losses went on for longer in 2001, but they were also MUCH shallower and recovered more steeply from trough than they declined. in our current downturn, losses were much steeper and recovery has been significantly shallower than the decline.

this graph makes both the depth of the drop and the weakness of the recovery very clear:

http://calculatedriskimages.blogspot.com/2010/06/percent-job-losses-during-recessions.html

this is looking like the weakest recovery since ww2, and that's using u3, which gives this recession an advantage as we also have record "discouraged" workers who don't get counted.

using job cut announcements as a trend measure is wrong fort a number of reasons. first, it's only half the equation. you need to know about job creation as well. second, fewer job losses are announced that in previous decades. more people work for themselves of for small companies. such companies do not report cuts, so this absolute number is coming from a declining portion of the economy and therefore will tend to decline even if nothing is happeneing job wise.

 
At 8/24/2010 12:25 PM, Blogger James said...

The current business model is shut down American operations move production out of the country import that production and sell it to those who still have a job. Under that model for each worker made unemployed Wall Street forfeits most of that worker’s spending of about $770 a week but gains more than that much by replacing that worker with below a dollar an hour labor. Wall Street saves not only the wages of the worker but also the cost of fringe benefits. This is offset somewhat by things such as higher transportation costs and the onetime cost of moving.

To those on this blog who are certain the road to prosperity is lower taxes, lower regulation, and lower government services I suggest that if taxes were cut to zero, Obamacare, Medicare, Drug care, and Social Security eliminated, union labor contracts abrogated and minimum wage laws rescinded that it would still be advantageous to outsource jobs. There exists no level of taxation and government mandated costs that would prevent the outsourcing of jobs.

While a Main Street recover would be helpful as long as it came at no cost, Wall Street no longer needs Main Street. That is obvious from the Wall Street profits just reported.

Politicians are between a rock and a hard spot. Unlike Wall Street they need Main Street. But anything they do to help Main Street hurts Wall Street. So they will continue to pretend to help Main Street while protecting Wall Street’s foreign investments.

This model can not last but there is no change in sight.

 
At 8/24/2010 9:08 PM, Blogger juandos said...

Hey James, I think you're overthinging it...


Federal interference in the oil business means 23,000 lost jobs in the gulf states...

Federal interference in the job market and thousands lose their jobs...

Government stimulus programs result in a hosed economy...

 
At 8/25/2010 9:26 PM, Blogger VangelV said...

I guess that you are calling a top in the bond market, that the tax cuts will be extended, and do not believe that the Obamacare legislation will have a negative impact on employment.

Does that mean that you must be stocking up on energy shares, shorting bonds and looking to buy home builders? And by the way Mark, how are you handling your investments? Actions speak a lot louder than any words.

 
At 8/30/2010 7:07 PM, Blogger Flex said...

There are always jobs.Companies are always hiring. But the competition is much tougher.
-Builders

 

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