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Last week’s nonfarm payroll numbers were credited as the catalyst of a major sell off. While the payroll increased by 431,000 in May, expectations were much higher. May’s numbers were a very good month - being the largest monthly increase since March 200. But it was skewed by the government hiring of 411,000 temporary census workers. Private payrolls increased just 41,000 after rising 218,000 in April.
Stepping back from the minutia of monthly fluctuations, we can get some perspective on the US job market:
Source: Chart of the Day
The long term regression line going back to the 1960’s shows just how few jobs have been created since 2001. So the recent data point is really nothing new. As the lower pane shows, during the last economic recovery, job growth was not able to recover to its long term trendline.
But what really has me concerned is not the unemployment rate but the duration of unemployment. That is the mean number of weeks that people are unemployed. I first showed this chart last summer. And since then, it has just gotten even more terrifying:
Source: St. Louis Fed
As you will notice from the grey recession bars, the Fed is suggesting that the recession is in fact over (as of July 2009). According to the established historical pattern, the current mean duration of unemployment is continuing to go higher, even after the recession is officially over. But this is beyond unprecedented. Even the U6 rate of unemployment has topped out but this keeps rising.
The only silver lining I could find is the recent survey results from the weekly “Job Creation” Gallup poll. This is the net result of a sample of survey respondents, subtracting the percentage of workers who say their employer is reducing the size of its workforce from the percentage who say their employer is hiring new workers and expanding the size of its workforce. The best we can say is that it has flatlined rather than continued to fall:
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