Think the economy is in trouble? There are some encouraging data overshadowed by the negative news these days.
It’s August, and we’ve just competed the first half of 2008, making this an excellent time to reflect on what has impacted the economy and the job market so far this year. Issues such as global unrest, rising oil prices, turmoil in the financial services industry, concerns around inflation, continued mortgage meltdown, and volatile markets—set amidst the backdrop of an impending presidential election—have been dominating the headlines.
Despite the colorful commentary in the mainstream media, two of the less volatile yet most important economic indicators have been the job market and GDP growth. It’s true that we’ve now seen six straight months of job losses totaling a reduction in payrolls of 438,000, and clearly this is not good news. However, the news brightens when you look at the 2001 recession in which 300,000 jobs were lost in just one month. Yet in 2008, it has taken us almost six months to surpass that one-month total. Also, GDP growth continues to be positive with the first quarter coming in even higher than the fourth quarter of 2007, showcasing another bright spot in an otherwise dim picture.
The June headlines coming out of the Bureau of Labor Statistics (BLS), the principal fact-finding agency for the Federal Government in the broad field of labor economics and statistics, show June 2008 job growth down 62,000, a national unemployment rate of 5.5 percent, average hourly earnings up $.06, and first-quarter productivity rising by 2.6 percent.
Return to stability
June’s jobs report indicated a return to consistency for the unemployment rate as it remained steady at 5.5 percent. These results reflect that while employers continue to be cautious, they’re still hiring as needed and are resisting widespread cuts to their workforce (other than anomalies such as GM, for example, which in obvious trouble). Further reinforcing this dynamic was the jobless claims report for the week of July 5th, which was much better than economist expectations with 346,000 new unemployment claims, far below the 400,000 expected and the biggest month-over-month drop in 2.5 years.
Despite recent punches to our economy coming in the form of higher gas and food prices, as well as the mortgage and credit crises, job losses have month-over-month remained below the 100,000 mark (a loss of 62,000 in non-farm payroll employment in June 2008), and overall U.S. employment is close to 95 percent. Job losses peaked at around 300,000 per month during the 2001 recession, and right now several other developed global economies are experiencing unemployment in the 7 to 9 percent range, so current U.S. data doesn’t look that bad in comparison.
As we take a closer look at the jobs situation here in the U.S., we see more signs of two distinct labor markets. How you’re impacted is largely based on where you live and what you do. For instance, if you’re a teenager looking for a summer job, you’re facing an 18-percent unemployment market, versus a far more encouraging 2.3-percent unemployment rate for college graduates.
If you’re in healthcare, your industry added 13,000 jobs in June 2008. But if you’re in construction, that industry lost 43,000 jobs.
The largest year-over-year increases in non-farm employment for metropolitan divisions occurred in the areas of Dallas-Plano-Irving, TX (+46,700), New York-White Plains-Wayne, NY-NJ (+40,900), Washington-Arlington-Alexandria, D.C.-Virginia-Maryland-West Virginia (+25,800), and Seattle-Bellevue-Everett, Washington (+21,700).
The largest year-over-year declines in non-farm employment were reported in the Midwest in the areas of Detroit-Livonia-Dearborn, MI (-26,600), Santa Ana-Anaheim-Irvine, CA (-21,000), and Warren-Troy-Farmington Hills, MI (-20,800). These were not surprising given the losses in manufacturing jobs.
El Centro, CA continued to have the highest unemployment rate (19.2 percent), followed by the adjacent area of Yuma, AZ at 17.6 (percent). Meanwhile, Idaho Falls, ID and Logan, UT registered the lowest jobless rates, 1.9 and 2.1 percent respectively.
A lot has happened so far in 2008, but through it all the U.S. job market, which encompasses more than 138 million people, has maintained a relative stability not shared by many other portions of our economy. I think most people—Republican or Democrat, bear or bull, hawk or dove—will agree that job-market stability is important for our economy to maintain so that we might have a better chance at closing out 2008 on a more upbeat economic note. HRO