Furthermore, the establishment data showed a reduction of 263,000. Even if you omit that cut of 53,000 from a bloated government teat (most of it on the State and Local level, 10,000 and 37,000, respectively), that number is huge for this point in the recession… er… recovery. Additionally, the combined loss in jobs for the months of July and August was revised higher (or is that lower?), from 492,000 to 508,000.
Wait… it gets even uglier for the acolytes of the second derivate school of economics. The number of hours worked fell back to the lowest level, 33.0 hours, since records began in 1964. That’s an ominous sign. Whereas the unemployment rate and payroll data are lagging indicators, the hours worked data is more of a coincident indicator. Thus, if those much vaunted green shoots were really sprouting, which some in the media have purportedly been seeing since February, it would then not be unreasonable to expect to see at least a glimmer by this point?
Instead, 2.7 million Americans have lost their jobs over the last seven months. Remember, the reason why the payroll data is a lagging indicator is that because on initial signs of a recovery, firms will tend to call back workers who it has laid-off and increase overtime, before it will commit to new operating expenses.
On one hand, nonfarm productivity surged as of the second quarter. The indication from this report was that firms were squeezing more output from fewer workers. Thus, perhaps this was an indication that the velocity in layoffs was about to subside.
Indeed, that appears to have happened. In the third quarter 768,000 Americans lost their job, as opposed to 1.29 million in the second quarter. What’s more, weekly claims for unemployment insurance have dropped from a four-week average of 616,000 in June to 563,000 as of last Thursday.
On the other hand, the average workweek regressed to a record low and factory overtime fell in September. Thus, productivity surged in the second quarter, but as of the end of the third quarter the workweek has contracted and overtime is unchanged.
Thus, when Ben Bernanke tells us that the recession is “technically” over, but, “…it is still going to feel like a very weak economy for some time as many people still find their job security and their employment status is not what they wish it was…” we believe him.
In other words, the residue of this recession will linger in the psyche of the American consumer – who’s spending drives two-thirds of the U.S. economy – for quite some time to come.
Stephen Schork is the Editor of, "The Schork Report"and has more than 17 years experience in physical commodity and derivatives trading, risk systems modeling and structured commodity finance.