The answer is that predicting monthly employment much less monthly anything is like predicting how many pounds you will gain after one large juicy rib-eye at Malibu. I don't know if a recession is coming or when but this last data point for employment tells me nothing. Nada. Zip. Zero.
To prove my point -- look at the two graphs I downloaded from my friend FRED at the St. Louis Fed. The first graph plots monthly employment for each month between January 2000 and February 2019. I did not do this with my Etch-a-Sketch. It is the real thing. Do you see a recession coming in that graph? Do you see a major employment problem? Do you see a Tuna with a miniskirt?
How about the graph below it? In that one I asked my buddy FRED to plot the annual growth rate of employment for each month since January of 2000. The point on the graph for February 2019 is the percentage change in employment from February 2018 to February 2019. Do you see anything crazy in that graph? Basically the year over year changes for about the last five years have been pretty stable. Recession signal there? I don't see it.
What's with the press then? You already know the answer. They don't give a hoot about informing or educating you. They just want to sell you cars and trucks and a host of other doobers. They can't sell all that stuff unless they get your blood boiling. So sad.
At this stage in the employment/unemployment cycle, it would seem more important to focus on the relationship ( if any) between a generally full employment situation and its impact on achieving additional growth. My sense is that with most folks desiring employment already in the workforce, achieving larger growth objectives is limited to productivity improvements. Achieving productivity improvements in a full employment situation is likely tied more to capital investment, not the application of additional labor at the margin.
ReplyDeleteGood points but I don't really see employment as providing any real limits to economic growth now. Productivity gains would be nice but a changing political environment will retard investment and productivity. Hours worked per person could rise, however and provide some income gains. And I would not give up on labor force participation. I suspect as wage levels keep rising more and more folks will be induced back into the measured workforce. I guess we will see.
DeleteDear LSD. The rise in total employment since 2010 per the top graph pretty much drips cold water on the chatter of an impending recession—using employment as the only indicator. Growing govomit, corporate, and consumer debt and global economic slowing could—could—indicate otherwise, on the other hand; slower global growth = less demand for ‘merican exports = slowing ‘merican econ growth. Yo, that’s the old ripple effect (but not the Ripple wine effect, however, ‘cause unopened boddles are now $150-$200). The rise in the top graph will level off as fewer unemployed are available to fill job vacancies thus moderating future monthly employment numbers—that’s fer shure. Shure, some media prognostikaters will report slower growth and the leveling of the top line as proof of looming recession. But, they are not two-handed macro econ sages.
ReplyDeleteThere’s a good reason tunas don’t don miniskirts. Tried that in the 60’s and my ability to swim and control buoyancy looked like the 2008-2010 line segment in the bottom graph. Hot pants didn’t work out either.
Dearest Tuna, I need to inform standards of decency in this blog and hope to restrain you from using provocative words like miniskirt, hot pants, and buoyancy. What you say about the future is true -- lots of risk factors out there. But risk factors are probabilistic. That's a little different from taking one data point and making tuna stew out of it.
DeleteDear LSD. I’ll do my best to refrain from using woidz that offend land-lubb’n homo sapiens ‘cauze we in the depths don’t alwaze unnerstand your kind: We certainly don’t want to provoke you further from putt’n us in cans. But, back at ya . . . please refrain from using woidz referring to cook’n Pisces ‘n particular tuna stew . . . de kidz in de tuna school follow’n yer blog git all warm’d up when that kind 0 woid’n shows up. Standardz of decency, ya know?
DeleteDearest Tuna, I hear your woids and agree our species should find a way to live together in harmony. Keep on swimming!
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