Number of Jobs Returns to 2000 Levels

The media-driven focus on the (inevitably revised) monthly non-farm payroll numbers has always seemed a bit misplaced to us. The employment picture matters enormously, of course, but more in terms of its medium- and long-term trends than its short-term vicissitudes.

Which makes the following charts all the more disconcerting. Note that the total/absolute NFP number has now fallen back to levels first reached nine years ago. In the second chart, you'll see that at no time in the last 50 years has the absolute NFP number fallen so far below its long-term trend.

Given persistent population growth, the economy has to create lots of new jobs just to keep the employment rate steady. The job losses of the last two years have made it all the more difficult to return to the long-term trendline.

A new normal? Unfortunately, for a while at least, it looks like the answer is yes.

Chart of the Day

Source:

Bob Willis, "September Job Losses Exceed Forecast," Bloomberg, October 2^nd, 2009

Comments

[Mad Hedge F...:]

vyu For the last six months there has been a great big whopping contradiction in the markets. The stock market has been discounting a return to the “Roaring Twenties,” while the bond market has been anticipating another “Great Depression.” After yesterday’s publication of the Labor Department’s September nonfarm payroll number showing the loss of another 263,000 jobs, it looks like the bond market now has the upper hand. This takes the unemployment rate up 0.1% to 9.8%, and total job losses for this recession to 7 million. The really disturbing aspect of this number is that 57,000 teachers were fired, as states chop budgets to the bone. This is really eating our seed corn by the bushel full. Of course, I have been banging pots and pans, setting off distress flares, and yanking the fire alarm, trying to alert readers that this kind of disappointment was coming (click here for “Risk Reversals Can Be Such a Bitch” and here for “Stocks Offer No Value”). Shares have dropped 5% from last week’s peak, as the bond market soared, the ten year yield reaching nosebleed territory of 3.05%. The dollar maintained its flight to safety status, which to me is one of the great ironies of all time. It’s like that reprobate, alcoholic uncle with the bad teeth, who, when your car breaks down in the middle of a downpour in a bad neighborhood, will always let you crash on his sofa. Let’s call him your Uncle Sam. You have to hand it to PIMCO’s inveterate card counter, Bill Gross, who says this is all about transitioning to a “new” normal of 1%-2% real GDP growth. That’s why he was loading the boat with bond yields at 4%, a “ballsey” move at the time, which now smells like roses. I guess that’s why they call him the “Bond King.”

Oct 04 10:03 AM