By David Berman
Thursday’s disappointing reading on U.S. initial jobless claims for last week is hanging over the stock market, and you can practically hear investors mumbling something about a jobless recovery -- which is bad news for the consumer-driven economy. But at least one economist remains hopeful of better days ahead.
Beata Caranci, director of economic forecasting at TD Securities, dusted off the old “green shoots” metaphor – recently applied ad nauseum to the U.S. economy – and used it to describe what she sees as early signs of a turnaround in the employment numbers.
“Perhaps one of the most compelling green shoots to have appeared is the sharp increase in demand for temporary help,” she said in a note. “These workers are essentially the first line of response in the early stages of a recovery, as firms wade cautiously into the hiring pool amidst ongoing uncertainty over the outlook on profitability and the economy.”
Eventually, she said, demand for these temporary workers translates into full-time positions. Unfortunately, her back-up data go back to just 1990, which isn’t a long stretch for employment booms and busts, but the numbers are impressive nonetheless: When demand for temporary workers rises, private sector employment soon follows. Over the past three months, temporary work has soared 37% on an annualized basis, which she says is consistent with employment growth in the range of 1% to 3%.
“In case you’re wondering, the hiring in temporary workers thus far is not related to the government census hiring that will take place during the spring months this year, which is anticipated to add more than one million workers to payrolls,” Ms. Caranci said. “These workers will show up in government payrolls, not the private sector.”
Taking into account a number of other factors, including a pickup in the number of hours worked, she thinks the U.S economy will generate about 2.3 million new jobs this year, or 2% employment growth. Yes, that’s a small recovery from the 7 million jobs lost during the recession. But rather than characterizing the gains as a “jobless recovery”, she thinks that “less-job recovery” might be a more appropriate term.
