Understanding the US economy is no easy task. Economic measurements involve many complicated relationships of voluminous data. The truth is, most people do not read large economic textbooks in their spare time. They rely on media and government, in sound bite format, to tell them what is going on in the economy and to guide their investment strategies. Because the temptation for central control over information is so great, I believe articles such as this one are important in shining an independent light on our economic condition and in identifying crucial trends for our future.
They say a picture is worth a thousand words. So, let us explore our economy of the last 10 years through charts. We’ll start from employment and continue to other important areas of the economy in subsequent articles. By the time you finish reading this, you will feel much more confident in your knowledge of economic trends and how to use those trends to your advantage.
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Source: BLS. All numbers are in thousands.
From the first graph, we note that total non-farm payrolls have fallen since 2001.
Government jobs are up over 4% and private payrolls are down about 1% for the decade. Because private payrolls are larger than government payrolls, the net is a loss of jobs in the economy.
Next we note which categories gained the most jobs, and which lost the most jobs. Private services, education, government, and leisure and hospitality had the biggest gains.
Construction, manufacturing, durable and non-durable goods, trade and transportation, and information dropped the most. This clearly signals that the productive capacity of our economy is being lost which will increase our trade deficit.
Job gains show that government spending is up. Private services and leisure and hospitality show that those who still have jobs are spending more on leisure items, indicating a growing disparity between the haves and have nots.
Professional and Business Services showed a positive gain of 5%. Half of that (2.5%) came in the last year, and 73% of the last year’s gain was in temporary workers. This suggests that while the category is growing, recent growth are not permanent jobs. Time will tell if these temporary workers are converted to full time workers.
Percentage-wise, manufacturing, goods, and information lost about 25% of their jobs in the last 10 years. Construction lost 19% of jobs over that time span.
On a good note, mining and logging is up 22% over the decade, signaling at least a very small portion of productive capacity of the country is not declining. However, mining and logging is a very small portion of the overall jobs economy in the US.
Examining Trade, Transportation, and Utilities in more detail, we find that during 2010, the sector is relatively flat, up only 0.7% from the year before.
Within this sector, wholesale and retail trade, along with utilities, had almost no noticeable movements. The increase in the TTU sector came almost completely from transportation and warehousing jobs, up 2%. Along with the manufacturing and trade categories, this seems to confirm the thesis of an inventory ramp-up, but not a retail, consumer-driven economic recovery.
Employment vs Population
Now let’s take a look at employment versus the population. First we start with population growth and compare it to our non-farm payrolls graph.
Source: BLS and Census
We notice that while population has increased by about 9%, jobs have been flatlined for the decade, measuring 3 tenths of a percent decline over that time frame.
We break down employment versus population changes by age category. Note the large increases of baby boomers versus the relative flat Generation X and Millenials by population. During the same time frame, those baby boomers have been taking more and more of the available jobs while the younger groups are suffering higher unemployment. And as they retire, the baby boomers will put more pressure on entitlement programs that cannot be funded by the smaller Generation X and Millenials.
More interestingly, those 65 and above are taking a much higher proportion of jobs than their population increase, suggesting many of the retired are moving back into the workforce at the expense of the younger generations.
Wages By Age Group
The biggest increases came for the more experienced workers. Given our entitlement spending problem, it appears the only way we balance the budget is to tax those closest to receiving the benefits more (because nobody else can afford it), or drastically cut programs.
Next, time, we examine GDP, wages, and wealth in detail.