This is what the jobs report really looks like:
I tend to look at an economy from the standpoint of how many hours are being worked and what is the rate of output per hour to get an idea of how it is doing.
I also care far more so as to how it is doing on a per capita basis.
Today's jobs report showed a gain of 151k jobs over the previous month of July. Year over year, the US non-farm jobs number is up 2.447 million at 144.598 million jobs.
The jobs number alone, on a year over year perspective, looks pretty flat and stable. Jobs are up 1.72% over a year ago in August.
We need to look at little deeper.
August saw a rather dramatic decline in average weekly hours worked.
Weekly hours dropped from 34.6 to 34.3 year over year.
When I multiply average weekly hours with total jobs, I get an aggregate hours worked figure.
Year over year, aggregate hours worked is up just 0.84% in the US economy.
This figure tells a different story. Things are not so stable and in fact are steadily in decline.
Real GDP growth is not getting any help from productivity.
Productivity is actually down .2% for the first half of 2016, meaning that the bulk of real GDP growth has come from hours worked alone.
If there is no productivity in the second half of 2016 and hours worked goes negative, then that will very likely put is in a recession.
On a per capita basis, and this is critical because this is where folks will "feel like it's a recession," hours worked is up just 0.07% year over year. This is now at the brink of going negative year over year.
The take away from this is that the economy is running out of steam and the next president of the United States is likely going to be inheriting an immediate recession if these trends continue.
The jobs report should go down as a big disappointment from the standpoint of how the economy is doing at the moment.
We should see demand for goods and services fall and that should prove a deflationary factor as well.
Have low expectations for growth in the US economy.
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