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Page added on January 7, 2018

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Inevitable Job-Growth Slowdown Could Be a Good Thing

Consumption

The U.S. economy is still creating lots of jobs, with a seasonally adjusted 148,000 added in December and 2.2 million (not seasonally adjusted, for reasons I discuss below) for full-year 2017, according to Friday’s employment report from the Bureau of Labor Statistics.

That 2.2 million is up a little (93,000 jobs, to be misleadingly precise about it) from 2016’s total, but it’s down substantially from earlier in the current economic expansion.

Annual Job Growth

Change in nonfarm payroll employment

Source: U.S. Bureau of Labor Statistics

You may have seen other reports indicating that job growth this year was slightly less than in 2016. That’s true according to the seasonally adjusted numbers from the BLS, but when calculating annual totals I figure seasonal adjustments only muck things up, so I went with the unadjusted data. Also, all these numbers are going to change next month anyway in an annual benchmark revision. So I wouldn’t make too much of a 100,000-job shift in either direction!

My general sense, though, is that job growth is in fact slowing. One reason I think that is because I’ve been following the shifting fortunes of the mining and oil and gas businesses, which often follow different cyclical trajectories than the economy as a whole. The mining sector (which in BLS nomenclature includes oil and gas extraction) shed 78,200 jobs in 2016 after big oil, natural gas and coal price declines and gained back 60,600 in 2017 as prices stabilized or rose. If not for that, job growth would have been lower in 2017 than in 2016.

Another reason to think job growth is slowing is that’s what it usually does several years into an expansion:

Job Growth Since 1980

Percentage change in nonfarm payroll employment, trailing 12 months

Source: U.S. Bureau of Labor Statistics

Recent recoveries have seen less-spectacular early job gains than those of the 1980s and before, a result in part of the shrinking labor-market role played by manufacturers and their penchant for temporary layoffs during downturns. Still, the trend of job growth rising to a peak and then fading seems to hold. In the 1980s and 1990s recoveries, job growth did get a second wind, in both cases accompanied by a stock-market boom, but in neither case did it surpass the earlier peak. Which is to be expected: After a recession, there are millions and millions of unemployed people ready to go right to work. A few years into a recovery, not so much.

We may be about to experience another such second wind now, as a business sector encouraged by tax cuts and deregulatory attitudes in Washington invests in job-creating new projects. But don’t expect it to be all that dramatic with the unemployment rate at just 4.1 percent — about as low as it has been since the late 1960s. 1 The prime-working-age (ages 25 to 54) employment-population ratio is still well below its late-1990s peak, indicating some remaining labor-market slack, but the prime-age population, which was growing in the late 1980s and 1990s, really isn’t now. If this expansion does in fact get a second wind, it seems likelier to pay out in wage gains than in accelerating job growth.

Let’s be clear: Faster wage gains would be great. They might also help jump-start productivity growth, which has been lagging around the world for the past decade-plus, thus limiting the economy’s potential. As the Economist’s Ryan Avent argued in a New York Times op-ed last month:

Just as expensive oil encourages us to wring more utility out of each gallon of gas, high wages encourage companies to make the most of their work forces — and to make full use of whatever new technologies promise to economize on payroll.

So yes, job growth is probably slowing. Let’s see if something good can come of that.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
  1. The unemployment rate hit 3.8 percent in April 2000 but ranged from 3.9 percent to 4.1 percent for the rest of that year. From February 1966 through January 1970, the rate stayed below 4 percent for 48 consecutive months, and went as low as 3.4 percent. The lowest rate on record (the data series goes back to 1948) was 2.5 percent, in May and June 1953.

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16 Comments on "Inevitable Job-Growth Slowdown Could Be a Good Thing"

  1. davy on Sun, 7th Jan 2018 11:56 am 

    I used to follow the stock market religiously for a sense of where the collapse process was going. I watch the VIX closely too. I don’t watch the market anymore. The markets are rigged and the global economy managed. It is a rigged casino these days meaning it is a game but there is a game within the game. That layering of the gaming becomes and vortex of deception. I don’t really watch these employment numbers much. The whole things is manipulated. The rules change to accommodate goal seeking. So many have dropped out of the labor force yet they claim unemployment is low. So many are part timers and many in low paying jobs. The country is a big country so there is still lots of growth and lots of decline. Which is winning? I imagine decline is winning but since there is a bias against decline it is very hard to see it clearly and accurately.

  2. MASTERMIND on Sun, 7th Jan 2018 12:13 pm 

    Every major monthly US government economic report – employment, GDP, inflation – is little more than a fraudulent propaganda tool used to distort reality for the dual purpose of supporting the political and monetary system – both of which are collapsing – and attempting to convince the public that the economy is in good shape.

  3. MASTERMIND on Sun, 7th Jan 2018 12:14 pm 

    Why didn’t wages raise above inflation this year if we truly are at full employment like the government says…LIARS!

  4. green_achers on Sun, 7th Jan 2018 2:52 pm 

    In the first sentence, he says he’ll explain why he didn’t apply a seasonal adjustment to an annual number. I don’t think I have much to learn from this person.

  5. Makati1 on Sun, 7th Jan 2018 7:45 pm 

    I’m getting a “Blocked by content security policy” Where the graphs should be. Is it blocked in other places?

  6. Makati1 on Sun, 7th Jan 2018 7:46 pm 

    This why the US has to be put down:

    “The War Party’s Desperate Assault On ‘America First'”

    “Those eminently sensible notions struck the Deep State’s raison d’etre to the quick. The fact is, there would be no justification for the $800 billion defense, intelligence and foreign aid apparatus on which the very prosperity of the Imperial City depends in the absence of a large state-based enemy; or, better still, without an imperial foreign policy that is implicitly designed to either bully or remove recalcitrant governments anywhere on the planet — whether or not they have the intent or capacity to harm the US homeland.”

    http://www.ronpaulamerica.com/2018/01/the-war-partys-desperate-assault-on.html

    The sooner the US no longer has the ability to plunder and murder wherever it chooses, the better for the other 7,200,000,000+ of us. Tomorrow would be fine with me, or at least this year. (This is my 3rd try to post this.)

  7. davy on Sun, 7th Jan 2018 7:51 pm 

    maybe the deep state is on to you mad kat. LMFAO, you getting paranoid????

  8. MASTERMIND on Sun, 7th Jan 2018 8:19 pm 

    Davy

    LOL Good one! Madkat is in a deep state of paranoia! THIS IS MY FOUR TIME POSTING!

  9. Makati1 on Sun, 7th Jan 2018 8:26 pm 

    “US Has Killed More Than 20 Million People in 37 “Victim Nations” Since World War II”

    https://www.globalresearch.ca/us-has-killed-more-than-20-million-people-in-37-victim-nations-since-world-war-ii/5492051

    The reason for my above comment about putting down rabid dog America.

  10. Makati1 on Sun, 7th Jan 2018 8:29 pm 

    Tweedledee and Tweedledum have just spewed their latest bullshit from the Alice in wonderland called America.

  11. MASTERMIND on Sun, 7th Jan 2018 9:47 pm 

    Madkat

    Spreading more disinformation. What about China’s recent credit downgrade? They are headed to junk status soon! Goodbye silk road!

  12. Makati1 on Mon, 8th Jan 2018 12:00 am 

    MM, Who said they were downgraded? Some US owned rating agency? Now that agency wouldn’t have an ulterior motive (propaganda) would they. Americans are so gullible/stupid! LMAO.

  13. Makati1 on Mon, 8th Jan 2018 12:13 am 

    BTW: More on your fair and unbiased rating agency…

    “October 2011 – Moody’s reached a settlement resolving claims by the state of Connecticut that the credit rating company unfairly gave lower ratings to public bonds.[28]

    July 2012 – Moody’s said it reached a settlement with stockholders in lawsuits filed over structured finance ratings.[29]

    April 2013 – Moody’s reached a settlement avoiding what would have been their first jury trial over crisis-era ratings. The fourteen plaintiffs, were led by Abu Dhabi Commercial Bank and King County, Washington. They claimed lawsuits filed in 2008 and 2009 that Moody’s misled them by allegedly inflating ratings on two so-called structured investment vehicles they purchased.[30]”

    Never trust a company/person whose income depends on what they claim is true without multiple, independent truth/facts.

  14. Davy on Mon, 8th Jan 2018 5:01 am 

    “Never trust a company/person whose income depends on what they claim is true without multiple, independent truth/facts.”
    We can’t trust China to honestly present the truth/facts in a transparent way because of profit motive. It works with nations too mad kat.

  15. MASTERMIND on Mon, 8th Jan 2018 5:03 am 

    Madkat

    The head of the bank of China said they are headed for a misky moment

  16. Sissyfuss on Mon, 8th Jan 2018 10:45 am 

    Job growth slowdown could be a good thing, as well as the accompanying die-off.

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