On weekend talk shows and in some blogs, talk about a “leading indicator” – temporary employment showed a decline in the June 2011 BLS jobs report (analysis here). It has been postulated and widely suggested that the USA economy is perched at the abyss.
Whilst the economy could be approaching an abyss, using temporary employment at a “leading indicator” is old school. Temporary employment is only a leading indicator that a recession has ended. The new normal use of temporary employment is to smooth out business cycles.
A downward trend in temporary employment tells you a business cycle is less good.
The best leading indicator of an impending recession in the employment report is transportation employment. All the goods and people movement comes from this sector.
Historically the transport sector is not uptrending going into a recession. Employment in this sector is less noisy – and is a much better “leading indicator” coming into a recession.
There is no question the last business cycle peaked in March or April, which corresponds to the downtrend in temporary employment. Econintersect called this peak in its April economic forecast (analysis here).
The economy is “less good” than it was a few months ago, but the underlying fundamentals are not showing a recessionary pattern with the data we are currently seeing.
June 2011 BLS Employment Worsens by Steven Hansen
June 2011 ADP Employment Growth: Not Good, Not Bad by Steven Hansen
Is A Budget Deficit Necessary for an Economy? by Steven Hansen
What’s Up With Employment? by Steven Hansen
JOLTS: Likely Indicating Slowing Employment Growth by Steven Hansen
Is the Stimulus Effecting Unemployment Claims? by Steven Hansen
College Training for Unemployment by Mike Konczal
Economic Damage Storm Track of The Great Recession by Ted Kavadas