Written by Steven Hansen Over last weekend Econintersect issued its October 2012 economic index. The October index value had dropped precipitously – the largest one month drop since January 2009. However the index was not (yet?) indicating Main Street was in a recession. One reader offered an observation: ….that the middle class (say the middle …
Weekly Initial Unemployment Claims exceeded levels of the corresponding week in the previous year for the first time in two years. Yet the non-farm payrolls numbers grew by a healthy 244,000. The bizarre contradictions were emphasized by sharp drops in commodities, smaller declines in stocks, and disappointing reports on productivity and from the ISM non-manufcturing survey.
The celebration of the stronger employment numbers is misplaced. The drop in the unemployment rate is due almost entirely to people leaving the labore force. Further the employment gains being celebrated are less than all but a few months in the late 1990s – and we have 10% more people now.
According to the CBO, slow jobs growth for the next decade will be the result of a combination of economic and demographic factors.