In the wake of the bullish June jobs report, economist
David Rosenberg declaredthat the “third act” of the economic recovery — the labour market comeback — was in “full swing.” At the time, he offered
10 reasons to love the jobs report.
Unfortunately, the improvement we’ve seen in the labour market in recent months was not good enough for the Federal Reserve to begin tapering its stimulative large-scale asset purchase program, which currently includes the monthly purchases of $US85 billion worth of Treasury securities and mortgage-backed bonds.
Rosenberg is among the many economists who continue to scratch their heads about the Fed’s decision.
In his Tuesday research note, Rosenberg offered five stats that suggest the labour market is actually in pretty good shape.
SOME INTERESTING EMPLOYMENT DATA POINTS…
…ones that refute the Fed. For example:
- The number of discouraged workers amount to 866,000. How does that really spin the dial for a country with a 250 million population? If all those folks decided to re-engage in a job search, it would add the grand total of 0.8% to the labour force.
- The number of people not in the labour force and actually want a job has plunged 10.5% over the past year. We haven’t seen something like that happen since the peak of the housing bubble when people believed they could simply live off their home equity withdrawals and mortgage cash-outs.
- The number of people working part-time for economic reasons has fallen nearly 2% from a year ago after plunging 334k in August in what was dubbed an extremely soft employment report.
- Those who were unemployed for up to five weeks in the latest report also sagged 10.5% from year-earlier levels in August. This is a very reliable cyclical indicator.
- As the chart below illustrates, the number of unemployed who were job losers or coming off a temporary layoff is also a great indicator and is now 14% below year-ago levels — when this is below zero, we are in economic expansion, and when it is surging to peaks we are well into a recessionary phase.