Jobs report...if September was bad, just wait for October

[Biggus Piggus]

Private jobs fell by 168,000 in September.  August revised to decline of 104,000.  July set at -106,000.  The pace of decline has accelerated, and October will probably crest -200,000 easy.

The breadth of job losses in non-manufacturing industries expanded in September, with July and September showing weakest since 2003, which had some temporary blips stemming from the Iraq invasion.  In the 2001 recession, the worst month had 59% of non-manufacturing industries losing jobs.  In the 1990-91 recesssion, the worst month was 62% down.

July and September of this year showed 57% of non-manufacturing industries losing jobs.  Clearly in recession territory.  Non-manufacturing industries contracted in the past five months, seven of the nine months of 2008.

The 2001 recession caused non-manufacturing jobs to start shrinking in April 2001, and they were down in 15 of the 17 months starting from there.  That was a much harsher downturn than happened in 1990-91, and the recovery was softer than during the 1990s too.

From 1993-98 more than 70% of non-manufacturing industries were growing.  The post-2001 recovery was much slower, with the best years being 63-64% up in 2005-06.  Less breadth of strength is never good.

Meanwhile, only 27% of manufacturing industries grew in September, lowest number since 2003 again.  Manufacturing never had a sustained broad recovery after 2001.  The sector never averaged 50-50, growing vs. shrinking, for a whole year since then.  Longest growth streak was four months in 2004.  Since January 2005, manufacturing jobs grew in more industries than not for this many months: 4.  Months in a row that more than 50% of manufacturing industries shrank: 26.

Manufacturing would have to decline for another year and a half, into 2010, to match the 2000-04 slump.

[Hawgon]

Yeah, that is the thing.  When the history books are written, they may look at this as a decade long slump.  We've really been in a recession, or an economy with lots of the characteristics of a recession since about 2000.  Stupidly low interest rates and easy easy credit masked a lot of those problems as we tried to keep the ball rolling instead of just taking out medicine back then.  Had we done that, the recession would probably be in our rearview mirror by now.  Instead, we just kept upping the dosage like an addict and now, we have Great Depression II scenario staring us in the face.

[Biggus Piggus]

Yeah, that is the thing.  When the history books are written, they may look at this as a decade long slump.  We've really been in a recession, or an economy with lost of the characteristics of a recession since about 2000.  Stupidly low interest rates and easy easy credit masked a lot of those problems as we tried to keep the ball rolling instead of just taking out medicine back then.  Had we done that, the recession would probably be in our rearview mirror by now.  Instead, we just kept upping the dosage like an addict and now, we have Great Depression II scenario staring us in the face.

You write wisdom.

People have explained away manufacturing contraction by saying we're a service economy now, but I have two things to say about that:

1) It may be a service economy, but a service economy relies on skilled people, and we are short on those, so it constrains growth.
2) We still export a lot of raw and finished goods.

[Hawgon]

You write wisdom.

People have explained away manufacturing contraction by saying we're a service economy now, but I have two things to say about that:

1) It may be a service economy, but a service economy relies on skilled people, and we are short on those, so it constrains growth.
2) We still export a lot of raw and finished goods.

In lots of ways, our economy looks like that of a Third World nation or a colony.  We export lots of raw materials and receive manufactured goods in return.  In order to buy the goods, we borrow money from the nations that made them.

Our economy is not a self-sustaining model.  A nation simply can't send its high paying manufacturing jobs overseas and maintain a standard of living necessary to purchase manufactured goods indefinitely.  It just won't work.  And of course, it is ultimately the reason behind the easy credit.  The low rates and easy credit allowed our purchasing power to remain the same while there were fewer and fewer good paying jobs everyday.

I'm not sure what the solution will be now. 

[Biggus Piggus]

Our economy is not a self-sustaining model.  A nation simply can't send its high paying manufacturing jobs overseas and maintain a standard of living necessary to purchase manufactured goods indefinitely.  It just won't work.  And of course, it is ultimately the reason behind the easy credit.  The low rates and easy credit allowed our purchasing power to remain the same while there were fewer and fewer good paying jobs everyday.

Lessee if this works:

[Biggus Piggus]

This one, in my opinion, is more to the point:

[Biggus Piggus]

That second chart means:

In real dollars, recognizing the impact of inflation, the typical US worker saw his/her wages fall from 1973-1990.

Real wages didn't really grow until 1996-99.

Any progress since 2000 has been halting, and we are back to a net zippo.

Part of what's going on = higher-paying jobs in manufacturing being replaced by lower-paying services jobs.

Part = you're getting a lot of your raise in what your employer pays for health insurance.  Annual increases there have beat the dog out of employee pay.

[Biggus Piggus]

The low rates and easy credit allowed our purchasing power to remain the same while there were fewer and fewer good paying jobs everyday.

True, but also upper class wealth and spending have grown at a phenomenal rate over the past 30 years.  They are not insignificant numbers.

[Biggus Piggus]

Highest 20 percent income quintile
Average annual expenditures

[Biggus Piggus]

Lowest 20% income quintile
Average annual spending on alcoholic beverages

[Biggus Piggus]

Lowest 20% of incomes, spending on education


Highest 20% of incomes, spending on education

[Biggus Piggus]

That means in 1984, the lowest 20% of wage earners, on average, spent 62% of what the highest 20% did on education.  But in 2006, the lowest 20% averaged 22% of the top income earners' spending on education.

[Biggus Piggus]

You're gonna love these.

State and local income taxes, highest 20% of incomes


Federal income taxes, highest 20% of incomes


State and local income taxes, bottom 20% of incomes


Federal income taxes, bottom 20% of incomes

[Biggus Piggus]

I knew somebody was getting stuck with the taxes.

Second 20% of incomes (next to lowest), state/local taxes paid

[Biggus Piggus]

Ah, genesis of our problems.  Estimated market value of owned home, all US households:

[Biggus Piggus]

Average net change in total liabilities

Bottom 20%


Next 20%


Middle 20%


Next-to-best 20%


Highest 20% of incomes

[Biggus Piggus]

Pulled this together from the data associated with those charts.

Average consumer's change in net worth, 2001-06

Bottom 20% = ($5,751)
Next 20% = ($15,707)
Middle 20% = ($29,813)
Next-best 20% = ($74,788)
Top 20% = ($123,259)

Whoopie!  The wealth effect of the housing bubble was getting everybody to borrow and spend.

[Biggus Piggus]

Take a while to absorb this doozy.  Average health insurance spending, all consumers:

[Biggus Piggus]

OK, to be fair...

Average annual spending on alcoholic beverages, top 20% of incomes


Yes, rich people spend more than 4x as much on booze as the lower income folks do.

[Mouth Wide Open]

I don't understand this thread...

[Biggus Piggus]

well sheeit, my graphics no longer appear.