Jack Dunn - Reclaiming Common Sense

The April Employment Situation, or Jobs Report was released this past Friday. The Jobs report includes a cornucopia of data that can be analyzed many different ways. There are two data sets. The Current Population Survey (CPS,) or Household Data measure jobs and unemployment, as well as the workforce population. The unemployment rate and workforce participation rate are derived from this data set. The second data set is the Current Employment Statistics (CES) data set, or Establishment Data, which measures workers. Each data set has a seasonally adjusted (SA) component and an non-seasonally adjusted (NSA) component. The seasonal factors used to convert the NSA data to the SA data change month to month and year to year. It is statistically disingenuous to compare data from different months with differing seasonal factors.


The first article published regarding the April Jobs Report was "April Jobs Report Exceeds Some Expectations." We saw non-seasonally adjust full-time jobs surge, NSA part-time jobs tick slightly higher, NSA Unemployment (U-3) decline and the workforce participation rate rise. The second article "Five Presidents, Month Three, Participation Matters" detailed just how good this data was. President Trump has added more full-time jobs during his first three months in office than Presidents Reagan, Clinton, George W Bush, or Obama. President Trump has also overseen the largest reduction in the number of unemployed workers during the first three months of the five Presidents' first three months in office. The net-net is that even though the reduction in unemployment workers decreases the number of participants, President Trump has added more participants during his first three months than any of the other four Presidents during their first three months.


This column writes many other columns regarding the jobs report, one of which is the Sector data. There are eleven sectors that the CES data measure. This column has produced numerous articles on the CES data that have revealed that not all sectors have recovered to pre-recession levels.


Ten Sectors saw improvement over their March 2017 Level. This improvement is on the heels of another strong CES report on the sectors that revealed that "Ten Sectors Added Workers (during March.)" The information technology sector shed jobs during March and April of this year.


Six Sectors have fewer jobs than they had fewer workers than they had at the Peak of the Pre-recession Market of July 2007. This is important because we now how more full-time jobs and more part-time jobs  jobs than we had during July 2007. This was not the case this past January when we had fewer full-time jobs during January 2017 than we had during July 2007 - nine and a half years ago. Mining, Construction and Manufacturing have fewer workers than they had during April, 2007. The Information Technology, Financial Services, and Government Sectors have fewer workers than they has during April 2009.


Two Sectors have fewer Workers than they had during April 2009 - as we were still in the job shedding period of the Great Recession. We did not hit bottom until January 2010. The two sectors that have fewer workers than they had during April 2009 are the Government Sector and the Information Technology Sector.


There are five sectors that have expanded since the Great Recession.  This is a little strange. The Government Sector, which have recovered since the recession  still has not fully recovered. The interesting item here is that the Government Sector saw its peak April Employment during April of 2009, not during 2007 as most of the other sectors did. The other sectors that have expanded are the Trade, Transportation, and Utility Sector, the Professional and Business Service Sector, the Education and Health Services Sector, the Leisure and Hospitality Sector, and the "Other" Sector.


It has been an incomplete recovery. Education and Health Services has been "recession proof." Leisure and Hospitality dipped during the recession and has expanded Manufacturing and IT have been in decline for decades and are making a slight recovery. Mining and Logging had made a recovery until oil and gasoline prices faltered. Part of the stagnant wage growth that has been referenced in the  media could be due to the expansion of part-time jobs during the recession as we lost and recovered full-time jobs. Part-time jobs don't normally pay as much as full-time jobs. Part of the decrease in the wage levels could be due to an oversupply of workers (low participation rate.) Employers do not have to pay as much if there are people willing to worker for lower wages than other potential employees. Part of the problem is the job mix. Some sectors pay more, on average (Construction, Mining, Manufacturing) than others (Education, Leisure/Hospitality.) The high paying sectors are still in recovery mode.


All of these puzzle pieces come together to form a better picture of the economy. Jobs matter. More jobs, more money to spend. More full-time jobs, more money to spend. If we spend money on retail sales then more jobs are created in retail sales. Most workers either start in the leisure and hospitality sector or in retail sales. More consumption, better Gross Domestic Product numbers. Better GDP numbers, more investment buy businesses. More investment by businesses, better job security. Better job security, more people buying homes. More existing home purchases, more existing home sales, potentially more new home sales. New home sales need construction. New construction homes require appliances, gardening, furniture and services. We need to make it easier to hire workers. So far, consumer confidence is up and companies are hiring, so consumer confidence is up. Will it be reported?


It's the economy.