The payroll company ADP released its closely watched job numbers report today, and it was very disappointing. Forecasters, including New Deal Democrat, had been predicting the number of private sector jobs to grow by 40,000 to 90,000.
ADP reports that nonfarm payrolls dropped by 23,000.
That number is disappointing enough, but even more troubling is the study released by the progressive Economic Policy Institute that projects it will be nearly 5 years before the raw number of jobs even recovers to where it was in December, 2007, before this Great Recession began.
Charts and numbers after the break.
First, today' ADP numbers (courtesy of Calculated Risk):
Nonfarm private employment decreased 23,000 from February to March on a seasonally adjusted basis, according to the ADP National Employment Report®. The estimated change of employment from January 2010 to February 2010 was revised down slightly, from a decline of 20,000 to a decline of 24,000.
The report notes further that these numbers do not include the government jobs that are included in the Bureau of Labor Statistics numbers to be released later this week. Those numbers are still expected to be positive due to hiring for temporary census jobs.
These numbers do contradict the relatively rosy picture painted by New Deal Democrat earlier in the week:
This week is probably going to end with some good news about employment. When nonfarm payrolls are released on Friday, almost everybody expects it to be a positive number. As I type this, according to Briefing.com, the median forecast for nonfarm payrolls is +190,000. In part this is statistical noise, because the Census created about 100,000 to 150,000 jobs this month. But that still means that the economy probably added between +40,000 and +90,000 other jobs in March...
But for March, almost everybody, even pessimists, are predicting actual job growth, partly because of the Census hiring, but partly based on continuing improvments. For example, the median forecast for the private ADP March employment report, which does not include government jobs, is +40,000.
Those who persist in promoting a V-shaped recovery in the jobs market received another blow today when the progressive Economic Policy Institute released its study, "For job seekers, no recovery in sight—Why prospects for job growth and unemployment remain dim."
The National Bureau of Economic Research (NBER), the nation’s arbiter for dating business cycles, is apt to conclude that the recession officially ended in the middle of 2009. Yet consistent job growth has yet to arrive and the unemployment rate will probably not peak until the second half of this year. In short, this recovery is currently "jobless" and has been for quite some time. Worse, even when it is no longer technically jobless (that is, when we have positive employment growth), the unemployment rate will likely not fall substantially for a year or even longer.
Projecting employment numbers is obviously more art than science, but the two following graphs formed the backbone of the EPI report and make it obvious even to us laypersons that unemployment will remain very high well into the future.
First, let's look at raw job numbers in this recession compared to other later 20th century downturns:
The most obvious thing about the graph is the extraordinary numbers of jobs lost in the Great Recession, but look a little longer. It also becomes apparent that recovery in the employment market is taking longer and longer in our newliberal, financialized, service economy. In the 1981 recession, up till then the deepest since the Great Depression, there were still large numbers of manufacturing jobs. These were lost quickly because of demand-sensitive layoffs, but picked up quickly once demand recovered.
By 2000, things were different. Job losses were initially less dramatic, but recovery took much longer.
The EPI economists take this history and use it to extrapolate out what a jobs recovery might look like this time around. Here it is:
If we had the same kind of economy we had back in 1981, New Deal Democrat's hopes for a V-shaped jobs recovery might be reasonable, but that economy no longer exists. If we take the closest analogous situation, the 2001 recession, it will not be until November, 2014 when jobs have even rebounded to the same number they were at in December, 2007. Remember that the number of jobs must always increase just to accommodate the growing number of people in the labor force. That means that we would still have a high unemployment rate in November, 2014 if the EPI's projection is correct.
Also keep this in mind. The 1981 recovery was, in fact, not so swift. We experienced a "double dip" second recession that sent job losses climbing again. That remains a very real risk this time around as well because of the risks posed to the economy by the commercial real estate crash, the continuing deterioration of the residential real estate market, insolvent banks and political pressures to reduce the deficit.
We would all like for there to be good news about the economy and unemployment, but the news and predictions of improvement need to be real. Politically spun happy talk and overly rosy projections do a disservice both at a macro policy level and for the misleading impact they might have on our personal planning.
Not only can we handle the truth, but we also have a serious need to hear nothing but the truth..