More on the Unemployment Numbers ... Eight More Years and Twice as Fast Economic Growth are Required to get Unemployment Rate Back to "Normal"

Jobs market is treading water, and that's not bad says the following about July's unemployment report:

"Treading water doesn’t get you very far, but it does prevent you from going under.

The U.S. economy continued to make very slow progress in July, according to the latest read on the jobs market from the government’s Bureau of Labor Statistics. Read the full BLS report.

A total of 163,000 net new jobs were added in July, while the unemployment rate edged a tenth higher to 8.3%, the BLS estimated. Read our full news coverage of “July jobs data show some improvement in hiring.”

It was a mixed report, with positives mostly outweighing the negatives. But in a climate that fears the worst, a mixed report is encouraging.

Month-by-month movements in these data can be volatile and misleading, and certainly aren’t anything one should consider very seriously when planning for the future. Seasonal adjustments, in particular, have been disrupted this year by both weather and company decisions about when to hire or retool factories.

When viewed over a slightly longer horizon, a more useful picture emerges.

Over the past six months, business establishment have created an average of 141,000 jobs a month, more than enough to absorb new jobseekers, but not nearly enough to absorb all those millions who’ve been without work for months if not years. Treading water.

Over the past six months, the unemployment rate is unchanged at 8.3%, with employment rising just about as fast as the labor force has. Treading water.

Over the past six months, average weekly paychecks have risen at a 2.1% annual rate, just a touch higher than prices have risen. Treading water.

Over the past six months, the number of hours worked in the economy has risen at a 1.5% annual rate, enough to keep the economy growing at a slow pace. Treading water.

Treading water isn’t good enough, but at least we haven’t gone under."

My Take

If we can only tread water, eventually we'll drown.

If we have roughly 15 million people in aggregate who are (1) "officially" unemployed, (2) underemployed (working part-time or discouraged), or (3) who have prematurely withdrawn from the work force in recent years, and if the new entrants into the labor force increase by ~150,000 each month, we can do the math as to how long it would take to get the unemployment rate down to what we used to view as normal. That is, 5% or so.

My math says roughly 100 months or more than eight years, and that's not a slam dunk by any means.

How's 2020 sound?

But there's a caveat that comes even with the 2020 guesstimate. Only if we're somehow able to increase monthly jobs by 300,000 instead of the current average monthly rate of 150,000 or less, is the 2020 estimate credible. That's an approximate double from today's numbers.

Thus, it would take 100 more months to employ the 15 million  people now out-of-work, underemployed or those who have prematurely "retired." The other 15 million will be the new labor force entrants over that time period.

While the above guesstimate is admittedly not accurate (what estimates are?), at least it provides an indication of the severity of our serious economic issues and how long it will take to overcome them, assuming we ever get serious about doing just that.

Finally, to get back to "normal" we'll need something closer to 4% real GDP growth instead of the less than 2% we're currently experiencing.

That will happen only as a result of economic growth enhancing actions taken by the evil and greedy fat cats located in the private sector of our economy. And it will require the approval of evil and non-Sierra Club approved things like building the Keystone pipeline project as well as drilling for more oil, natural gas and so forth.

We're not on that track today. Not even close.

Meanwhile, we're supposed to be content with treading water. Until we drown, I guess.

Thanks. Bob.