Executive Summary
A look at the “strong” employment data reveals some discrepancies casting doubts on the employment picture. For instance, the Establishment Survey in May showed 272,000 job gains, while the Household Survey reported employment fell by 408,000. Another discrepancy is reflected in the Establishment Survey showing 2.7 million payroll increases over the last year versus the Household Survey reporting an increase in employment of 376,000. The first graph shows the Employment-to-population ratio trending back down. And Mike Shedlock’s Mish Talk compares job openings to unemployment, noting both trends appear recessionary.
Please continue to The Details the complete commentaries on the employment situation.
“It’s a recession when your neighbor loses his job; it’s a depression when you lose yours.”
–Harry S. Truman
The Details
The one anomaly in the post-covid economic slowdown has been the “strong” employment situation. However, thorough analysis by numerous analysts has cast doubt upon the accuracy of certain data. One can easily shoot holes in May’s Establishment Survey’s new jobs number showing a “strong” gain of 272,000. The first discrepancy shows up in the Household Survey (used to calculate the unemployment rate) which reported total employment fell by 408,000 in May.
Over the past year, the Establishment Survey shows an increase in payrolls of 2,756,000, while the Household Survey reports an increase in employment of 376,000. The Household Survey reveals that Full-Time Employment dropped a whopping 1,163,000. And, Multiple Job Holders has increased over the last year by 629,000. The Employment-to-Population Ratio, shown in the graph below, is now declining again and is at levels seen during the Great Recession in 2008.
According to Mike Shedlock’s Mish Talk, “Job openings have plunged from a peak of 12.2 million in March of 2022 to 8.1 million in April 2024. Openings data is current through April. Unemployment is up from 5.7 million in December 2022 to 6.5 million in April 2024. The May unemployment level is 6.6 million. The levels don’t match the Great Recession, but the pattern is strikingly similar.”
Regarding job openings, Mish went on to write, “Does anyone believe the current number of openings? I think openings are hugely overstated. There is no cost to having an opening now. There was decades ago when it cost to list a job with search firms. Openings now are frequently along the lines ‘If the perfect candidate shows up, I will hire, otherwise not.’”
The following graph from Mish shows unemployment is rising and job openings are falling. This pattern looks recessionary.
And finally, weekly initial unemployment claims are rising. Although not yet at crisis levels, the trend appears to be upward.
The preponderance of data indicates a weakening jobs market. Unemployment is rising along with part-time and multiple job holders. Initial claims for unemployment are increasing. Job openings and employment data look like a recession is either here or coming soon. The statements about a strong jobs market are not based on facts.
The S&P 500 Index closed at 5,432, up 1.6% for the week. The yield on the 10-year Treasury
Note fell to 4.21%. Oil prices rose to $78 per barrel, and the national average price of gasoline according to AAA remained at $3.45 per gallon.
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