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No Job Creation this time around

Posted By Barry Ritholtz On October 1, 2003 @ 11:16 am In Finance,Media | Comments Disabled

Important front page article in the NY Times today: “Slowing Stream of New Jobs Helps to Explain Slump [1].” While job losses (blue line) have mostly stopped — recent layoff announcements notwithstanding — there has been very little in the way of Job Creation (red line). The chart below shows that new job creation appears to have peaked in ’99:

Job creation.gif [2]

Here’s an excerpt:

“A lack of hiring, rather than a wave of layoffs, appears to be the main problem afflicting the American economy. Even as unemployment continued to mount last year, the number of jobs being eliminated fell below the level in the late 1990′s, according to a new government report. But the number of jobs that businesses created in 2002 dropped to its lowest level since 1995. Compared with the size of the economy, the rate of hiring was even slower than during the weak recovery of the early 1990′s.

The results come from a survey that the Bureau of Labor Statistics published for the first time yesterday, offering a fuller picture of the nation’s long jobs slump. The government previously reported only the net change in employment, which does not explain whether a weak job market like the current one stems mainly from layoffs or from companies’ unwillingness to hire.

The new numbers portray an economy stuck in neutral, with workers no longer losing their jobs at the rapid pace of 2001 but with relatively few new job opportunities popping up. In the last three months of 2002, 7.8 million jobs were eliminated, while 7.7 million were created, according to company records studied by the bureau.”
-David Leonhardt, Slowing Stream of New Jobs Helps to Explain Slump [1], New York Times

I believe this is part of a larger (and complex) structural change [3] where the GDP and Jobs have Disconnected [4].

I plan to address it as the subject of a focused piece shortly (less than a week). Other issues will include why “Shell Shocked CEOs [5]” are so reluctant to hire new employees; How strong Productivity [6] is making the situation much more difficult; Where one must draw the line on the misleading issue of Employment data as a lagging indicator [7]; Lastly, the non-issue of the “Self-Employed Work-at-Home Contractor [8]” is analyzed and dismissed as a canard.

Sources:
Slowing Stream of New Jobs Helps to Explain Slump [1]

http://www.nytimes.com/2003/10/01/business/01JOBS.html

by DAVID LEONHARDT, New York Times, Published: October 1, 2003

Full text article: Download PDF file [9]


Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2003/10/no-job-creation-this-time-around/

URLs in this post:

[1] Slowing Stream of New Jobs Helps to Explain Slump: http://www.nytimes.com/2003/10/01/business/01JOBS.html

[2] Image: http://www.nytimes.com/2003/10/01/business/01JOBS.html?hp

[3] structural change: http://bigpicture.typepad.com/comments/2003/09/structural_job_.html

[4] GDP and Jobs have Disconnected: http://bigpicture.typepad.com/comments/2003/08/gdpjobs_disconn.html

[5] Shell Shocked CEOs: http://bigpicture.typepad.com/comments/2003/09/shell_shocked_c.html

[6] strong Productivity: http://bigpicture.typepad.com/comments/2003/06/the_new_product.html

[7] Employment data as a lagging indicator: http://bigpicture.typepad.com/comments/2003/09/lag_this_payrol.html

[8] Self-Employed Work-at-Home Contractor: http://bigpicture.typepad.com/writing/2003/10/selfemployed_wo.html

[9] PDF file: http://bigpicture.typepad.com/comments/Slowing Stream of New Jobs Helps to Explain Slump.pdf

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