click for larger chart

Source: JP Morgan Funds


On NFP day, I usually present you with my usual schtick as to why each month’s data point is much less important than is made out. Rather than repeat that yaddayaddayadda again this month, let’s look at the really long term 20 year chart above.

A few things stand out:

• The FIRE economy — Finance, Insurance, and Real Estate sectors — led the growth of jobs over that 2 decade period. Most of these FIRE sectors continue to soften.

• Health Care continues to capture a lot of GDP, and that is reflected in job growth

• Low paying jobs in Leisure & Hospitality is a significant grower

• Manufacturing has been the most negative, shrinking ~5% over the past 20 years. This is the sector that could experience a revival

• Government sector has seen very little growth

Also worth noting: The Labor Force participation rate has now fallen back to 1985 levels — that is pre-tech boom, and before the bulge of FIRE hiring occurred.

When today’s NFP is released, instead of having a kneejerk reaction to the preliminary soon-to-be=revised data, consider putting it into the context of the longer term, bigger picture.


BLS data released at 8:30am


NFP Day: The Most Over-Analyzed, Over-Emphasized, Least-Understood Data Point (February 4th, 2011)

Category: Data Analysis, Employment

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

11 Responses to “NFP: 20 Years of Net Job Creation”

  1. BennyProfane says:

    “• Manufacturing has been the most negative, shrinking ~5% over the past 20 years. This is the sector that could experience a revival”

    I know that a lot of FIRE workers and pundits have been beating this drum a lot lately, but, for the life of me, I can’t see this happening. Those aren’t your father’s or grandfather’s factories out there in the “right to work” states that the multinationals are building. They’re filled with computers and robots and a few very underpaid employees who will turnaround in a flash as long as the local Starbucks offers fifty cents more an hour. And, it’s not as though it’s going to get better as time goes on. Robots will get smarter, and world wage levels will drop further.

  2. vbiersch says:

    How about rather than blindly trusting the data from J.P. Morgan, we use the actual data taken from BLS OES that compares 1999 with 2011?

    The link above is to the chart I have prepared which disagrees with the chart from J.P. Morgan substantially.

    The article that accompanies the chart can be found on the link above.

    I apologize in advance for having to lead you to my site, but I could find no way to post the chart in this comment and I believe you need to see the chart so that you will understand what the big picture is.


    BR: The JPM data comes from BLS, and if it were off enough to be noticeable, people would see it and savage them.

    2nd, your data differs from theirs because they use 9 broad sectors and you use about 24

  3. b_thunder says:

    And in addition almost 30-year low participation rate, a 40-year low median wage, and interest rates that can’t move much lower. So how the heck can the middle class continue financing mcmansions, 60″ TVs, trade up Chevys to Cadillacs and, most importantly, afford $50k/year college fees ?
    The post on this blog a few days ago was correct: perpetual and ever bigger asset bubbles. But bubbles, like ponzi schemes, can’t grow indefinitely. I fear a big “reset” is coming where neither stocks, nor bonds, not commodities, nor real estate will preserve your wealth.

  4. [...] The really long-term look at job creation and NFP in the United States.  (TBP) [...]

  5. Lukey says:

    Labor Force Participation Rate is all we should be paying attention to. If this statistic doesn’t start improving, we simply cannot ever expect to afford the level of spending the Federal Government has adopted over the past decade. I suspect the increase in FIRE jobs was a response to all the government regulation that made it hard to employ someone who wasn’t producing a big number for the bottom line each month. In their never ending effort to produce profits out of thin air, these businesses (as one might have expected) went too far and needed to be reigned in (read: more regulation). Now these jobs are disappearing. Manufacturing might make a bit of a come back here as they incorporate low cost natural gas as an energy source but it will still make more sense to make things elsewhere, as the vast regulatory regime continues to expand (read: Obamacare). Low paying service jobs (that cannot be automated) will likely be the only category that consistently grows, but it’s pretty hard to build prosperity on the backs of low wage workers. And if there is no real growth in good paying jobs, the growing unfunded tax liability (read: deficit spending) will eventually drag us under in a sea of red ink. The recent “fiscal cliff” resolution did exactly nothing to change that situation, except possibly make it worse (read: fade this rally).


    BR: In my field, I need to be constantly aware of my confirmation bias — when looking at economy, markets, portfolio etc.

    Lucky for you that you don’t work in a field where that matters — You seem to view everything through the lens of your own favorite issues. . . that’s classic confirmation bias, and its trouble for good analysis

  6. RodneyBD says:

    Question – to what extent is the Labor Force Participation rate influenced by demographics – baby boomers retiring, working adult population size, etc?

  7. constantnormal says:

    … “net job creation”, eh?  I wonder if the “net job creation” keeps up with the “net population increase” … and exactly what kinds of jobs are being created?  Are they good, high-paying jobs, with a career path into other jobs, or are they dead-end low-wage jobs that will disappear as soon as they can be automated away?

    What are the mechanisms of “job creation” in a rapidly changing capitalist economy, and does that serve the needs of society as a whole?  Is there another kind of economy that would serve society better?  How could we make the economy that we have today serve society better?

    These are the kinds of questions Congress ought to be pondering, instead of how to screw the people and slide more of the people’s money into the hands of the folks who put them in office …

  8. pdtrader says:

    Very troubling, these long-term trends. I’m not one to toll the bell for the glory days, but it would be nice to see jobs coming from sectors that actually, you know, make stuff. Hypocritical for me to say, given that I’m a trader, but the size of the FIRE economy is just too big. Thank you, Mr. Fed, for that one.

    As for healthcare, I’m not sure what that says about the state of our country. Perhaps Hostess going bankrupt was a good thing? Is it too late for us to start making cars again? Oh, right, yeah, it IS too late – unless you count the channel stuffing.

    I think maybe I should just start drinking right about now…

  9. [...] Big Picture posted this long term look at job creation.  The decade long decline in participation rate is not [...]

  10. jerivespoli says:

    Should also include new firm establishment for a more complete picture…

  11. Lukey says:

    Well thanks to you Barry, I’m more aware of my confirmation bias than I used to be. I think we are all subject to some level of it, even when we make a concerted effort to avoid it. I’m trying to keep an open mind, but I just don’t see how big government, underfunded by a singular focus on only raising taxes on “the rich,” is the answer to our economic problems. I’m way more inclined to give credit to lefties like Howard Dean, who is at least honest about the levels of taxation needed to support the Democrats’ social welfare agenda. But then we will have to have the argument about what that does to the economy.