This is not your grandfather’s labor market. On paper, we just ended a 27-month streak with the unemployment rate below 4 percent, longer than some of the years of the post-World War II economic boom. But in the real world, the streak of job growth was an illusion. In fact, we were in a labor market when it came to full-time employment for native-born workers. recession This will continue for years to come, and with inflation it will only get worse.
If you don’t feel like you’re at the peak of postwar American exceptionalism, you’re not missing anything. Again, the Bureau of Labor Statistics Published While the employment report released last week reported a large increase of 272,000 paid employees in May, census data from the Household Survey show the opposite: the Household Survey reported a 408,000 decrease in the employed population, with an additional 250,000 people dropping out of the labor force, even as the working-age population grew by 182,000. So, rather than the 272,000 job gains shown by the Establishment Survey, the U.S. Census Bureau data shows a loss of 840,000 jobs relative to the population.
Job openings are a classic example of subtraction by addition.
Which study do you believe, given the reality that your friends and family are struggling with the cost-of-living crisis? They can’t both be true. Bloomberg chief economist Anna Wong said: Observed:
The May employment report, as expected, provided a mixed picture of the labor market. The establishment survey showed a solid increase in nonfarm payrolls, but the unemployment rate rose to 4%. The BLS business closure and opening estimate model added 231,000 jobs to nonfarm payrolls in May, but we believe the unemployment rate is closer to the current situation than payrolls because it lags behind the reality of a surge in business closures and a decline in business creation.
Ignoring the noise in the establishment survey, census data show that there are now 920,000 more unemployed people than there were in February 2020, just before the COVID-19 catastrophe. The reason why the household survey reflects reality better lies in the numbers showing the types of jobs being created. The May employment report paints a dystopian economic picture: Full-time employment fell by 625,000, while part-time employment increased by nearly 300,000.
As inflation weighs on the economy and shrinks full-time employment opportunities, forcing consumers to look for multiple part-time jobs to make ends meet, the employment numbers are a classic example of subtraction by addition.
Recent labor market trends also show that native-born Americans lost 663,000 jobs while immigrants gained 414,000 jobs. To date, employment levels for native-born workers have barely returned to pre-pandemic levels (excluding population growth), while the foreign-born job market has grown by more than 3 million. Growth has been primarily in the government-supported health care sector, with the majority of new jobs going to foreigners.
So not only are we missing out on the so-called jobs boom, but the labor market is also in recession and not keeping up with population growth. Frankly, this is to be expected in an economy where inflation is squeezing producers and consumers alike. With the cost of doing business so high, most employers don’t have the funds to offer new jobs.
In fact, the only new job growth we’re seeing is from multiple part-time jobs because people can’t live on just one full-time job, and neither party will do anything to attack the deficit, the cause of our crushing inflation.
In addition to the record annual deficita record $9.3 trillion in existing debt Over the next 12 months, they will be refinanced at higher interest rates. This creates a vicious cycle in which the Treasury switches to shorter-term bonds in the hope of paying them back at relatively lower interest rates. This accelerates the maturity of the debt.
The amount of annual debt maturities has already doubled in four years. At the same time, in an ill-fated attempt to curb inflation, the Federal Reserve has embarked on “quantitative tightening” to remove over $1.5 trillion from its balance sheet. Who will buy up to one-third of the total debt maturing each year? This means that interest rates will need to rise even higher to attract foreign investors who are already withdrawing funds from U.S. Treasuries.
What’s shocking about the size of our debt is that even with record revenues, we’re still in a debt crisis because spending is at 43% of GDP, higher than during the Great Recession. Revenue increased by 10% That’s still a $1.2 trillion deficit for fiscal year 2024 compared to the first eight months of the previous fiscal year.
What happens if we officially enter a recession, spending on unemployment benefits, Medicaid, and food stamps soars, and tax revenues plummet? What will happen then to the cycle of debt issuance and interest rates?
Yes, consumers are nearly out of money: Credit card debt is at an all-time high and personal savings are drying up.
Certainly, the days of paying off both public and private debt with credit cards are over. Therefore, today’s job market is nothing like your grandparents’ days of 4% unemployment. If it was this bad at 4% unemployment, wait until bills come due, unemployment is 8%-10%, and debt and interest levels are well above 2008. The Great Recession will seem like a fond memory.
