Private sector jobs lost for 3rd consecutive month in February; wages likely again failed to keep up with prices as recession starts to bite.
Today’s BLS jobs report from February should finally put an end to the sucker-hype that has until now continued to deny the recession that likely started in December. The BLS’ downward revisions today to their earlier jobs estimates for December and January are now consistent with virtually all of the previous economic information.
The private sector is now shown to have lost a net of -14,000 jobs in December, lost another -26,000 jobs in January, and lost another -101,000 jobs in February; a total of -141,000 private sector jobs lost over the past three months.
Because state and local governments continued adding to their health care, education and prison bureaucracies – now very likely to be quickly reversed – total jobs grew by 41,000 in December and declined by “only” -22,000 in January and lost another -63,000 in February. That is, because state/local governments added 97,000 jobs over the past three months, the private sector’s loss of -141,000 jobs was reduced to a total loss of “just” -44,000.
Total and private sector job gains and losses worsened sharply in each month since last October with job losses in February the worst since the March 2003 military invasion of Iraq.
Most industries lost jobs in February with, as is the now habitual pattern, virtually the only industries adding jobs are those in protected domestic consumer services such as private and public health care, bars and restaurants, and professional services related to taxpayer funded homeland security and the military.
Virtually every industry capable of exporting that faces cut-throat import competition or routine offshore out-sourcing, continues to lose jobs at an accelerating rate.
The continuing, $2 billion per day trade deficit (shortfall of production) does matter even at a time of enormous debt stimulus from the federal government and households. (my updated industry-by-industry table of job gains and losses is attached)
Real weekly wages, down -1.4% yr/yr to January, likely fell further behind prices in February, rising only 0.28% with prices expected to have jumped by more than 0.3%.
In a uniquely misguided and dangerous example of managing the news, the major media is refusing to inform their readers/viewers/listeners of declining wages and incomes. No major media reported on the sharp decline in real wages in January ( BLS, Feb. 20th) the six-month decline/stagnation of real per capita incomes (BEA, Feb. 29th) and many (such as the Washington Post) failed even to report yesterday’s steep drop in AVERAGE net worth during 2007-Q4 – BEFORE INFLATION. (Federal Reserve, March 6th )
Finally, today’s BLS report also revised down sharply the number of total hours worked in January and shows a further decline for February. This further emphasizes just how anemic was the cyclical recovery that began in November 2001 – despite over $10 Trillion in federal and household debt stimulus.
Over the 75 months since November 2001, total private sector hours worked in the US economy has risen by only 6.8%. This compares with a growth of 17.1% in the comparable period of the “jobless” recovery of the 1990s and is, by far the weakest 75 month recovery period on record back to WWII – even including those recoveries that fell back into recession before 75 months.
With the unprecedented trade deficits/production shortfalls in manufacturing, the total hours worked in manufacturing over the past 75 months has actually DECLINED by -9.4%. The only other 75 month decline on record is -2.1% in the severe double-dip 1980-’82 recessions when a US dollar was worth 260 Japanese Yen; today the dollar will buy 103 Yen.
Denial is not just a river in Egypt. But when it gets so out of control for so long, it can cause considerable damage to innocent bystanders.
great catches re net worth, wages
It is very significant, I think, that in this past expansion median household net worth never matched its high from the 1990s expansion -- this will be the first time since the great depression that the middle class as a whole is moving, secularly, in the wrong direction.
If mean net worth is declining, just imagine what is happening to median net worth!
In that regard, is the figure for Household Debt Service and Financial Obligations Ratios, specifically total household debt as a percentage of income, buried in the flow of funds report somewhere (and if so, where?) . Or do I have to wait for a separate report?
Flow of Funds Report
You probably mean that median household "income" (not net worth) didn't return to 1999 levels in the recent expansion. Median and Mean net worth of households did continue to rise since 1999 despite the Nasdaq meltdown -- that had little or no effect on median households -- due to rising home values. See the Fed's Survey of Consumer Finances; 2004 is the latest. That's why the collapse of the housing bubble is so important.
You'll need to wait for the Fed's separate report on Household Debt Service and Financial Obligations that depend on the rates of interest that households pay on their soaring debts. But the debt itself is in the Fed's Flow of Funds report released on Thursday. Look for the file on "balances." You can also go to my company's website (http://www.mbginfosvcs.com/) to see graphics of the soaring ratio of household debt o disposable income, assets and net worth. (Left hand side, second from top at this moment.) There is also a link to the Fed's Flow of Funds data.
Debt Service Figures
Here are the debt service figures from the Fed; they’ve just been updated.
And yes I meant income. Appreciated.
debt service figures
Thanks for this. I had expected the household debt figures to contract significantly in Q4 2007. Interesting that they didn't. At least as of the end of last year, households apparently were NOT reining in spending yet, just re-allocating it to food and gas and away from discretionary spending.