The September jobs report was greeted by a flurry of robo-trader exuberance because another print well above 200k purportedly signals that growth is underway and profits will remain in high cotton as far as the eye can see. But how many years can this Charlie Brown and Lucy charade be taken seriously – -even by the headline stalking talking heads who inhabit bubblevision?
For the entirety of this century they have actually been gumming about little more than ‘born again’ jobs, not real expansion of labor inputs to the faltering US economy. In effect, some macroeconomic Lucy periodically removes the jobs football, but after ritual hand-wringing during the recession the charade starts all over again. That is, Wall Street and the financial media resume what amounts to a monthly jobs telethon around the BLS’s messaged, imputed, seasonally maladjusted and incessantly revised establishment payroll guesstimates.
But try the trend of aggregate labor hours. instead. That’s also contained in the BLS report, but it is never cited in context – -only as a meaningless point comparison with the prior month. The better angle, of course, is spans of years and decades because that captures trends and the real course of economic history, not monthly noise and revisions.
Here’s what the trend of labor hours used to look like. Notwithstanding five recessions between 1964 and mid-2000, labor hours grew at 2.1% annually between 1964 and 1980, and 1.8% per year between 1980 and 2000. Throw in a point or two for productivity, and you had 3-4 percent real GDP growth.
This post was published at David Stockmans Contra Corner on October 7, 2014.
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