If you listen to the politicians and talking heads on TV, our economy is sizzling hot! Given all the job losses, wars, and inflation over the past few years, this would be a bit of a historical unicorn. 🦄 While we’re always fans of a strong economy – because that means lots of good Paychecks – we need to be sure it’s real before we get too excited about it. A recent report dumps a massive bucket of icy cold water on all the “sizzling” celebrations. We’ve talked about this before, but let’s see what’s really going on using current data. ℹ️🤔
Here are Five Fast Facts about the true job numbers:
- 📉 Overstating The Obvious - The Bureau of Labor Statistics (BLS) recently revised its job creation numbers for 2023 (through November) down by almost 450,000! In fact, in nine out of the 10 months included in the report the number of jobs created was overstated by an average of about 50,000 per month. Quite the oopsie, there, don’t you think?
- 😲 Why It Matters - This is a critical detail because it means the economy isn’t nearly as strong as we’re being told, and because the jobs report strongly influences the Fed’s decision to raise interest rates (or not), and as we’ve talked about before, that has a major impact on all our daily lives.
- ⌛ Possible Explanation - Some economists say the reason is that many of the 140,000+ business surveyed about their jobs numbers are sending in their info late. That doesn’t work for most third grade teachers, so why should it be allowed for this? Also, the BLS itself says they’re not related, so… 🤷
- 👶🧓 Birth-Death Ratio - Critics point to problems with the method itself used by the BLS - the birth-death ratio. If companies don’t report their numbers, does that mean they’re out of business or that they just didn’t send in the info? There’s no way to know. As a result, the method tends to underestimate companies going under and overstate the number of jobs being created.
- 🤦 Big Trouble - There are lots of people boasting about how many jobs have been created in the last couple of years, but have they ever consider the jobs that were lost in all the shutdowns? Real job growth has been mediocre at best since 2020, and the labor force participation rate is a historically low 62.5%. Feel that icy water yet?
🔥Bottom line: The reality is that the economy isn’t nearly as strong as we’re being told. Sure, there have been 14 million jobs “created” since 2020…but that’s after we lost 22 million to government-enforced shutdowns. More recently, we’ve lost 1.5 million full time workers since June of last year while adding 800k part-time workers, leading to a record-high 8.7 million people working multiple jobs just to pay their bills. The one area that has shown real sustained growth (escaping those downward revisions) is government jobs, growing by an average of 52,000 per month. Hm… 🤔
It appears this “sizzling hot” unicorn economy is exactly that - not real.
What do you think?
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