It has been a few months since I discussed or mentioned (originally posted dynamic here) the trend in the year-over-year acceleration and deceleration in employment levels publicly. You have undoubtedly heard some government official, analysts, or the Federal Reserve discussing the monthly employment report and how the continued gains in job openings point to an improvement in the economy. Most of these discussion lack any fair context however, with most glossing over the historical relationship between job openings and the economy. Namely that job openings is a lagging indicator to the economy.
I think that the acceleration and deceleration in the year-over-year change in total household employment is a far better indicator of economic growth versus job openings. Especially in relation to other indicators of current and future GDP. As of the June 2013 jobs data, employment levels continue to gain versus the year ago level, but those gains are declining at an accelerating rate. First, I present the chart of year-over-year growth in GDP versus the the change in household employment levels for the period covering the last 20+ years.
Although still positive, the change in employment levels is increasing at a decreasing pace. Another way to look at it is the year-over-year acceleration/deceleration in the employment changes.
Through June 2013, the change in the employment levels has declined at an accelerating rate. This dynamic has been present throughout 2013.
It of itself, an acceleration in the decline of employment level changes is not an indication of a recession. However, combine this with low and declining levels of GDP growth, a negative ISM, and other measures and we see a mosaic suggesting high recessionary risks.
I think that the acceleration and deceleration in the year-over-year change in total household employment is a far better indicator of economic growth versus job openings. Especially in relation to other indicators of current and future GDP. As of the June 2013 jobs data, employment levels continue to gain versus the year ago level, but those gains are declining at an accelerating rate. First, I present the chart of year-over-year growth in GDP versus the the change in household employment levels for the period covering the last 20+ years.
Although still positive, the change in employment levels is increasing at a decreasing pace. Another way to look at it is the year-over-year acceleration/deceleration in the employment changes.
Through June 2013, the change in the employment levels has declined at an accelerating rate. This dynamic has been present throughout 2013.
It of itself, an acceleration in the decline of employment level changes is not an indication of a recession. However, combine this with low and declining levels of GDP growth, a negative ISM, and other measures and we see a mosaic suggesting high recessionary risks.
No comments:
Post a Comment