Its Getting Ugly Again

Today’s Bureau of Labor Statistics report on U.S. jobs in August shows not only that no new jobs were created in August – zero change – but it also revises down the number of jobs in June and July, mostly due to worse than previously estimated cuts in state and local government jobs. The net result is that the new data show the U.S. has 58,000 fewer jobs in August than was previously estimated for July.

It gets worse.

Not only were no jobs created in August, but the “average” paid workweek was reduced to 34.2 hours a week from 34.3 hours a week in July. This means that the failure to add jobs was not the result of employers adding hours to the existing workforce – which is often the case in uncertain times like these – and gives further reason for concern about job growth going forward.

It gets worse.

And even “average” hourly wages fell slightly in August – even before factoring in price rises – which, along with the decline in paid hours per week, means that “average” weekly wages plunged by 0.4 percent in August even before factoring in any price rises. Such sharply falling wages and no job growth is awful news in an economy where the vast majority of households were already under very severe financial stress.

Real disposable income per capita continued falling in July for the fourth time in the past five months. Sales rebounded in July, after three consecutive months of real decline, and appear to have held up reasonably well in August by driving down “average” savings rates. This is obviously unsustainable.

Maybe most importantly, there are now nearly 2 million fewer private sector jobs in the U.S. than there were in August 2000. That is the first 11-year loss of jobs since the period ending in 1938 following the catastrophic policy mistake of prematurely focusing on balancing the federal budget – which, of course, also worsened sharply. The jobless pay few taxes.

Comments