The recent government shutdown furloughed thousands of employees, closed our National Parks, and fostered an even higher level of brinkmanship between politicians in Washington. This also caused a delay in the reporting of monthly economic data including the September jobs report. Normally reported on the first Friday of the month, the release was postponed until after the shutdown ended almost three weeks later.
Not only did this report miss analyst expectations, it revealed some longer-term trends that are still plaguing the job market. Although the headline showed a decline in the long-term unemployment rate, the details showed something much more sobering. There are still 11.3 million folks that want a job looking for work. That statistic doesn’t reflect the number of part-time workers (7.9 million) or the number of people that are marginally attached to the workforce (2.3 million). Add all of those together and you have 21.5 million people either unemployed or underemployed.
The unemployment survey only takes into account those workers that are looking for a job that have been unemployed for less than a year. After 365 days, workers are considered to be “not employed” and aren’t counted in the monthly surveys. The recent numbers also showed the labor participation rate holding steady at 63.2%, but that still matches the lowest level since 1979. The data suggests job market weakness, but the markets have rallied to record highs.
Those delayed numbers have an impact on the economy and the markets. With fewer workers and those working only part-time, it’s difficult to forecast economic growth. Whether it’s the troubles with Obamacare or economic uncertainty, the jobs numbers show that companies aren’t hiring full-time workers at a rapid pace. The stock market churns ahead as the government agreed to fight another day on the debt ceiling and budget woes. Weak economic data brings hope that the Fed will continue to artificially stimulate the economy through the end of year.
Without quality job growth and increased consumer demand that follows, how can the U.S. economy and corporate earnings grow? Unemployment may be shrinking, but for the wrong reasons.
Welcome to the job(less) recovery.
