Category: U.S. Economy

U.S. Occupations with Low Unemployment Rates

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The U.S. unemployment rate has finally dropped below 7.0%, yet there are occupations where the rate of unemployment is well below the natural rate. An unemployment rate of 4.5% to 5.5% is often referred to as the natural rate. (Milton Friedman and Edmund Phelps developed the concept of the natural rate in the 1960s to describe the rate of unemployment where the economy operates most efficiently.)

The occupations with the lowest unemployment rates are Healthcare practitioners, Computer, Legal, Education, and Math. Many of the 10 occupations require a college degree. On the other hand many of the occupations that have levels of unemployment above 5.0% have minimal education requirements or they require only on-the-job training. For example, a laid off construction worker may not have skills that are transferable to being a software developer. As a result some occupations, such as construction workers, may consistently have higher unemployment rates.

On a positive note, the unemployment rate has declined in 7 of the 10 categories. Interestingly enough, the number of unemployed workers in these 10 categories has increased from about 2.0 million to 3.0 million over the past year. Most likely that is a result of increased hiring, volatility in companies, and job churn.



 

©Copyright 2011 by CBER.

U.S. Labor Participation Rate Continues Downward Trend

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As the country has recovered from the Great Recession there has been concern about why the economy hasn’t recovered more quickly. Part of the reason is the decline in the labor participation rate .

After peaking in 2000, the labor participation rate has declined steadily. The rate is the percentage of people who are either employed or actively looking for work.

Since 2000 the labor participation rate has declined from 67.3% to 62.8% at the end of 2013 – a significant drop. While there is debate about the reason for the decrease, the primary factor is an increase in discouraged workers (a weak recovery) and a change in demographics (more baby boomers retiring).

labor participation rate trends downward
After peaking in 2000, the labor participation rate has trended downward.

 

©Copyright 2011 by CBER.

ADP Report – Mid-Size Companies Adding The Most Jobs

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ADP announced that the U.S. private sector added 175,000 jobs in January. The data shows mid-size companies adding the most jobs.

Since the official end of the Great Recession the ADP data shows the private sector has added 7,418,000 jobs.

The number of jobs added by company size category follows.

1 to 19 employees

  • 1,477,000 jobs added.
  • 19.9% of total jobs added.
  • 25.9% of private sector jobs.
  • 5.2% growth since the end of the recession.
    (See chart below for jobs added since the end of the recession).

20 to 49 employees

  • 1,191,000 jobs added.
  • 16.1% of total jobs added.
  • 15.9% of private sector jobs.
  • 7.0% growth since the end of the recession.

50 to 499 employees

  • 2,674,000 jobs added.
  • 36.0% of total jobs added.
  • 35.6% of private sector jobs.
  • 7.0% growth since the end of the recession.

500 to 999 employees

  • 474,000 jobs added.
  • 6.4% of total jobs added.
  • 6.9% of private sector jobs.
  • 6.4% growth since the end of the recession.

1,000+ employees

  • 1,602,000 jobs added.
  • 21.6% of total jobs added.
  • 15.8% of private sector jobs.
  • 9.7% growth since the end of the recession.

Jobs have been added across all size categories. The data show the following:

  • Well-established large companies (1,000+ workers) have added jobs at the fastest rate, 9.7%.
  • The 50 to 499 category has added the highest percentage of jobs 36.0%.
  • The 50 to 499 category is the largest category, 35.6% of private sector jobs.
  •  The 50 to 499 category has added the greatest number of jobs, almost 2.7 million.

The most encouraging news is the recent increase in the growth of smaller companies.
Mid-size companies adding the most jobs

©Copyright 2011 by CBER.

Manufacturing Role in U.S. Recovery May be Overstated

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The Manufacturing Sector has been regarded as a driving force in the recovery from the Great Recession.

A look at U.S. Manufacturing Shipments shows the sector’s contribution to the recovery may be slightly overstated. Consider the annualized growth rates for shipments for the following periods:

  • January 1992 to January 2000, 8 years at +5.6%.
  • January 2000 to January 2002, 2 years at -4.6%.
  • January 2002 to January 2008, 6 years at +6.5%.
  • January 2008 to January 2009, 1 year at -21.6%.
  • January 2009 to January 2014 (est.), 5 years at +6.1%.

As a result of the Great Recession, shipments dropped to mid-2004 levels and it took 5 years before shipments returned to 2008 levels.

While it is good news that the manufacturing sector has played an important role in the recovery, it should be noted that the annualized rate of growth from 2012 to 2014 was only about 2.0%.

What’s on tap for manufacturing in 2014?
manufacturing
©Copyright 2011 by CBER.

Relief at the Pump – Coloradans Saved $56 in 2013!

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Back in the day… a Hershey’s candy bar cost a nickel and a person needed a dime to get a Coke from the vending machine. (Diet Coke didn’t exist). Nickels and dimes had value back in the day.

And…it cost $.21 for a gallon of gasoline. Not only that, an attendant filled up the car, checked the oil, and washed the windows. Back in the day a car was taken to a service station, not a gas station.

Given that perspective, the current relief at the pump is still painful.

As we ring out the old year and ring in the new it is now possible to compare the annual costs of gas for Colorado and the U.S. This calculation assumes that 15 gallons of gas were purchased each week at the average price for all blends. The comparison follows:

  • Colorado
    • The 2013 cost was $2,706.
    • The 2012 cost was $2,762.

It cost $56 less to purchase gas in Colorado during 2013 than 2012.

  • United States
    • The 2013 cost was $2,782.
    • The 2012 cost was $2,874.

It cost $92 less to purchase gas in the U.S. during 2013 than 2012.

In 2013 it cost $76 less to purchase gas in Colorado than the U.S.

How is that for relief at the pump?

If you are a Coloradan, how did you spend the $56 dollars you saved in 2013?
©Copyright 2011 by CBER.

Pain at the Pump – Will it be Less in 2013?

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Since 2009 Americans have felt the pain at the pump. The angst for Coloradans has been slightly less.

For the past 52 weeks, the average cost to purchase 15 gallons of gas per week was $2,760. Believe it or not, this was about $1 more than the previous 52 weeks, not adjusted for inflation.

As well, the cost for Coloradans was about $111 less than the U.S. total for the past 52 weeks.

Sticker shock wasn’t as bad as it was two years ago. This is good news for consumers, but not so good news for the companies who rely on higher oil prices and governments who rely on severance and other taxes for revenue.


©Copyright 2011 by CBER.

Surprise – U.S. Employment up by 200,000/month from August to September

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On November 8th the Bureau of Labor Statistics reported the U.S. employment was up by 204,000 in the month of October. This was a shock to many, particularly given the weak ADP numbers published in late October.

The BLS delivered a second surprise by bumping up the net jobs added for August and September. Unfortunately, the number of unemployed in October was only 44,000 less than August, and the unemployment rate, 7.3%, was the same for both months.

For the first 10 months of 2013, U.S. employment increased at an average rate of 186,300 jobs per month. This is above the monthly average for 2012 (185,000) and 2011 (175,000).

U.S. job growth was strong in the first quarter of 2013, but the increases became more tepid as the year progressed. Average job growth for the past three months is slightly above 200,000. The December release will show the extent to which Congress’ game of chicken with the Federal budget derailed this momentum.

U.S. Employment Situation

©Copyright 2011 by CBER.

ADP Report – Mid to Large Size Companies Adding Most Jobs

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ADP announced that the U.S. Private Sector added 130,000 jobs in October.

Ugh!

To add insult to injury, the September data was revised downwards from 166,000 to 145,000.

Ugh! At least the number is positive.

The ADP data reports that since the official end of the Great Recession the Private Sector has added 6,367,080 jobs. The number of jobs added by company size category follows.

1 to 19 employees

  • 1,251,500 jobs added
  • 19.7% of total jobs added
  • 4.4% growth since the end of the recession.
    (See chart below for jobs added since recession).

20 to 49 employees

  • 972,200 jobs added
  • 15.3% of total jobs added
  • 5.7% growth since the end of the recession.

50 to 499 employees

  • 2,328,900 jobs added
  • 36.6% of total jobs added
  • 6.1% growth since the end of the recession.

500 to 999 employees

  • 446,900 jobs added
  • 7.0% of total jobs added
  • 6.0% growth since the end of the recession.

1,000+ employees

  • 1,357,600 jobs added
  • 21.5% of total jobs added
  • 8.2% growth since the end of the recession.

Jobs have been added across all size categories; however, the data suggests it is the well-established companies that have led the recovery from the Great Recession, not the small businesses or entrepreneurs.

©Copyright 2011 by CBER.

U.S. Jobs Are Being Added at a Slower Rate

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On October 22nd the Bureau of Labor Statistics reported the U.S. added 148,000 jobs in the month of September. For the first 9 months of 2013, U.S. employment increased at an average rate of 177,000 jobs per month. This is below the monthly average for 2012 (185,000) and slightly above the monthly average for 2011 (175,000).

Given the fact that the government shutdown delayed the publication of the jobs data, many economists believe the September value is nothing more than a placeholder that will be revised downward on November 8.

U.S. job growth was strong in the first quarter of 2013, but it has grown at a slower rate as the year has progressed. A similar pattern has occurred in Colorado.

On a positive note, the rate of growth for the state has remained stronger than the nation.

Note: The recent BLS projections do not account for job reductions attributed to the Government shutdown.


©Copyright 2011 by CBER.

Summer Volatility in S&P 500 Not as Bad as it Seemed

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In July the S&P 500 Index gained 79.5 points, an increase of 4.9%.

In August, the S&P 500 hiccupped and fell 52.8 points for a decline of 3.1%. Historically, the equity markets often dip in August, so the correction did not catch most people by surprise.

 

In July and August the historical late summer tendencies were discussed, but that didn’t stop some writers and economists from attributing the August volatility to a series of events at home and abroad.

Across the pond there were worries about chemical warfare in Syria, the instability of Egypt, and the chess match Vladimir Putin and President Obama were playing with Edward Snowden as their pawn. North Korea, Benghazi, and Iran’s threat to produce nuclear weapons were recent memories.

At home, attention was focused on whether Janet Yellen’s feet would fit in the glass slipper that will be left behind by Ben Bernanke. The Fed also captured the heart of many with the question “to taper or not to taper”? Those who looked Into the not-too-distant future could see that the members of Congress were entering preseason training camp to play another game of chicken with the federal budget.

At the time, concern was expressed that these events might derail the bull market. As September approached, these events turned out to be nothing more than a case of nasty indigestion.

Plop, plop. fizz, fizz. The S&P 500 appears to be poised for a quick recovery in September.

A look at the VIX shows the volatility associated with the excitement of the summer was minimal compared to previous crises.

Note: VIX is a weighted blend of prices for a range of options on the S&P 500 index. VIX measures market expectations of near term volatility conveyed by stock index option prices. VIX is produced by the Chicago Board of Exchange (CBOE) to volatility of the S&P 500 index over the next 30 days.

©Copyright 2011 by CBER.