The best picture we have of current and future
job trends is the Labor Department’s JOLTS report (i.e.,
Job Openings and Labor Turnover Survey). Calculated Risk’s colorful graph shows
Job Openings (yellow line) hasn’t yet dropped below 7 million openings in
August, though it is falling.
This is a given while there were 5.8 million Hires
(dark blue line), so there are still 1.2 million job vacancies searching for
employees. It gives a good picture of
the huge labor turnover rate in the $20 trillion U.S. economy.
It is also why it is so difficult to predict the
next recession, or depression. I maintain we need another New Deal that
boosts public spending on health care, education, infrastructure, R&D, and
the environment, if we want to continue the longest economic recovery ever.
How low must the number of Job Openings
fall—maybe 1-2 million?—for anyone to begin to worry that a lack of available
jobs that promotes real productivity might begin to hurt growth? The
yellow line of the Job Openings tally dipped to some 2.4 million op enings in
2009 at the bottom of the Great Recession.
The red
and blue columns show Layoff, Discharges and other, and Quits (light blue
column), which are basically flat, which means we are at the top of this
business cycle. The only hint of a
downward trend in job formation is the downward curve in the number of Job Openings
(yellow line).
We really must look for any downward trend in retail sales, and
consumer spending to tell us the direction of economic growth. Retail sales dropped 0.3 percent last
month as households slashed spending on building materials, online purchases
and especially automobiles, the first
spending decline since February.
What else should we look for? Nobel prize-winning behavioral economist
Robert Shiller believes consumer spending is holding up this longest economic
upturn since WWII because of the Trump presidency. The fact that he touts himself as a
successful businessman creates a general sense of optimism about jobs and the
economy.
“Trump has for decades touted a glamorous narrative of his life by “surrounding himself with apparently adoring beautiful women, and maintaining the appearance of vast influence,” Shiller said in a recent op-ed in Britain’s the Guardian newspaper. “The end of confidence in Trump’s narrative is likely to be associated with a recession,” Shiller warned.
So such optimism can be a two-edged
sword. While Trump’s affluent lifestyle
has been “a resounding inspiration to many consumers and investors … a severe
recession may be his undoing,” Shiller warned.
What else could cause such an outcome? The Great Recession that ended in June 2009
could have been a second Great Depression; but for the Obama administration’s
passage of the $850 billion American Reinvestment and Recovery Act emergency
aid package that gave states as well as Washington enough dollars to stop the
losses.
But, alas, the religiously right wing Tea Party that resisted almost
all public spending took over the house in 2010, sharply cutting back further
government programs. The focus turned to austerity measures that hurt the
Midwest and southern states depending on government largesse to support them,
after the loss of all those manufacturing jobs.
The result is the discontent we see today. We need another New Deal that will invest in
our future generations--those roads, bridges, schools; need we say more?--rather than a “glamorous lifestyle”, to sustain this
recovery.
Harlan Green © 2019
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