Last week (June 7, 2013), the – US Bureau of Labor Statistics – released their latest – Employment Situation – May 2013 – which showed that in seasonally adjusted terms, total payroll employment increased by 175,000 in May while the Household Labour Force Survey data showed that employment rose by 319 thousand. The essence to be extracted from the data is that total employment in the US is not even keeping up with the underlying population growth. As a result the level of and the labour force shrunk by a further 496,00 persons. The twin evils – falling jobs growth and the unemployment rate edged up a little with participation constant. The question that needs to be asked is whether this is a turning point with slower growth and rising unemployment ahead. Certainly, the conservatives who claim that the budget cuts under the so-called sequestration have done no harm are way off the mark. The major part of those cuts will hit soon and already the employment situation is looking very fragile. The Gross Flows data also tells us that the probability of an employed person becoming unemployed is rising again and the probability of a new entrant getting a job is falling. Those transitions are signally a switch point. The budget deficit is currently large enough to just maintain activity. It should be significantly larger to keep the growth momentum in the right direction. The politics, however, militate against that despite the shaman on the Republican side losing their greatest authority – those Excel spreadsheet geniuses.

Last Friday (April 26, 2013), the US Bureau of Economic Analysis – published the – US National Income and Product Accounts – for the March-quarter 2013 (the advanced estimates – subject to later revision). The US economy continues to grow despite the fiscal drag coming from the government sector, principally the federal government. But the outlook is not that bright given that this data does not include the impacts of the “sequester”, which will start to reveal themselves more clearly in the June-quarter data. The signs are not good, however. Most recent data, which will feed into the second-quarter result is suggesting the economy is slowing under the weight of the fiscal drag. The point is that there is still a huge output gap in the US (my estimate – around 10 per cent) and no signs of an inflationary surge. Combining that information with the parlous state of the labour market indicates that the US federal government should be increasing their net spending rather significantly at present. The fact that all levels of government are now retarding growth is not a responsible act.

Last week (April 5, 2013), the – US Bureau of Labor Statistics – released their latest – Employment Situation – March 2013 – which showed that in seasonally adjusted terms, total employment decreased by 206,000 in March and the labour force shrunk by a further 496,00 persons. The twin evils – falling jobs growth and declining activity. While the unemployment rate fell to 7.6 per cent (from 7.7 per cent) that is an illusory improvement. The fact is that the participation rate fell by 2 percentage points and thus hidden unemployment rose. The 290 thousand fall in official unemployment arose because the drop in employment was more than offset by the fall in the labour force. There is nothing virtuous about any of that. The facts are that it is getting harder again for Americans to get work and easier for them to lose it. The data is signalling a fairly poor outlook and hardly the time for the President to be submitting austerity budgets. But in the same week that the data came out, the President did just that. The latest budget submissions from the Administration, designed to placate the mad Republicans, is an act of economic vandalism.

I am still reeling from the incompetence of the EU, the German’s who pushed the deal, the ECB and the IMF who thought they could get away with stealing ordinary deposits when they had made such a big deal early on in the crisis that guaranteeing deposits below 100k Euros was an essential part of their financial stability reforms. The mind boggles as to how stupid those decision makers are. They are so blinded by ideology that they have lost a grip on their own narrative and certainly on reality. I notice the Troika rats are pointing the blame at each other for the disastrous judgement that was exercised in the package design. And, not one Cypriot politician voted in favour of the package. The bird on both hands (stereo effect) to the Troika. And you will note I haven’t said a word about Russian oligarchs and money laundering. That is a side-show in all of this. Anyway, I needed a rest from that so turned my attention to the US labour market as I was updating the latest February 2013 labour force data and examining where things are at. I did this as I thought about the debates in the US about the budget. I think many of the politicians might have been drinking the same Kool Aid as the Troika. They have also lost a grip on reality.

As I have said on enough occasions to earn the title of being a cracked record – the solution to mass unemployment is very simple – create enough jobs to satisfy the preferences for work of those who haven’t any. I attend a lot of meetings – here, there and everywhere – and listen to officials from governments and multilateral agencies say the same thing – “unemployment is a multifaceted, complex problem”. My response is always the same. No it isn’t. That sort of language – dissembling language – is just an excuse for saying that it doesn’t suit the dominant ideology to create the necessary jobs. Another simple fact is if the non-government sector cannot create the necessary jobs – well, ladies and gentlemen – there is only one other sector. Get over it. This blog reviews the latest release by the US Bureau of Labor Statistics of its – US JOLTS database – for December 2012. This data set sends some very clear and very simple messages about the causes of mass unemployment – and they all implicate the demand-side.

Today, I read a Bloomberg article – How the IMF Can Help Reduce Unemployment – which, in part, makes out that the IMF know what they are talking about when it comes to macroeconomic policy (that was the hilarious aspect). The article also claims that the US government has pursued “expansionary fiscal policy … aggressively but growth has remained too weak”. That claim, which surfaces most days, is being used to indoctrinate people into holding the view that fiscal policy has failed and there is little the government can now do other than turn it over the market (with very substantial handouts to the powerful lobby groups – of-course – but that isn’t really government spending is it – not like helping the pitifully poor unemployed who have no income and no power)! This theme repeats like a worn out record. The reality is that the US government didn’t give fiscal policy a chance to work fully. It was clear that the stimulus packages underpinned economic growth in 2009 and 2010 and led to an increase in private confidence (backed by growth in consumption and private investment spending). But the fiscal support was withdrawn too soon as the latest national accounts data clearly shows. The point is that the US government wasn’t aggressive enough, got cold feet too soon, and has never exhausted its fiscal options.

Last week (February 1, 2013), the – US Bureau of Labor Statistics – released their latest – Employment Situation – January 2013 – which showed that total “nonfarm payroll employment increased by 157,000 in January, and the unemployment rate was essentially unchanged at 7.9 percent”. The question is whether that is a good outcome or not in the scheme of things. The answer is that it remains a fairly bleak outcome especially when we consider the data more deeply. The economy is not growing fast enough to absorb the backlog of workers who were made unemployed in the downturn. There is massive waste now being endured by the economy and disproportionately being borne by the most disadvantaged workers in that economy. It is madness for the politicians to argue about debt ceilings and the rest of the irrelevancies when there is this much waste being created.