Yes, the nonfarm payroll clocked in at 138.5 million jobs and thereby retraced for the first time the point at which it stood 77 months ago in December 2007. This predictably elicited another “milestone of progressâ€Â squeal from the mainstream media.
So you have to wonder. Did these people skip history class? Do they understand the vital idea of “contextâ€? Are they so mesmerized by paint-by-the-numbers agit prop from Wall Street and Washington that they have come to mindlessly embrace the notion that any number that is better than the last “printâ€Â is all that it takes—regardless of composition, quality or longer-term trend?
Thus, consider the ancient days of the Reagan era. Back then there were actually 15.0 million new jobs by the time that 77 months had elapsed after the June 1982 bottom. And these were honest-to-goodness new jobs that had never before existed, not born again jobs of the type that CNBC has made a “jobs Friday†fetish out of ever since the Great Recession was officially declared over in June 2009.
So if you want to try a little “context†absurdity recall this. So far we have created a trifling 100k “new†jobs since the last cyclical peak. During the equivalent 77 months in the Reagan era the US economy actually generated 150 times more jobs!
And, no, that wasn’t due to a demographic windfall of new employable bodies. During that 77 month period the civilian population age 16 and over increased by 8% or 13.3 million. This means that 113% of the growth in the pool of employable adults was converted into job-holders.
This time around, the pool of working age adults grew by quite respectable 14.4 million; and that amounted to a not shabby gain of 6% from December 2007. But self-evidently, during the 77 months since then virtually zero percent of the labor pool growth was converted into job holders. So the yawning difference between the Reagan era and now is not a surfeit of demography, but a dearth of job creation.
And this has nothing to do with Ronald Reagan hagiography—since the jobs gains of the 1980s were purchased in part with grotesque peacetime deficits of a magnitude never seen previously. Nor would they be seen again until the Bush-Obama era showed what real fiscal profligacy looks like.
But the larger point is that each cycle since the 1980s has generated net new jobs, albeit at a steadily declining rate. The truth of the matter is that we have now reached the point where no new payroll jobs have appeared for 77 months—which is to say, over the entire span of a historically ordinary peak-to-peak business cycle. Rather than a cause for celebration, therefore, the Friday jobs print ought to stand out as a wake-up call.
Surely, the CNBC revelers do not believe the business cycle has been abolished. And if not, why should it be assumed to have a indefinite remaining lease on life when everywhere around the world governments are at the end of their fiscal rope and central banks have painted themselves into an impossible monetary corner of ZIRP and QE. Is it not probable that something will go bump-in-the-night owing to these vast experiments in fiscal and monetary largesse?
