The US jobs market remains very fragile. That seems to be the key message from last week's monthly job statistics. And, of course, if jobs are hard to get, then consumer spending and GDP will remain weak.
The chart shows the monthly jobs trend since 2008:
• The number of jobs dived to 134.4m by the end of 2008 (blue line)
• They fell further in 2009 (yellow) to 129.3m - a level last seen in 1999
• They recovered to 130.3m in 2010 (purple) and 132.2m in 2011 (green)
• Now 2012 (red) has seen the number rise to 133.3m
As the blog discussed back in February, the US has never before seen a period where job growth had not occurred over a 10 year period.
The reason for the change is the short-termism of financial markets. They want to see higher earnings every quarter. So companies continue to restucture in order to protect their share prices. But, of course, people who are unemployed, or worried about their jobs, spend less.
Thus there is a real danger of a vicious circle developing. If companies continue to cut jobs, then US consumers will spend less. And as consumption is 70% of US GDP, its growth rate will continue to suffer as well.