Another “unexpected” economic report

Payrolls Jun10.pngEvery day, the word “unexpected” appears next to a downbeat economic report. The latest example was yesterday’s US employment report, where the consensus forecast was for a jobs gain of 180k. Yet it has been clear for months that this has been a ‘jobless recovery’, and so the actual figure of only 41k new jobs should not have been a real surprise.

This chart above, from thechartstore, shows US payrolls from 1939, and highlights how:

• Payroll growth was very steady until 2001, through wars and recessions
• The recovery from the 2001 downturn was followed by only a slow, and relatively small gain in payrolls
• The current downturn has taken payrolls back below the 2001 level
• 1 in 6 Americans is currently unemployed according to the U6 measure

Equally worrying is that the average jobless person is now unemployed for 34 weeks. This is the highest level seen since records began in 1950. The previous high was just 22 weeks, in 1984.

70% of US GDP comes from consumer spending, and it is a key driver for global chemical demand. Unemployed people don’t have much money to spend, whilst fear of unemployment makes others more cautious.

Sadly, nothing is likely to change for the better, whilst policymakers and analysts continue to fool themselves that every piece of bad news is “unexpected”.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

One Response to Another “unexpected” economic report

  1. LALIT JAIN 9 June, 2010 at 11:43 am #

    i think USA should stop exporting technology instead they should use technology and start their own factories of all types and start exporting to asian markets , which are truly driving the demand and biggest consumers .

    this wud help create jobs in american factories and well help the growth of gdp

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