Apparently Friday’s US jobs numbers disappointed the experts. The consensus forecast was that 250k jobs would have been created in March – yet only half the forecast actually appeared. Even more tellingly, hiring estimates for January/February were revised down. Separate data also showed weak growth in wages and spending.
None of this was really a surprise, however. There was plenty of evidence that US employment had simply seen a temporary boost from the shale gas bubble.
My 8 January post was even headlined “US jobs growth at risk with end of the shale gas advantage“, and was followed a week later by a post titled “US economic recovery at risk as energy bubble bursts“. All the necessary data was easily available in the public domain, if anyone wanted to look.
But as during the subprime era, the consensus simply didn’t want to know. It was much easier to pretend to believe that somehow printing money could change the fundamentals of the US jobs market. But at the risk of repeating myself, the key data continues to be found in charts 16 and 17 of the Bureau of Labor Statistics monthly report, as shown above:
- US employment rates depend on race (chart 16) and educational level (chart 17)
- The jobless rate for Blacks (10.1%) is double that for Whites (4.7%) and Asians (3.1%), and 50% higher for Hispanics (6.8%)
- The rate for those without a high school diploma (8.6%) is 3x that for those with a bachelor’s degree (2.5%)
- The rate for those with a high school diploma (5%) is still double that of those with a degree
The issue is rather, as I noted back in September, that politicians prefer to ignore these structural problems in the economy. It is much easier to instead simply tweet about the need for more stimulus, and then deliver a sound-bite on the subject for the evening news bulletin.
The news is also embarrassing for the US Federal Reserve. They have spent nearly 2 years preparing to celebrate the success of their stimulus policies, since the ‘taper tantrum’ – when then Fed Chairman Ben Bernanke suggested in May 2013 the Fed would soon be able to “normalise” its policies.
But now that oil prices are returning to their historical relationship to natural gas, in terms of energy value, the bubble is ending. And unfortunately, it is taking with it the highly paid jobs that the bubble had created.