Misinformation?ByRaymond D. Matkowsky
I have been dismayed by what was once considered to be good jobs and economic reports are now considered to be terrible estimates. It should be said some estimates do come in below pre-reporting consensus. This does not make for a “bad” report. It should also be said that the economy is not physics and does not follow definitive rules. This is usually why economists have such a poor track record when making predictions. There are so many moving parts and individuals’ choices that all estimates are nothing more than just individual guesses.
These are not just U.S. problems. The United Kingdom (UK) and European countries (EU) are also affected. The UK’s situation is further complicated by Brexit. The UK is depended on euro zone workers to fill needed positions.
According to government figures, the UK’s present employment sits at 75.3%. The pre-pandemic level was 76.5%.
Employment Statistics – Good or Bad?
There has been a recent tendency to call anything that comes in below estimates as “bad.” For the record, in the past employment gains exceeding 150,000 a month in the U.S. was consider “good.” This figure was based on a population growth attributed to 300 to 350 million people. This also approximates the population of the United States. 150,000 new jobs per month are considered sufficient to meet this population growth. In September, 2021, the United States created 194,000 new jobs according to the Bureau of Labor Statistics (BLS). This is 34,000 jobs more than is needed to maintain the status quo. Yet, September is considered a poor month for job growth.
Several pundits are calling both August and September as weak employment growth months. I already mentioned that September’s growth was 194,000. However, these same pundits were expecting a growth of 500,000. The revised August growth was 366,000 jobs. However, many economists were forecasting 720,000 new jobs. What are they basing their predictions on? When in recent history has that much growth occurred? The predictions were wildly outrageous.
At Data Stats, we looked at job growth during the summer months of 2021. The summer months can be a slow period for hiring. We compared this information with the same period in 2019. We did not use 2020 data since we were in the middle of the pandemic. During the summer (June, July, August, and September) of 2019, 1.20 million jobs were created. During the same period in 2021, 2.22 million jobs were created. That does not seem as “poor” job growth.
The job market is tight for two reasons. First of all, there are at least three million more jobs listed than there are unemployed workers. Many of these workers will not have the qualifications necessary to fill these vacancies. Many do not live where these vacancies are and for various reasons cannot or will not move.
Secondly, Covid-19 is still with us. Many do not want to take the chance of infecting their families by going back into an office environment. This is especially true because of “break-through” cases and unmasked, unvaccinated coworkers.
Just as demand for worker rise, many aging workers are retiring. Border controls and new immigration policies have also affected the number of workers available.
As is true in most cases, a portion of the unemployed will never return to their previous jobs. Their skills will become outdated. Employers are also finding that they can operate at pre-pandemic levels with fewer workers.
Economic Outlook
I do not understand why the media in the United States thinks the U.S. economy is in the dumps. All the reports from the Bureau of Labor and the Bureau of Economic Analysis (BEA) show an advancing economy.
According to the BEA, GDP increased at a rate of 6.7%. In the fourth quarter of 2019, the economy was US$21.7 trillion. In the second quarter of 2021 the economy was US$22.74 trillion. This is a 4.65% increase over pre-pandemic levels. During the pandemic, the U.S. economy contracted by about 30%. Contractions occurred worldwide. Nation’s trade is interconnected.
The UK’s GDP for 2021 is expected to grow 7.2% and 5.5% in 2022. The EU nations are expected to reach a pre-pandemic GDP by the end of the year. This is three months ahead of schedule.
Conclusions
It appears to me that many of the so-called experts have unrealistic expectations for both the employment levels and economic activity. By historic measures the U.S. and much of the world is doing great. It may not last. Historically, the U.S. economy grew at approximately 2% rate. Forecasters expect the U.S. GDP to slow down to a 3-4% rate in the fourth quarter of 2021. This is still much better than it has been over the last fifty years if this prediction holds true. If it doesn’t, then we may be back to normal. This would not be a “bad” situation.
To me it appears that the predictions made previously were not rooted in reality. Do some pundits have an agenda?
Do you have any comments or other suggestions, please share them with your fellow readers. Email me at rdm@datastats.com.
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