Popular Economics Weekly
The best picture we have of current and future job trends is the Labor Department’s JOLTS report (i.e., Job Openings and Labor Turnover Survey). Calculated Risk’s colorful graph shows Job Openings (yellow line) hasn’t yet dropped below 7 million openings in August, though it is falling.
This is a given while there were 5.8 million Hires (dark blue line), so there are still 1.2 million job vacancies searching for employees. It gives a good picture of the huge labor turnover rate in the $20 trillion U.S. economy.
It is also why it is so difficult to predict the next recession, or depression. I maintain we need another New Deal that boosts public spending on health care, education, infrastructure, R&D, and the environment, if we want to continue the longest economic recovery ever.
How low must the number of Job Openings fall—maybe 1-2 million?—for anyone to begin to worry that a lack of available jobs might begin to hurt growth? The yellow line of the Job Openings tally dipped to some 2.4 million openings in 2009 at the bottom of the Great Recession.
The red and blue columns show Layoff, Discharges and other, and Quits (light blue column), which are basically flat, which means we are at the top of this business cycle. The only hint of a downward trend in job formation is the downward curve in the number of Job Openings (yellow line).
We really must look for any downward trend in retail sales, and consumer spending to tell us the direction of economic growth. Retail sales dropped 0.3 percent last month as households slashed spending on building materials, online purchases and especially automobiles, the first spending decline since February.
What else should we look for? Nobel prize-winning behavioral economist Robert Shiller believes consumer spending is holding up in this longest economic upturn since WWII because of the Trump presidency. The fact that he touts himself as a successful businessman creates a general sense of optimism about jobs and the economy.
“Trump has for decades touted a glamorous narrative of his life by “surrounding himself with apparently adoring beautiful women, and maintaining the appearance of vast influence,” Shiller said in a recent op-ed in Britain’s the Guardian newspaper. “The end of confidence in Trump’s narrative is likely to be associated with a recession,” Shiller warned.
So such optimism can be a two-edged sword. While Trump’s affluent lifestyle has been “a resounding inspiration to many consumers and investors … a severe recession may be his undoing,” Shiller warned.
What else could cause such an outcome? The Great Recession that ended in June 2009 could have been a second Great Depression; but for the Obama administration’s passage of the $835 billion American Reinvestment and Recovery Act emergency aid package that gave states as well as Washington enough dollars to stop the losses.
But, alas, the religiously right wing Tea Party that resisted almost all public spending took over the house in 2010, sharply cutting back further government programs. The focus turned to austerity measures that hurt the Midwest and southern states depending on government largesse to support them, after the loss of all those manufacturing jobs.
The result was the discontent we see today. We still need another New Deal that will invest in our future generations, rather than a “glamorous narrative” to sustain this recovery, in other words.
Harlan Green © 2019
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