Jobs Trend Downward

From Chart of the Day:

Today, the Labor Department reported that nonfarm payrolls increased by 431,000 in May. It is worth noting that a large majority of last month's gain in payrolls was due to the hiring of temporary workers for the 2010 census. Today's chart provides some perspective on the US job market. Note how the number of jobs steadily increased from 1961 to 2001 (top chart). During the last economic recovery, however, job growth was unable to get back up to its long-term trend (first time since 1961). More recently, nonfarm payrolls have pulled away from its 40-year trend (1961-2001) by a record percentage (bottom chart). In fact, the number of US jobs is currently at level first reached in early 2000.


Notice the drop in job growth at the beginning of the winter phase of the long wave cycle aka the Kondratieff cycle. The job growth rate slows in 2001 and does not recover.

The central bank (Federal Reserve) gooses the economy by dropping interest rates artificially at this point and fakes a recovery for nearly 9 years. Now, reality is setting in and the deflationary recession is making a delayed appearance.

We can continue to expect to see price declines in this phase of the long wave cycle. Houses will drop in value as mortgages are defaulted on and consumer earnings drop as wages decline. At some point we will see additional Sovereign defaults as governments become increasingly insolvent and bond auction failures.