Only Two Points Meaningful in Payrolls——Both Look Downward

There are only two numbers in the monthly payroll report that have any meaning, and both came up quite short yet again. The first, as always, is the labor force itself as that population estimate more than any other indicates the relative station of the US economy. There has never been any time in recorded economic history where economic growth is satisfactory, let alone booming, and labor participation isn’t rising. As per usual, that continued to be the case, assuming the growing economy, in August.

The labor force was down another 41k last month and remains 115k below January. Since October 2012, the labor force has only added 1.57 million, of which 1.05 million was in January 2015 alone (a likely statistic discontinuity). That means an increase of just 523k where jobs are purported to have been solid and even highly expansionary. In the greater sense of economic advance, even the Establishment Survey’s addition of 7.7 million jobs falls short when compared to the 7.1 million increase in the civilian non-institutional population. None of these figures add up to much actual economic gain, which is the greater sense of the trajectory since the global economy slowed precipitously in 2012.

The second meaningful figure in the payroll report is just how much the Establishment Survey has itself decelerated. To my view, it is absolutely clear the upward bias in the “trend-cycle” component of the estimate which only suggests that the slowing of payroll gains in 2015 is “real” and thus highly understated to the degree at which it may be eroding. That is the view from the Household Survey, too, which more than suggests whatever the actual absolute change the direction is not in dispute.

Where the 6-month average for the Establishment Survey is down to 205k (with revisions to prior months)

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