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The Employment Report Portrays a Dismal Outlook For the Economy
The US Bureau of Labor Statistics released employment data for October, 2010 which received considerable media attention and a televised comment by President Barack Obama. They cited the report’s data that showed total private nonfarm employment increased by 159,000 over September, 2010. Unfortunately, no one in the popular media, to my knowledge, bothered to report the composition of the increase.
There was a net increase of only five thousand (+5,000) employees in the production of goods. There was an increase of seven thousand (+7,000) in mining and five thousand (+5,000) in construction, but a reduction of seven thousand (-7,000) in manufacturing, leaving a net increase of only five thousand (5,000) employees in the production of goods and minerals.
Of the remaining 154,000 jobs created, 27,900 were in retail and 7,300 in wholesale trade, 46,000 in professional and business services (including 34,900 in temporary help services), 53,000 in education and health services, 25,000 in other services, a reduction of five thousand ( -5,000) in leisure and hospitality, and two thousand one-hundred (-2,100) in financial and information services. There was no growth in employment in transportation and warehousing.
From an economic development or economic recovery point of view, the only ones capable of make a contribution to growth were those employed in the production of investment goods that can be used in increasing the production of goods and services for domestic and foreign markets. To get jobs, jobs, jobs we need investment, investment, investment. Unfortunately, the U.S. is not an attractive country in which to invest. The chronic and persistent and growing trade deficits indicate that producing abroad and importing the products produced is much more profitable that producing here. We have proposed tariffs on imports from countries we know are using mercantilist tactics--scalable tariffs-- that rise when the trade deficits rise and fall when the trade deficits fall. But that is another story.
The latest numbers on GDP indicate that exports did increase but imports increased even more. The negative number for net exports was $-536 billion on an annualized basis in the second quarter of 2010, which represents the value added of about 5 million workers. The numbers published by the BLS respecting the change in employment between September, 2010 and October, 2010 are recession numbers not recovery numbers. They pale in comparison to the number of jobs lost as a result of the trade deficits which probably increased during the third quarter.
Should we expect a double dip in the recession? The data is suggestive that we shall experience a double dip but there are many additional factors that are involved. Suffice it to say that the data does not rule out a double dip.
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