Nonfarm payrolls climbed 132,000 in November, offering further confirmation that the U.S. economy, fueled by fiscal and monetary stimulus, has entered its sixth year of expansion.
Indeed, employment is the broadest economic indicator, and payrolls have surged by 6.2 million (or 4.8 percent) since reaching a trough in August 2003. And that date is no coincidence. It was right about then that the Bush tax cuts on investment were signed into law.
Real gross domestic product, which has grown for 20 consecutive quarters, is yet more evidence that this expansion has legs. So is industrial production, which measures the output of the nation’s factories, mines, and utilities. Production is 16 percent above the trough it reached in November 2001, the month the last recession ended.
But let’s not kid ourselves. These bullish statistics won’t stop the perpetual bears from keeping up the drumbeat that a recession is near. More recently, the bears have fixated on interest rates to the exclusion of other indicators. Yes, an inverted yield curve is an important development since, historically speaking, recessions have appeared when short rates have risen above long rates. But responsible forecasts of economic turning points must take into consideration the broad range of economic indicators: Yield curve data are helpful, but so are production and employment trends.
For instance, last Friday’s employment report shows that private industry sectors continue to create new jobs at a very decent clip. There’s nothing recessionary about that.
The economy’s private service-providing supersector — which accounts for two-thirds of total U.S. nonfarm employment — has added 5 million new jobs since the August 2003 trough. The trade, transportation, and utilities supersector has created 885,000 new jobs in this period. This includes 288,100 in wholesale trade; 330,500 in retail trade; and 280,000 transportation and warehousing positions.
Financial services have added 368,000 new jobs. Education and health services have added 1.3 million new jobs. Leisure and hospitality have added 1 million new positions.
Professional and business services have added an impressive 1.5 million new positions. This includes accounting and bookkeeping services, architectural and engineering services, computer systems design, management and technical consulting services, and management of private companies and enterprises.
The biggest weakness in the national employment picture is the manufacturing private industry sector, which peaked eight years ago. But importantly, while overall private employment expands, total federal employment continues to decline. It peaked under George H.W. Bush and dropped under both Bill Clinton and George W. Bush.
Here’s one more fact you’re not likely to hear from the perpetual-bear camp: In September, this expansion surpassed the postwar average of 57 months, and is now the fourth longest of the eleven postwar expansions.
– Greg Kaza is executive director of the Arkansas Policy Foundation (www.reformarkansas.org).