Employment: Weak Jobs Suggest Weak Consumer, Recession Persists

Nonfarm employment fell 598,000 with declines in all private sectors except for education & health. Meanwhile, government employment continues to rise. The breadth of job losses, illustrated below by the diffusion index, now surpasses the prior two recessions. The unemployment rate rose to 7.6 percent. Aggregate hours declined again.

Employment Declines Signal Broad Consumer Weakness

  • Job declines were widespread with losses in all private sectors with gains only in health & education. Over the last three months we have lost 590,000 jobs on average.
  • Only the government sector is adding jobs at this point with most of the jobs being added by the federal sector.
  • Hours worked have declined and this suggests GDP declines.

Unemployment Up, Output Down

  • Over the last year, the breadth of industries adding jobs has dropped sharply suggesting broad weakness in consumer spending and dismal consumer confidence.
  • Rising unemployment rates have been driven by a loss of jobs and are consistent with weakness in consumer spending and the drop in consumer sentiment.