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U.S. Added 175,000 Jobs in May; Jobless Rate Rises to 7.6%

New York Times: June 7, 2013

American employers added 175,000 jobs in May, almost exactly the average monthly job growth over the last year, the Labor Department reported Friday, while the unemployment rate ticked up to 7.6 percent from 7.5 percent in April....

At the current pace of job growth, it would take nearly five years to get the economy back to the low unemployment rate it enjoyed when the recession officially began in December 2007....

In a New York Times/CBS News poll conducted May 31 to June 4, nearly half of respondents – 46 percent — rated the job market in their area as very or fairly good, with a third saying that they think their local job markets will improve over the next year. The same poll found that 39 percent of respondents said that the condition of the economy was very or fairly good...

There are a lot of jobs being added in low-paying sectors like retail and hospitality....
[end quote]

The charts from the Federal Reserve show that employment growth is growing and the unemployment rate is falling on trend. The Civilian Labor Force Participation Rate is still falling in its trend established during the recession. People who have dropped out of the labor force and have not actively applied for a job in the past month are counted in the Civilian Labor Force Participation Rate.

Initial unemployment claims are falling, showing lower job losses. The number of long-term unemployed is dropping, though 4.4 million people have been unemployed longer than 27 weeks, by far the largest since World War 2. (Remember that these are active job seekers. Those who have given up are counted in the Participation Rate, which has been falling.)

Disposable Personal Income: Per capita: Current dollars fell a little, but that may be noise in a generally rising trend. Personal Current Transfer Receipts are rising (these are benefits such as Social Security, Medicare, pensions, unemployment insurance, food stamps, etc.)

Real Disposable Personal Income: Per capita has been flat since 2010. Real personal income excluding current transfer receipts (earned and investment income) has been rising but dropped slightly in 1Q2013 -- this may be noise, or may be a trend change due to the sequester or growth in lower-paying jobs.

Value of Manufacturers' New Orders for All Manufacturing Industries has been flat (with a lot of noise) since 2010. Industrial Production: Manufacturing has been steadily climbing (with slight pauses) since 2009.

The Leading Index for the United States has also been stable, with some noise. Like previous post-crisis years, 2013 had a brief early spike which fell back to the baseline.

Like the Beige Book report, these numbers support the hypothesis that the economy is slowly, steadily growing on trend. This isn't exciting news because it is exactly the same news as the past 3 years.

The sequestration will have an effect, since government spending will reduce fiscal stimulus.

So far, the civilian economy is adding enough jobs to overcome the drag from the sequestration. People spend their income, increasing GDP.

The shift of spending from government to civilian employees is gradually improving the economy. As business improves, more taxes are collected. The combination of higher tax collections and lower spending are reducing the federal deficit without the fiscal shock of a sudden large reduction in government spending.

This slow, steady improvement has been the plan to climb out of the 2008-9 financial crisis without upsetting the applecart. It appears to be working. Jobs and the economy are all steadily on trend.


All Employees: Total nonfarm

Civilian Unemployment Rate

Total unemployed, plus all marginally attached workers plus total employed part time for economic reasons

Median Duration of Unemployment
Average (Mean) Duration of Unemployment

Civilian Labor Force Participation Rate

Initial Unemployment Claims

Civilians Unemployed for 27 Weeks and Over

Disposable Personal Income: Per capita: Current dollars

Real Disposable Personal Income: Per capita

Personal Current Transfer Receipts

Real personal income excluding current transfer receipts

Value of Manufacturers' New Orders for All Manufacturing Industries

Industrial Production: Manufacturing

Leading Index for the United States


Net Government Saving
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