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Employment Growth Proof of Recovery

May 10, 2010

By Bill Conerly,
Conerly Consulting
, Businomics,

The NewsHour with Jim Lehrer asked for some comments on this morning’s employment report.  Here’s what I gave them; you can read other comments on the NewsHour website:

The economy is on the mend.  We have a long way to go before employment is back to normal, but the evidence shows progress.  The production-based indicators, such as gross domestic product and industrial production have clearly bounced back.

We’re probably just one quarter away from reaching our old peak level of real GDP.  The employment-based indicators have been slower to rebound, but now show gains.  Total non-farm employment (the standard measure) has grown in each of the last four months, with strong gains the last two months.  Although Census workers inflated the increases, even without them the gains are substantial.

Manufacturing, an important bellwether, has added workers in the last four months.  Temporary help agency employment has also expanded, which is often a leading indicator for the entire economy.

The rise of the unemployment rate is even a positive sign.  The number of employed people rose, but the number of people looking for work increased even more.  To be counted toward the unemployment rate, a jobless person must have been looking for work in the past four weeks.  Otherwise, that jobless person is considered “not in the labor force.”  The increase in the number of people looking for work is a sign that the jobless are less discouraged about job prospects than they had been a few months ago.

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Discuss this article

Steven Plunk May 10, 2010

Your analysis fails to take into account regional differences and government spending as part of employment and GDP picture. This is a Potemkin recovery and will likely result in a double dip recession. Throw in the additional debt problems and there’s little light at the end of this tunnel. Take a more in depth look at those employment figures and you will see the rate is unchanged and the long term unemployed is still problematic. I wonder how many of those new jobs are census takers.

John Fairplay May 10, 2010

This is an odd analysis from Dr. Conerly. More than half the job growth in the past 4 months has been government jobs, and most of those are “temporary” Census jobs. It is further not possible for someone to “start looking again” and suddenly receive unemployment benefits that have previously been stopped. Once you drop off the unemployment roles because you stop looking for work, you can’t get back on again unless you are hired for a new job and work some minimum number of months and then lose that job.

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