Qualitative Adjustment? Economist Update
While many of you continue your July 4th celebrations this week, Valuant has curated a list of recent articles with the greatest reader interest. As a prelude, Retired Senior Economist of the Atlanta Federal Reserve Tom Cunningham shares his thoughts on last week’s jobs report:
Last Thursday’s Employment Situation report from the Bureau of Labor statistics came in surprisingly strong. 4.8 million jobs were added in June, versus a little over 3 million expected. The headline unemployment rate, U3, fell to 11.1% when the expectation was a slight decline to something just over 12%. The broader measure of labor underutilization, U6, declined from 21.2% in May to 18.0%. Labor force participation rose, although it has not fully recovered from its earlier downward spike, and the issue of potentially misclassified workers diminished significantly.
We are still 14.7 million jobs below where we were in February. Almost all sectors saw employment increase with the exception of mining and nursing care facilities. There were strong gains in manufacturing, retail, health care (other than nursing care facilities), and miscellaneous services.
Both the average workweek and average wages fell slightly, but that is largely a function of the large employment gains that reduced overtime hours, and, as the workers originally not let go by firms were making higher wages, the return of the more average workers brought the average wage down. In both cases, the declines should not necessarily be interpreted as weakness.
This morning (July 9th), the Department of Labor reported 1.3 million initial claims for unemployment for the previous week. This was slightly below the 1.4 million expected and continues the trend of declining churn in the labor market.
Make no mistake, we are still in considerable distress. But it seems that a lot of the noise associated with the initial disruption is dissipating.
- Tom Cunningham, Ph. D., Retired Senior Economist, Federal Reserve Bank of Atlanta