Illusion vs. Reality in the Employment Market
Posted on June 6th, 2010
This blog has consistently maintained that employment is a key indicator of the future direction of bank rates. Savings account rates, money market rates, and CD rates are likely to make little upward progress until stronger employment numbers indicate that the economic recovery is taking hold, and becoming self-sustaining.
The difficulty, sometimes, is telling illusion from reality in the employment market. The following are some examples:
Illusion: Over the past three months, more people have quit their jobs than were laid off. This follows a fifteen-month period in which the reverse was true, and is said to be a sign that the employment market is strengthening.
Reality: Layoffs may be slowing, but until new hiring picks up (see below for more on that) you can’t really say the job market is strengthening — it’s more like it isn’t deteriorating as quickly. As for the idea that more people quitting their jobs is a sign of confidence in the job market, it could just as easily be an indication of how many people had to take unsatisfactory or unsuitable jobs in the recession.
Illusion: The economy added 431,000 jobs in May, the strongest month in over a decade.
Reality: That figure included 411,000 temporary census jobs. It also included 31,000 jobs with temporary help services. Back those out and it looks as though permanent jobs actually declined.
Illusion: The economy has created a healthy figure of 982,000 jobs so far in 2010.
Reality: That figure includes those 411,000 census jobs. Back those out, and the economy has restored less than a tenth of the 8+ million jobs that were lost in the recession.
Bank depositors should continue looking for signs of strength in the employment market, but the reality is they just aren’t there yet.
Similar Posts:
- Jobs Report Could Be Good Medicine for Bank Rates
- Jobless rate inches higher, but payroll cuts where less-than-expected in August
- Bank Rates Need More Than Wishful Thinking to Rise
- Making Sense of Unemployment Numbers
- Percent of Americans in Poverty Highest in 15 Years
Tags: Employment Market, Market
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