Friday, October 8, 2010

US Employment & Business Profits

From a Toronto Dominion banks' economics report, the level of employment in the US is stuck at a level last seen in the late 1970s:

Worse, while corporate profits have rebounded, employment hasn't come back:

In earlier recessions employment bounced back with corporate profits. But in the 2001 recession employment lagged a bit. But this Great Recession is in a category all its own. Employment is stymied. It just isn't budging!

The politicians in the US should be talking about the above facts. Instead they are doing the blame game, finger pointing, the right is demanding more "tax cuts", and the left is eerily impotent. Sure it passed some legislation, but you can't eat health care. Health care doesn't put a roof over your head. The priorities of Obama make no sense. Worse, when he did get a stimulus bill passed it was about one quarter the size needed! And he has persisted in claiming it was "perfect" despite all the evidence over the past one and three-quarters years. That's a long to time refuse to face up to reality.

The contrast between Canada and the US is extraordinary. Here is a bit from a report by the Bank of Montreal economics group:
I’ve said it before, and I’ll say it again: If this is what U.S. stimulus looks like, I’d hate to see restraint. The 95,000 drop in payroll employment in September was again entirely due to a 159,000 decline in the public sector, and census workers accounted for only about half the loss. Over the past year, government payrolls have dropped 1.1%, and are in fact below levels prevailing before Obama’s much-ballyhooed stimulus package began. While federal government payrolls are up slightly in that period, employment declines at the state and local level have swamped those modest gains. The drop in government employment stands in absolute contrast to Canada, where public administration payrolls are up 5.2% y/y. Combined with construction jobs, which are up 5.8% y/y in Canada but down 3.6% y/y stateside, these two sectors alone account for more than half the difference in the total employment growth between the two countries—Canadian employment is now up 2.1% from a year ago, versus a meagre 0.3% U.S. advance. The fact is that the U.S. private sector is quietly churning out modest job growth, rising another 64,000 in September, but the gains are barely strong enough to offset the severe headwinds from local governments.

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