The Bureau of Labor Statistics reports that
private sector net employment grew by just 54,000 jobs in May (100,000 lower than the number required to keep up with the natural increase, the number of people coming into the jobs market in the normal course of events) and the unemployment rate was substantially unchanged at 9.1%. The private sector added just 89,000 jobs while the public sector shed jobs.
Roughly a third of that (17,000 jobs) was in healthcare. Since two-thirds of healthcare spending comes from tax dollars, that cannot be an engine of growth. The balance of the increase came primarily from professional and business services which I interpret as temps and mining. My guess on the increase in mining is that more workers have been hired as commodity prices have risen. Since commodity prices have risen, along with other assets, largely due to the Fed’s policy of quantitative easing the latest round of which is drawing to a close, it will be interesting to see if the trend persists.
Here’s an analysis of the last three years of government policy that finds that we spent $7 for every $1 of additional GDP. Since the recession ended in July of 2009 I find it terribly difficult to accept the case that the ARRA (which had spent little if anything by that point) either ended the recession or prevented it from being deeper.
Can we stop pretending that we’re not following Japan down the lost decade path? Largely by doing the same things the Japanese did.