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 US MacroEconomic Graphics
    Publisher: Kaiser Research Online
    Author: Copyright 2012 John A Kaiser


US Macroeconomic Statistics

The following charts are presented to provide KRO members with a quick overview of key US economic trends based on data provided by the various federal government branches.

Employment Data published by the Bureau of Labor Statistics during the first week of every month

(The left scale reflects the red bars while the right scale reflects the blue line which is always the total number of jobs in the sector. The red bars represent either the percentage change in the number of jobs from the prior month, or the net absolute change in jobs. Data for the 3 most recent months is always tentative and subject to revision during the next month's Employment Situation report. Some charts have yellow tags depicting the net jobs created or lost during the designated period. The time periods presented are 2001 through 2006 reflecting the end of the dot-com recession and the start of the Bush administration, 2007-2009 reflecting the financial recession, and 2010 onwards reflecting the so-called recovery. This applies to non-government sectors where job creation and destruction is a function of market forces. In the case of government related sectors such as healthcare, education, military and state/local government where political forces deetermine jobs, the recession period has been shorted to 2007-2008, and the current period starts with 2009 to reflect the impact the Obama administration has had on jobs in government related sectors. The data are all seasonally adjusted.)

The non-farm job report excludes farm workers and the self-employed because of the difficulty in collecting reliable data and classifying such workers who are not on a payroll. The DOL reports another estimate called the "employed civilian labor force" which includes farm workers and the self-employed. In an effort to get some sense of the size of the farm and self-employed worker force, the charts below are the difference between the employed civilian labor force and the non-farm payroll work force. The erratic nature of the results makes this an unreliable data set. However, it can be seen as a measure of the extent that workers are withdrawing from the work force, which can be seen during Q4 of 2011 when despite growth in non-farm payrolls there is a sharp drop in farm and self-employed jobs".

The following time series and pie charts are offered to convey a sense of how the breakdown of non-farm payroll jobs compares to the contribution the job sectors make to US GDP. But be forewarned that the sectors behind the two data series do not map perfectly.

Individual Job Sectors ordered by Number of Jobs

While just about all job sectors have undergone net growth since 1980, manufacturing has been in decline since 1980 when the so-called Reagan-Thatcher revolution got underway which gradually reversed decades of US industrial policy that favored domestic industrial production while stifling competition and innovation. The cultivation of free trade coupled with the end of the Cold War in 1991 accelerated globalization and the accompanying deindustrialization of the US economy that climaxed with the recession that arose from the 2008 crash of the financial system which had nourished itself with an "innovation" fueled real estate bubble.

What is interesting to note is that the relentless month over month loss of manufacturing reversed itself in January 2010 since which with one exception the manufacturing sector has witnessed job growth.

Interestingly, most of the growth is coming from the Durables super sector, in particular three industries: Primary Metals, Fabricated Metal Products, and Machinery.

The other big durable manufacturing industries, Computers and Electronics, Electrical Equipment and Applicances, and Furniture remain stagnant, as are the main non durable industries Food Manufacturing, Chemicals and Plastics.

The financial sector which benefited from the Reagan-Thatcher revolution appears to be at the end of a 3 decade run, suffering sharp losses through the recession it was instrumental in creating and from which it appears unlikely to recover. The 2 and 20 "heads I win tails you lose" formula is under attack in the current low yield interest environment and trendless equity markets which have deteriorated into trading wars among professionals who are cannibalizing themselves as the traditional retail and institutional victims withdraw their capital from a game increasingly viewed as rigged and divorced from fundamental value discovery.

The financial sector is unlikely to resume meaningful growth until the destruction of the "American Dream" it wrought, namely home ownership and the utilization of ever rising home equity as the primary source of retirement security, is turned around.

By goosing the real estate market through fraudulent methods the financial sector gave the construction sector a big boost before reality caught up and bestowed a lengthy cycle of deleveraging on the US economy that The financial sector's poison has kept new residential housing starts at the lowest level in decades. While jobs in the professional and business services sector have recovered, this has not been the case in the construction sector whose workers generally lack a university education. Construction had soaked up many of the workers during the past decades who would have worked in the manufacturing sector if the latter had not seen its jobs flow overseas.

Much of the political discourse since the election of the Obama administration has been about the need to reduce the accumulated government debt and a soaring budget deficit by making government so small "it can be drowned in a bathtub". The following charts show the government jobs history at the federal, state and local levels.

If you ignore the census related job spike in 2010 it is pretty obvious that job growth at the federal level has been pretty muted during the past decade. This chart, however, excludes the federal government jobs classified as military jobs, which has seen a jump since Obama became president. The job growth in the military sector does not explain the tripling of the annual military budget since 2001 which now has the American taxpayer footing 43% of the estimated global military budget at an astonishing level of $2,424 per capita compared to $93 per capita in China.

While political bluster has been directed at the federal level, little praise has been heaped upon local and state governments for the heavy job losses they have sustained since the start of the Obama administration. Unlike the federal government the local governments cannot pay their expenses without selling municipal bonds or generating revenues from sales and property taxes, while state governments can raise revenue from both sales and income taxes. Local and state governments have had to deal with a 30% plus drop in the value of real estate and diminished sales of goods and services as consumers worry about job security, reduce their debt, and seek jobs that do not exist. Stabilizing real estate prices and dealing with underwater mortgages are critical to averting the death spiral that is pushing local and state governments to withdraw services that benefit a common good.

One sector that has seen almost no interruption in job growth has been education, though the effort to boost the education of young people has not been rewarded by a rise in jobs for young people, many of whom, including those with university degrees, have ended up living at home. The situation is unlikely to improve as older workers fearful about their retirement choose to stay in the work force, setting up an intergenerational conflict that will haunt the boomer generation whose oldest member turned 65 in 2011.

The US federal 2011 budget was estimated at $3.9 trillion, with the largest chunk going to national defence at $768 billion (higher if you include the $141 billion allocated to veterans). By 2016 the Obama administration optimistically projects defence to have shrunk to $680 billion, while social security will have soared to from $748 billion to $952 billion.

The social security outlay is covered by past contributions, though those payroll taxes were not segregated to earn interest in the style pension funds are supposed to do. This money has been raided to pay for other expenses. The ability to deal with future social security liabilities lies in boosting the salary cap from which payroll taxes are deducted.

More problematic is the future liability associated with Medicare, a form of socialized medicine whose funding structure did not anticipate rising longevity due to new medical technology and drugs, out of control medical cost escalation, and the long term health effects of eating the food industry's over-processed offerings. All of the possible solutions to this medicare entitlement expectation are political suicide for whoever tries to implement them. The only passive solution would be a horror movie equivalent pandemic which selectively wipes out the elderly. It makes you wonder why there is pressure to publish details about inter-mammal transmissibility of the avian flu virus.

What will it be, guns or retirees, as the United States deals with its accumulated debt whose ceiling is now growing exponentially?

US Household Net Worth Data


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