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The bottom in employment is in sight




This chart shows two measures of the number of private sector jobs in the economy, one using a survey of known establishments, the other using a random telephone survey. Both are now saying that job losses are almost a thing of the past. The ADP survey of jobs is also in agreement, as shown in the chart below. Within one or two months we should see clear evidence of a net increase in jobs.


It may be awhile before we see any meaningful decline in the unemployment rate, however. The next chart shows the unemployment rate, which appears to have peaked. This is largely due to the fact that the labor force (those with a job and looking for a job) has declined by almost 2 million over the past 8 months (lots of discouraged workers leaving the labor force). If the economy gets back on its feet, the labor force is likely to start expanding as worker confidence returns. To keep the unemployment rate from rising we'll need to see jobs rising by 200,000 or so a month, and we aren't likely to see that until we get closer to the November elections.

High unemployment is thus going to be a major focus of the elections. With luck it will spur discussion of why the many hundreds of billions in "stimulus" spending have failed to stimulate. The correct answer, of course, is that the money should have been used to finance a cut in the tax rate on labor and capital.

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