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1.3 million jobs and counting

Today's headlines are focused on the disappointing number of private sector jobs created (41K vs. expectations of 180K) in May. But that's only one side—the establishment survey side—of the story. The other side is the 178K new private sector jobs that were uncovered by the household survey. Growth in private sector jobs, according to the household survey, has totaled 1.33 million so far this year, but only 495K according to the establishment survey.

As the chart above suggests, the household survey can and does tend to lead the establishment survey, particularly in the first years of a recovery, so it is not unreasonable to conclude from the conflicting data coming from these two surveys that things are looking better than most people who watch the nightly news realize.

The unemployment rate (which is calculated based on the household survey) is still hovering at relatively high levels, however. That's because there have been lots of new entrants to the labor force that are now looking for work. It's going to be awhile—most likely some time after the November elections—before there is any meaningful decline in the unemployment rate.

In other news, average weekly hours rose a bit more than expected, and have now retraced all the decline of last year. At the current rate of improvement, however, we won't see a full recovery in hours worked until the end of this year.

My take on all this is that the recovery is progressing just about as expected. We're not in a full-blown, V-shaped recovery, but we are seeing the ingredients of a moderate recovery, in which the economy grows somewhere around 3-4% per year. We would be in much better shape if it weren't for the massive amount of "stimulus" spending, since that has only sucked over a trillion dollars out of the economy (to finance the increased deficit) that could have been used for more productive purposes.

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