The US Bureau of Labor Statistics reported last week that 353,000 jobs were added in January, which would appear to be good news. But the most recent Gallup survey found that 45% of U.S. adults think the US economy is poor, 29% think the economy is fair, while only 27% think it’s good. Maybe their pessimism is based on personal experience, or perhaps it’s influenced by the steady drumbeat of layoff announcements by major corporations such as Amazon, Google and Ford.
Another possible reason is the bad news buried in the details of the report. For example, Rosenberg Research calculated the total number of hours worked in January based on the BLS report and found that the hours worked decreased despite the increase in the number of jobs.
The BLS report also stated that the average number of hours worked per week in January fell to 34.1 hours from 34.3 hours in December and 34.4 hours in November. The average hours worked per week has been trending downward for several months, but the January average hours worked was the lowest since March 2020 at the height of the COVID shutdown.
There are a number of factors causing the decline in hours worked. Many companies have cut hours rather than lay off workers that they would have difficulty replacing in today’s tight job market. Actually that’s a hopeful sign that companies expect the economy to improve in the near future.
Another factor is the growth of part-time jobs. These positions increase the number of jobs, but the employees work fewer than 30 hours per week, which reduces the overall average number of hours worked per week. Many of the new part-time jobholders are people taking second jobs to make ends meet, and these dual jobholders are double-counted in the number of jobs.
Actually there are two employment reports released by the BLS. The one that receives the most attention is the Current Employment Statistics survey which is based on analysis of payroll reports made by businesses to the U.S. government. The BLS also conducts the Current Population Survey, commonly called the household survey, which is based on telephone and in-person interviews of 60,000 adults. Economists generally prefer the CES because the payroll numbers can be verified while the household survey is an estimate based on a sample. And the household survey tends to undercount people who recently found new jobs.
The January household survey indicated a 31,000 decline in jobs. The decrease consisted of a loss of 63,000 full-time jobs partially offset by 32,000 additional part-time jobs and gigs like food delivery and Uber drivers. More people are working part-time jobs because they are unable to find suitable full-time employment, or they are taking a second job to pay their bills. There is always some divergence between the CES and the CPS, but lately the differences have become more pronounced. The question is which one provides the most accurate picture of the economy?
This region will able to ride out an economic slowdown because the local economy is largely based on stable employers in agriculture, education and government. There are three institutions of higher education in the area, and the U.S. Coast Guard base is a large employer. In addition, many workers commute to Virginia to work in shipyards.
Also notice the number of new houses under construction. That means that people are moving into the area. But everyone is negatively affected to some degree by an economic slowdown, so put your financial house in order. Save money for a rainy day, and watch your budget.
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