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Heisenberg Is Killing The Already Fragile Economic Recovery
Like Walter White’s descent into apocalyptic madness, it is hard to imagine that things could get any more lunatic, dysfunctional, or destructive in Washington these days. The crazies in the House, under the leadership of Ted Cruz, aka Heisenberg, have taken over the asylum and are hell-bent on dragging the country along on their suicidal death wish. And the worst part of the insanity that characterizes the Republican party these days is the fact that their utterly anti-democratic, anarchic obstinance could not only destroy an already fragile economic recovery in the U.S., but also stop dead in its tracks a nascent global recovery.
For certain, the sporadic, generally anemic recovery from the Great Recession has been horribly frustrating – the slowest on record since the depression. But for the first part of 2013, it appeared as if things were finally starting to gain some traction in this 4th year of the recovery, what Jim Paulsen, Chief Investment Strategist for Wells Capital Management, calls the ‘Gear’ year. As Paulsen pointed out in a presentation I heard last week, and as he articulates in his September commentary on the economy, most signs are pointing to a strengthening economy. All of them, that is, with the monumentally significant exception of the U.S. labor market.
In the first quarter of 2013, the U.S. economy added a net gain of 622,000 jobs. While one could rightly argue about the suspect quality of those jobs (part-time, low-paying, etc.), not to mention the fact that 200,000 jobs a month barely keeps pace with population growth and that unemployment has only fallen because of a declining labor force participation rate, it was nevertheless becoming evident that the labor market was actually beginning to improve to some degree.
Unfortunately, countervailing forces are applying the brakes to the recovery, with the result that only 547,000 jobs were added in Q2. And if our predictions for September hold true, we are forecasting a net gain of only 383,000 jobs in Q3. Most disheartening of all, LinkUp’s data from September, in which new job openings in our job search engine declined by 9% and total jobs were flat for the month, point to horrible numbers in October that will start Q4 on an even worse pace. Perhaps we’re destined to never make it out of Paulsen’s ‘Stall Speed.’
As background, LinkUp is the largest and fastest growing job search engine on the web. Totally unique to the industry, we are the only job search engine that only indexes jobs found on company websites. As of today, we have 1.75 million real jobs from 40,000 real company websites. What that means is that we have the largest search engine of the highest quality job listings on the web. Every job on LinkUp is guaranteed to be current because the index is updated every night, and there are no duplicate listings because we only index jobs from a single source – the employer’s website itself. And most importantly, we have completely eliminated the garbage that pollutes job boards and job board aggregators. That garbage includes things like old, expired listings, job scams, work-at-home scams, lead gen garbage, fraud, identity theft, money mule positions – all the things that have really given the recruitment advertising industry a black eye. We’ve eliminated every single one of those things, and as a result, we deliver to job seekers the best user experience and the highest quality job site on the web today. Period. And not only do we deliver the strongest value proposition to job seekers and employers, the unique quality of our index gives us the cleanest data set in the market to forecast job growth given the undeniable fact that the best indicator of a future job being added to the economy is a job listing being posted to an employer’s own company website. LinkUp is essentially the blue meth of job sites on the web.
In September, new job listings on LinkUp fell by 9% and total job listings were flat from August. New job openings fell in 45 states during the month, while total job openings fell in 21 states, rose in 20, and were flat in 9 states.
Jobs by category present a nearly identical picture, with new job listings falling 9% and total job listings remaining flat from August. New job openings fell in 29 of the 31 categories tracked by LinkUp, while total jobs fell in 23 of the 31 categories.
The dismal figures for September continue a trend of a job market that has not only slowed down, but looks as if it might actually come to a complete stop and even start reversing. Although there was a brief, positive blip in August, the numbers since Q2 have gotten steadily worse every month.
That tracks almost perfectly to what we’ve seen from the Burea of Labor Statistics over the past 5 months. If you align our data from LinkUp with the BLS data the following month (the job listings on our site take an average of roughly 30 days to translate into a job being filled), the graph shows the degree to which our data is correlated to BLS data the following month.
Normally, I’d say that the slight increase of .8% in the blended average of new and total job listings that we saw on LinkUp in August would point to a net gain of roughly 185,000 in September which is, interestingly enough, exactly what the consensus forecast is at the moment. But in looking at what has happened over the past 6 months or so, I am paying much more attention to the rate of change from July to September which I believe will mirror what happened between March and June of this year. Now, as then, the month over month growth has been slowing down to the point where it turned negative in September at a blended rate of -5.4%. And if the trend for the next few months holds true to what we saw earlier this year, we will see a net gain of only 110,000 jobs in September and a miserable 40,000 jobs in October. Even if the jobs numbers for September come in around consensus (and who knows when we’ll see them), they will most certainly drop precipitously in October given the data from LinkUp for September.
That truly would be as horrible as anything seen in Breaking Bad. And while I should admit that I’m only through season 4 and have no idea what happens in season 5 or how the story ends, I’m pretty certain that, just like the current abomination that is Washington these days and what we can look forward to with the looming debt limit debacle, it won’t be pretty.