Rather than engage in long commentary, I thought a set of pictures would be sufficient to convey the deteriorating macroeconomic situation, at least as reflected in the labor market.
First, the decline from peak in nonfarm payroll employment at 2007M12 (1.911 million), and how revisions have continued to be in a negative direction. Whereas in the past, commentators could say that the job loss figures were not consistent with recession, I think that is no longer a plausible assertion.
Figure 1: Nonfarm payroll employment, seasonally adjusted, various releases. NBER defined recession dates shaded gray (assuming recession has not ended by 2008M12). Bloomberg consensus for November in dark blue square. Source: BLS, employment situation, various releases, via St. Louis Fed FRED II, Bloomberg.
Second, note that the decline in hours of employment has been much more drastic than the decline in employment (2.9% vs. 1.4%, in log terms).
Figure 2: Log Nonfarm payroll employment, seasonally adjusted (blue) and log aggregate weekly hours index, seasonally adjusted (red), normalized to 2007M12 peak. NBER defined recession dates shaded gray (assuming recession has not ended by 2008M12). Source: BLS, employment situation, December 5, 2008, via St. Louis Fed FRED II.
Are these figures an artifact of the establishment survey? I don’t think so. See Figure 3:
Figure 3: Log nonfarm payroll employment (blue), log civilian employment (red) and log civilian employment adjusted to conform to NFP concept (green). NBER defined recession dates shaded gray (assuming recession has not ended by 2008M12). Sources: BLS via FRED II, and BLS, and NBER.
The household survey figures indicate a comparable decline (1.3% vs. 1.4% for NFP). The BLS research series — the smoothed household series adjusted to conform to the payroll concept — evidences a smaller decline (0.7%) relative to 2007M12, but has been declining faster since its peak in 2008M04 (1.5%).
Finally, we know the losses are broad based (see Haver today). One interesting aspect is that manufacturing employment has been noticeably declining since mid-2006, despite the surge in exports in 2007.
Figure 4: Manufacturing employment, seasonally adjusted. NBER defined recession dates shaded gray (assuming recession has not ended by 2008M12). Source: BLS, employment situation via St. Louis Fed FRED II.
It is hard to glean many positives from these data. Using Okun’s law, output is likely to have taken a hit in November. Below is e-forecasting’s take on the situation for November.
Figure 5: GDP (light blue bars), GDP from e-forecasting, 12/5 (blue), and from Macroeconomic Advisers 11/18 (red) in Ch.2000$, SAAR. NBER defined recession dates shaded gray (assuming recession has not ended by 2008M12). Source: BEA, GDP release of 25 November, e-forecasting 12/5 and Macroeconomic Advisers [xls] 11/18 release.
For more, see Real Time Economics.
Update, 12/6, 10:10am Pacific: A graphic comparing NFP net losses, from NYT today.
[Update, 12/8, 10:30pm Pacific: In response to Marcus Nunes‘s allegation that I have distorted the trend/cycle pattern in manufacturing employment by truncating the start date to 2000. Here is a longer term picture:
Figure 6: Year on year growth rate of manufacturing employment (blue) and two year growth rate (annualized) of manufacturing employment (red), calculated as log differences. Source: BLS via FRED II and author’s calculations.