The employment release confirms a deceleration in employment, presaging deceleration in the other macro indicators. Government employment is down, and not solely because of the winding-down of the decennial Census. Rather, state and local government employment is declining, and is now 6.8% below NBER peak level.

Figure 1: Nonfarm payroll employment (black), civilian employment (red), both in 000’s, s.a.. Source: BLS via FRED.

Civilian employment actually increased m/m in October, but that series is particularly volatile. Focusing on the nonfarm payroll number, m/m growth (not annualized, in logs) has fallen from 7% to 6% to 3% to 2%, from July to October.

Figure 2: Government employment (blue), government employment ex.-Census temporary workers (brown), both in 000’s, s.a. Source: BLS via FRED, BLS, and author’s calculations. 

Figure 3: Government employment at state and local levels (teal), in 000’s, s.a. Source: BLS via FRED, and author’s calculations. 

In the wake of the 2007-09 recession, restrained government spending at state and local levels accounted for a lot of the slow recovery. We are at risk of repeating that sorry story, unless the Federal government provides further fiscal aid to the states and localities.