This backs the data we saw yesterday from railroads as the Temp Help Index rose to levels not seen since 2007 and has been in a steady uptrend all year. This is a highly bullish reading and very positive for employment for the remainder of the year. For those inclined to blame Obamacare for this, please read this post where I address that fallacy.
The bottom line here is the economy continues to grind forward. It is doing so in the face of significant headwinds from the shrinkage of gov’t employment around the nation on both a Federal and State level. As that downsizing eases and eventually stops, the underlying strength of the private economy will become more apparent to people. There is some interesting data on this.
We see here that State government employment seems to have taken a leg down after briefly stabilizing while Local government employment has risen. My bet would be this is simply due to States shifting certain tasks to localities meaning the net here is that State/Local employment is now simply stabilized. If we look at the chart below it would seem as though that is what is happening.
Now the Federal gov’t is still shedding jobs while the private sector continues to add to them. Now, this is the proverbial “double edged sword” for many people. Most would agree that gov’t is too large and payrolls and redundancies need to be reduced. If that is true, then what we are seeing is a healthy dynamic. It also means we cannot simply compare “this recovery to past ones” in terms of aggregate job growth because the reduction in Federal jobs will be both a drag on overall employment numbers and then economic demand in the overall economy (fewer gov’t workers purchase fewer goods/services).
The good news is that this dynamic appears to be running its course and even just a flat lining of the number will allow the private sector strength to become more apparent.
Now, before those who are skeptical try to mischaracterize everything i just said let me say this: I do think the economy could be much stronger. there are many reasons for its current “un-robustness”, Obamacare creating uncertainty, tax policy (or lack thereof) creating uncertainty, gov’ts fiscal status creating uncertainty etc etc etc…..
But I would argue that the private economy, despite all the above headwinds is actually doing pretty well. Solving any of the above issues could cause it to really take off……..
Of course, after nearly 6 years years of the same arguments, I guess one ought not be overly optimistic. Either way, the private economy is chugging along at a healthier pace than I think most would give it credit for…