Hire someone already! We’re very tired

The United States Department of Labor reported three significant economic statistics this morning…

1.  Weekly jobless claims were up 20,000 to 457,000.  The four-week moving average rose 2,000 to 456,000.

2.  Worker productivity rose to 1.9% in the third quarter.

3.  The government’s estimate for October GDP growth was 2.0%.

Analysis:  Let’s take these statistics in turn…

1.  That initial weekly jobless claims have basically been flat for the last month, up 2,000, is not surprising.  Everyone knows about the “game of chicken” that I have been describing ad nausea since the spring of this year.  Businesses are not hiring.  The unemployment situation remains bleak.  It’s very hard out there to find quality work.  And this is the single most important economic statistic on the planet week in and week out.

2.  Productivity is up.  What this means is that businesses are finally starting to increase their revenues.  Remember me saying that eventually businesses were going to have to make their profit numbers, not just through cutting expenses, but through actual sales growth.  For productivity to be up means that businesses are finally increasing their sales since productivity is output (i.e. revenues) per worker.

What this also means is that new workers are not being hired at the same pace as sales are actually growing.  This is not a sustainable situation.  Eventually workers will be overworked and productivity will fall.  So if sales growth remains even mildly even then this means that there will be a growth in the number of jobs out there.  Yea!

If you have read my “best of the blog” section then you know that I have a post in there about what is “real economic growth.”  Productivity is a very rough estimate of that real economic growth.  Fake economic growth happens when money is cheap (i.e. interest rates are too low) and growth in the economy is simply inflationary (too much money chasing too few a number of goods).  So compare productivity up 1.9% to estimated GDP growth in October of…

3.  GDP up 2.0% is paltry.  This is not rapid enough economic growth to improve the hiring situation out there anytime soon.  But a silver-lining is that the economy is growing roughly in step with productivity.  That means there isn’t a lot of BS inflationary, debt financed type of growth taking place.  For the long-term health of the economy this is a very, very, very, very good thing.  Also, compare the GDP growth to the growth in retail sales I reported earlier today on the blog, of up 1.6%.

Importance grade:

1. 10; the most important number on the planet right now.  Unfortunately, there still is no growth in employment.  It is stuck in a vicious circle.

2. 8; productivity growth is wonderful.  Unfortunately, it is also a preliminary estimate of worker exhaustion.  Hopefully U.S. businesses will begin hiring new employees soon.

3. 6; that GDP estimate is very preliminary and not at all reliable as an estimate for what the U.S. economy is going to do in the fourth quarter.

Taken together, these statistics affirm what we already know about the U.S. economy: it is growing very slowly in this post-recessionary environment.  But the growth is real.

Jason