Wolf Richter | Wolf Street | March 16, 2016
A party pooper showed up
The future for employment looks bright. The gig economy is firing on all cylinders. The FOMC, in its statement concerning its interest rate decision today, was practically gleeful about employment and where it’s headed:
A range of recent indicators, including strong job gains, points to additional strengthening of the labor market.
The Committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market indicators will continue to strengthen.
Elsewhere, employment has been cited as one of the strong points of the economy. Companies have been hiring and creating jobs by the millions since the Great Recession, bringing total “non-farm employment,” as defined by the Bureau of Labor Statistics, from a low of 129.7 million in February 2010 to 143.6 million in February 2016. That’s nearly 14 million more employed folks!
A lot of them might be part-timers, and there are some with more than one part-time job, and some have been counted twice, and many people are mired in the vast category of the “working poor.” But some sectors in some parts of the country have been booming and adding jobs that pay well, for example the “tech” sector, which includes all kinds of app-companies that are actually just trying to sell something to consumers, such as a craft-brew delivery service or Uber.
Some of these “tech” companies, from startups to broken icons like Yahoo, are running into trouble and are axing jobs, and so some unease has invaded the tech sector, but other “tech” companies are still hiring. And per our most recent employment reports, the party goes on.
But in July 2014, a party pooper showed up. That’s when total business sales in the US peaked, according to Census Bureau data. Since then, total business sales, which include US sales of all companies, not just the largest in the S&P 500, have fallen 5%, to $1.296 trillion in January, about where they’d been two years ago!
This has been confirmed by Corporate America. Revenues of S&P 500 companies, based on their earnings reports as parsed by FactSet, fell 3.6% in 2015.
Yet, despite sales cascading lower for a year-and-a-half, total non-farm employment during the same period has risen by 4.48 million jobs.