02 09 11 August 2011 NonFarm Payrolls

Lots of ink has already been spilled over this dismal number. I thought it might be interesting to take a longer term view of what has been going on. The chart below shows a rolling 12 month average of non-seasonally adjusted employment data from BLS indexed to July 1973=100 and with the actual or estimated US resident population growth for comparison.

I was somewhat shocked to see that the Federal government is no larger than it was in 1973! However, the chart clearly shows the big problem is out of control state and local employment growth. There is no reason for state and local employment to grow faster than the actual rate of population growth and in fact we would argue the rate should be far lower than a 1:1 ratio. Bad news indeed - just a question of when the municipal bankruptcies begin. click to enlarge the chart

The shift in population around year 2000 is because the Census bureau did not revise their previous estimates of montly populations between 1990 and 2000 thus there is a discontinuity.

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