In fact, I
suspect weakness in the construction sector is holding back a lot of
other categories, too. For example, with more home sales and associated
mortgages, I suspect the finance sector would have done much better.
Retail sales of furniture and other home-related goods are also hurt by
the slow housing market.
Job Growth Falls Short of Past Recoveries, but Not by as Much as You Might Suspect
The job growth, while a lot slower than we all wish, really
isn't that far off the pace of the last three recoveries. The recoveries
from 1982, 1990, and 2001 recessions averaged 1.9% employment growth on
an annualized basis for the full length of the recovery. This time
around, despite horrendous job losses during the recession, employment
has grown just 1.4% over the last year. That shortfall of .5% on a base
of about 131 million jobs equals about 668,000 jobs that we normally
would have gotten back, or an additional 56,000 jobs per month. That
overall analysis appears at the very bottom of the table below. Above
that, the table displays how many jobs short the U.S. economy is by
sector. Surprisingly, government is the worst offender, while a number
of manufacturing-related sectors have added more jobs than typical
(those without a negative sign).
Lack of Government Job Growth Holds Back the Recovery
Auto Sales Continue to Drive Spending
April auto data continued to show strong results with
seasonally adjusted, annual shipment rates remaining above 14 million
units for the fourth month in a row. During the recession U.S. auto
sales got as low as a 9 million rate, compared with a typical recovery
peak of around 18 million units.
Estimates for all of 2012 now center around 14.5 million units,
versus 12.8 million units in 2011. The 2012 estimate is up from a
consensus estimate of just 13.6 million units in January, just four
short months ago.
Many economists, including me, were at least a little concerned about
April auto sales given that warm weather provided a big boost to sales
results earlier in the year. April did not have that same benefit as
weather returned to more normal conditions. While not quite as strong as
February, April was the second-best month of 2012 and above any single
month of 2011, or for that matter, any other month of the recovery
dating from 2009.
Auto Industry Posts Second-Best Monthly Auto Sales of the Recovery
The boom/bust auto cycle was a huge contributor to both the recession
and to the recovery. To rebuild inventory, production is moving ahead
even faster than sales. Auto production is up about 20% year to
date. Strength in the auto sector was enough to affect the economy in a
big way, contributing 1.1% of the 2.2% increase in GDP during the first
quarter of 2012.
The one negative side effect of the strong auto number is that it
tends to take away from sales in other categories, especially
services. Shopping for a car can take time, and that takes away from
time to do shopping in regular stores or to use services. Furthermore,
down payment money and higher auto payments cut into consumer
budgets. In other words, auto shopping limits both the time and the
money to be spent elsewhere. Over the last five quarters, the quarters
with very strong auto sales also showed relatively weak growth in
services. On the other hand, when auto sales were off sharply due to
tsunami-related effects (quarter two and quarter three of 2011) services
thrived. In April we saw the same trend as auto sales were strong
again, and the ISM services index released on Thursday made a surprise
decline even as the manufacturing index from the same source was
remarkably strong on Monday (probably also due to the auto industry).
Manufacturing Looked a Little Better in April
Manufacturing data has been a little soft lately, especially
outside the United States.