Stagflation on the Way?

Information in the monthly Bureau of Labor Statistics’ Employment Situation for August and the National Jobs for All Network’s (NJFAN) Full Count, compiled by June Zaccone, reflect an economy that is not stagnating, but also one that shows signs of a slowdown ahead.

The unemployment rate rose by a tenth to 4.3%. By mainstream standards 4.3% is not very high, but 4.3% is the highest in four years. And NJFAN’s Full Count shows much higher, more realistic rates for the whole labor force. Our unemployment rate includes more people who need and want jobs, and the result is an unemployment rate of 10.4%. But even the official numbers on specific groups are shocking. For example, the official rate for African-Americans was 7.5%–twice the white rate of 3.7%. The unemployment rate for black teens was horrendous: 24.8%. These numbers show that we are missing a lot if we focus too much on the official national unemployment rate.

Here are examples of other things going bad. The number of added non-farm jobs in the last four months has been pathetic. According to information gathered from employers, in June the job total actually fell by 13,000, and only in July was the number of added jobs (79,000)–not so small as to be scary. By the way, low job-adds and downward adjustments of the numbers incited President Trump to fire the Commissioner of the Bureau of Labor Statistics last month. Trump’s replacement has not yet been approved, so, as far as I know, fiddling with the numbers has not yet begun. William J. Wiatrowski, who has put in many years of service at the Bureau, is Acting Commissioner. Will he survive? Last week, the BLS revealed that for the year ending in March, the economy created 911,000 fewer jobs than originally estimated.

More Negatives

New applications for unemployment benefits jumped in early September, but it is not clear if this was indicative of a broad trend, or something freakish going on in Michigan and Texas, where most of the increase was concentrated. Also the unemployment rate for recent college grads was up at 9.3%. The number of people who have been unemployed for 27 weeks or longer is the highest it’s been since late 2021. And quit rates are down; some people are “job-hugging” as they become a little more pessimistic about finding new jobs.

And very troubling are job numbers in manufacturing and the Federal government. The first is an area the president claims to be fixing. But job totals in manufacturing were down by 12,000 in August and 38,000 for the year. I’m guessing this area is not a real priority for Trump, except in the area of rhetoric and wishful thinking. Trump’s high tariffs were supposed to catalyze more domestic production, but they make it hard for American producers to get the materials they need. The president is pretty old, but he has a first-grader’s (sorry, first-graders) understanding of the economy. Keep foreign stuff out and we will make it here beginning on the day after tomorrow. New modern factories will be completed rapidly, almost magically. New mines and old ones will be brought on line, and the intricate international system of manufacturing stages and exchanges will be re-formed overnight. That is the essence of what the president promised, and when the bad numbers were released last week, he kept at it. But he admitted it may take a year to build new factories. Just a year?

As to Federal employment, jobs were down by 15,000 last month, and one expert predicts that a much larger decline will appear when federal workers who took buyouts come off the federal payroll in October. To me it is shocking that Trumpites and Muskites have contempt for many kinds of federal workers and what they do. Federal jobs are often good jobs for the employees, and the employees do good work for people. Examples include FEMA workers who help people in dire straits. Their ranks have been cut. Ditto, employees at the Social Security Administration who help people navigate the system.

More Inflation?

Prices are rising a little faster. The Consumer Price Index increased by .4% in August. That would be about 5% a year. I’d have thought that would seem high to Federal Reserve Chair, Jerome Powell, who usually worries a lot about inflation. But he seems ready to lower interest rates and stimulate economic growth and inflationary forces. Why? Is it because he is tired of Trump berating him for being slow to lower interest rates? Possibly. Or is it because Wall Street wants lower rates? Probably. Is it because he really is worried that a combination of the negative employment indicators that I have mentioned and the uncertainties and negatives that Trumpian policy inflicts on the economy will cause a recession without stimulative actions. Probably yes.

Frank Stricker writes for the National Jobs for All Network and Dollars and Sense. His monthly reports are based on the hard and valuable work of government employees at the Bureau of Labor Statistics and other government agencies, and on the labors of journalists and scholars including some who work for The New York Times, The Los Angeles Times, and the Associated Press.  In 2020 Frank published a book called American Unemployment: Past, Present, and Future (2020).  He taught history and labor studies at California State University, Dominguez Hills, for 37 years.