Explaining Southern California's economy

November jobs: How much will Sandy affect the big number?

A jobs sign hangs above the entrance to

KAREN BLEIER/AFP/Getty Images

A jobs sign hangs above the entrance to the US Chamber of Commerce building in Washington, DC. The November jobs report will be released Friday morning and may affected by superstorm Sandy.

The federal Labor Department will release its jobs report for November bright and early Friday morning. As usual, I'll be on the dawn patrol to scrutinize the numbers. Last month, the much-watched and heavily parsed report showed the domestic economy adding 171,000 jobs in October.

That was better than expected. The labor participation rate ticked up modestly as more people began looking for work — which was enough to push the headline unemployment rate up to 7.9 percent from 7.8 percent on September.

Importantly, August and September saw their jobs totals revised up, indicating an economy performing better than previously thought.

The trend suggests that we could see a good November report, particularly as the government recently revised its estimates of U.S. economic growth in the third quarter to 2.7 percent from 2 percent.

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Why better third-quarter U.S. economic growth isn't good enough

Saul Loeb/AFP/Getty Images

A Boeing 787 Dreamliner aircraft at the company's factory in Everett, Wash. Building and selling more of these would improve weak U.S. growth.

The federal Bureau of Economic Analysis revised its estimate for third-quarter U.S. economic growth on Thursday. The news is good: the total output of the economy, its gross domestic product (GDP), moved up to 2.7 percent from an earlier estimate of 2 percent.

The upward revision isn't terribly shocking (if an economist gives you a shopping list, you can expect a revision by the time you get to the cereal aisle). But it is a nice surprise. It means that the economy grew more briskly in the third quarter – although it doesn't mean that U.S. GDP growth for the year will get its head above 2 percent total. For that, the country will need a pretty solid fourth quarter.

For the record, that's what happened last year. The fourth quarter came in at 4 percent. But the entire year averaged out to only 1.7 percent, because the other three quarters were so weak.

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October jobs preview: Friday is the last unemployment report before the election

A jobs sign hangs above the entrance to

KAREN BLEIER/AFP/Getty Images

A jobs sign hangs above the entrance to the US Chamber of Commerce building in Washington, DC. The October national payrolls report hits on Friday — that last report from the Labor Department before the election.

The Labor Department will release its October jobs report at 5:30 a.m. ET Friday morning, making good on its promise to not allow Superstorm Sandy to prevent Bureau of Labor Statistics (BLS) economists from delivering the last batch of national employment data before next Tuesday's election.

In September, job growth was weak, with only 115,000 new jobs added. But the unemployment rate — the headline number that most people who aren't economists pay attention to — fell in eye-catching fashion, to 7.8 from 8.1 percent. This set off a frenzy of conspiracy-oriented speculation that the books had somehow been cooked.

We probably don't have something similar in store for us with Friday's numbers. The ADP employment report — from a national payrolls processor — came out today and said 158,000 jobs were added in October, many at large businesses (81,000), but also quite a few at small businesses (50,000).

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Why the US economy is stuck at 2 percent growth

A year later, and the slow-growth economy that was predicted in 2011 has definitely arrived. Orange County is somewhat defying the trend, however.

The U.S. Commerce Department just released data on U.S. economic growth in the third quarter. The nation's gross domestic product (GDP) was 2 percent, a significant improvement over the second quarter's 1.3 percent.

Conveniently, I was at the Orange County Business Council's 18th annual economic forecast Thursday and heard two California State University Fullerton economists grapple with the implications of what it means to be "2 percenters" when it comes to GDP growth.

Anil Puri and Mira Farka will be familiar to readers of the DeBord Report. I've covered their presentations on several occasions and attended last year's forecast. At that time, I suggested that Puri and Farka were basically forecasting a slow-growth, high-unemployment economy for 2012 — which is pretty much what we got. I call this "stuckflation," a reference to the infamous "stagflation" of the 1970s, with the main differences being that we do not currently have the high interest rates and high inflation of the Carter era.

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Why have Americans stopped working?

Labor-Participation

Federal Reserve

The labor participation rate has declined dramatically since the Great Recession. But after the 2001 recession, it never really recovered.

Thanks to James Pethokoukis for drawing my attention to the chart above. It shows the civilian labor force participation rate from 2000-present. The labor participation rate has been a sort of "third number" when U.S. jobs data comes out each month. The other two are the headline unemployment rate — now at 8.1 percent — and the level of U.S. economic growth, measured as GDP, which came in at only 1.3 percent for the second quarter. That's troublingly low.

And what about labor participation? It's at levels not seen since the early 1980s. A couple of factors are contributing. First, unemployment is high and job creation is weak; this means that workers are out of the labor force, either drawing or having exhausted unemployment benefits. Second, people are retiring as the first wave of the Baby Boom collects its gold watch. 

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