The May employment report largely indicated the labor market was unchanged last month. Relatively small job losses and an uptick in the unemployment rate are never good signs. However, noisy monthly data does have its ups and downs. So far, one bad month does not have us too concerned. Should job losses mount, then we’d be very concerned of course.
Encouragingly, the following are true. Job growth over the year is still healthy at 3 percent or so. Initial claims for unemployment insurance remain very low. Withholding out of Oregonian paychecks continues to grow. The unemployment rate remains down in the range that one could consider full employment prior to the Great Recession. Of course, we know not all is healthy and our Total Employment Gap remains a few percentage points away from something approaching normal.
However, the Oregon economy and labor market continue to improve considerably over the past couple of years. This most recent data point is not good, but so far it’s just one data point in typically noisy data. Put this all together, and a quick summary of the May jobs report probably looks like this: ¯\_(ツ)_/¯. With that being said, it did get me wondering about how often it happens that the economy loses jobs during an expansion.
The answer is in about once every year, or once every 12 months on average. For this calculation I focuses only on the employment changes from their lowest point in the business cycle to their highest point. These are not based on official NBER dates.
Losses were a bit more frequent in the 1990s expansion, however many of those losses were in the late 90s following the Asian Financial Crisis which hit Oregon hard. If one focuses on the early and mid-90s, the percentage falls to 8.8% (6 monthly losses out of 68 total months) which is essentially the same as the rates seen during the housing boom and today.