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Comstock Funds
Charlie Minter
7 April 2004
Although the 308,000 increase in March payroll employment may seem like a lot compared to what we’ve been getting and what most have been expecting, it actually falls far short of what we should be seeing at this stage of a recovery. Here’s what we found in examining the last seven economic recoveries.
In the first six of these recoveries beginning with May 1954 employment rose by an average of 7.7 percent over the first 28 months with a high of 9.1 percent and a low of 5.5 percent. This includes one cycle that peaked in 24 months with a gain of 7.4 percent. Even in the recovery that started in March 1991, employment climbed 2.2% over the first 28 months. For all of the seven recoveries, employment rose by an average of 6.9 percent over 28 months. So let’s not hear any more about employment being a lagging indicator. It is not, and even if it were, 28 months is surely enough time to catch up.
In the current recovery employment has actually declined 0.2 percent in the first 28 months that includes the March number and the revisions that were released on Friday. If employment had increased by 6.9 percent, the average of the past recoveries, March payrolls would have come to about 139.9 million rather than the 130.5 million actually reported. This means that there are now 9.4 million fewer jobs than there should be at this point in the cycle, and that we needed an average increase of 322,000 jobs for each of the past 28 months to equal the average job growth of the last seven expansions.
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