University of Central Florida economist Sean Snaith has this to say about the current labor market recovery: It’s a fraud.
That’s because there’s more to assessing economic recovery than just monthly payroll job gains and a declining unemployment rate, he said.
“You need to look at the number of jobs being created in the context of the potential number of workers in the U.S. economy,” Snaith said. “The gap between payroll employment and the Congressional Budget Office estimates of the potential number of workers in the U.S. economy is pretty darn scary right now.”
If payroll job growth were to persist at the average level of the past three jobs reports and increase at just 148,000 jobs per month, it would take until December 2021 for employment to reach its CBO estimated potential, he added.
In his 2013 third-quarter U.S. forecast, Snaith explains that by just focusing on the unemployment rate, many analysts erroneously are predicting a fast recovery that’s simply not there yet.
That’s why it’s not surprising that consumers are holding back on spending, which in the past has brought the economy out of the doldrums, he said.
Snaith was only one of four national economists to predict that the federal Reserve Bank would continue to funnel billions of dollars into the market on a daily basis as a way to help stimulate the economy and not begin tapering that process until 2014.
“Will the Federal Reserve’s exit be more like Ginger Rogers gliding across the dance floor or Miley Cyrus awkwardly twerking remains to be seen,” Snaith said. “But given the phony labor-market recovery it could be some time before the Fed hits the dance floor.”