In another sign of weakness for the job market, the total number of employed persons in the United States fell, month over month, in October. That’s the third time in the last seven months this total has fallen, dropping to approximately 158 million.
According to new employment data released by the Bureau of Labor Statistics on Friday, the current population survey shows 328,000 fewer people were employed in October than in September, seasonally adjusted.
This continues a seven-month trend in which the total number of employed persons has moved sideways. From March 2022 to October, total employed persons has only increased by 150,000 people, rising from about 158.45 million to 158.6 million. With October’s drop, this also puts total employment in October below the peak of 158.8 million in February 2020. In other words, the household survey shows there are fewer employed people now than before the Covid Panic.
Moreover, the household survey also showed that the total number of unemployed workers increased by approximately 250,000 people from September to October. That’s an 8-month high.
The decline in total employed was driven by a fall in full-time workers. The survey shows that in October full-time workers dropped by 433,000 while part-time workers increased by 164,000.
Yet, the headlines in the business press today told us that “U.S. payrolls grew by 261,000 October” and that “total employment” is now 800,000 jobs above the February 2020 peak.
Those numbers come from the “establishment survey” which differs from the household survey in that the establishment survey measures jobs. The household survey measures workers. Historically, the two numbers often track together, but there is a sizable gap between the two numbers in recent months. That is, since January, total jobs has grown considerably—showing an increase of 3.5 million jobs. Yet over that same time, the household survey has shown an increase of only 1.4 million employed persons. In other words, the two surveys together suggest much more growth in jobs than actual workers with jobs.
One conclusion we can draw here is that more people are working second jobs to make ends meet. This would make sense given what other information we have about the state of household finances at the moment.
For example, according to the bureau of economic analysis, disposable income is lower now than it was before the Covid Panic, coming in at $15,130. That sum was $15,232 during February of 2020. Meanwhile, the personal savings rate in September fell to 3.1 percent. That’s the second-lowest level since 2007. Credit card debt, in contrast, reached new highs in September, and is now well above its previous 2020 peak.
Workers and consumers are likely spending down whatever savings they have because wages, in spite of what the allegedly “robust” establishment-survey jobs numbers say, are not keeping up with price inflation. Since April 2021, CPI inflation has repeatedly outpaced growth in average hourly earnings, year-over-year. In September, wages grew by 5.12 percent, but the CPI grew by 8.2 percent (year over year). The latest jobs numbers show these hourly earnings are up by 4.86, but price inflation is going to have to come down a very long way for real wage growth to materialize again.
All of this combines to suggest that households are facing some real struggles in terms of dealing with rising expenses, and the need for more income. For example, CNBC reported last month that more Americans are living paycheck to paycheck:
As rising prices continue to outpace wage gains, families are finding less cushion in their monthly budget.
As of September, 63% of Americans were living paycheck to paycheck, according to a recent LendingClub report — near the 64% historic high hit in March. A year ago, the number of adults who felt strained was closer to 57%. …
“Being employed is no longer enough for the everyday American,” [Anuj] Nayar said. “Wage growth has been inadequate, leaving more consumers than ever with little to nothing left over after managing monthly expenses.
A recent study from Moody’s analytics also concludes that the average American household paid $445 more for basic goods and services in September, compared to September of last year.
Nor is the news likely to get much better. There is growing evidence that the United States—if not already in recession—is headed toward one. For one, the first two quarters of 2022 showed negative growth. The third quarter showed some growth, but that was largely driven by a one-time narrowing in the trade deficit and by government spending. Even with reports of third-quarter growth, CNBC admits that a recession is coming with economist Paul Ashworth concluding “Exports will soon fade and domestic demand is getting crushed under the weight of higher interest rates.”
The other big factor pointing toward recession is the yield curve, which has now inverted, pointing to a coming recession. In fact, inversions in the yield curve have a perfect record of predicting recessions in recent decades. As of last week, the spread between the 10-year and the 3-month Treasurys is now negative. The same thing happened in May of 2019, July of 2006, and July of 2000. There can be a lag of six months or more in these cases, but the result has been the same: recession.
The Biden Administration and the Federal Reserve both continue to cling to jobs data as evidence that the economy is “strong.” As we’ve seen, though, most of the employment data actually points to stagnation or even losses in terms of employed persons. So, the the-economy-is-great crowd clings to the small slice of the employment data that is the establishment survey suggesting that all is well. If there is an upside to this, it’s that the job-growth-is-strong narrative has provided some cover to the Federal Reserve which is far, far behind the curve on ending its inflationary easy-money policies. Thanks to the Fed’s refusal to reverse course on its ultra-low interest rate policy until the economy was already clearly headed toward 40-year highs in price inflation, the Fed now faces a stagflationary crisis if it cannot get price inflation down before a recession becomes obvious. After all, as the jobs data becomes worse, this will increasingly trigger an avalanche of political pressure to “pivot” and start “stimulating” the economy once again.
There’s no telling at this point if the Fed has the stomach for actually bringing price inflation down and truly abandoning its 13-year long era of ultra-easy money and so-called unconventional monetary policy. It’s far more likely that the Fed will return to suppressing interest rates just as soon as it can claim any sort of “victory” over price inflation, no matter how minor. This aborted retreat from the Fed’s ongoing inflationary experiments would likely send the US toward something at least as bad as 1970’s-style stagflation.
About the Author
Ryan McMaken (@ryanmcmaken) is a senior editor at the Mises Institute. Send him your article submissions for the Mises Wire and Power and Market, but read article guidelines first. Ryan has a bachelor’s degree in economics and a master’s degree in public policy and international relations from the University of Colorado. He was a housing economist for the State of Colorado. He is the author of Commie Cowboys: The Bourgeoisie and the Nation-State in the Western Genre.
Image by www_slon_pics from Pixabay. Article cross-posted from Mises.
Two Storms, One Harvest
Every food crisis in living memory has been a one-shock event. The 2008 price spike was a commodity bubble. The 2020 shortages were a logistics failure. The 2022 grain scare was a war on one exporter’s ports. Each time, the system bent, adjusted, and recovered, and each time the experts assured us afterward that global markets are simply too big and too diversified to fail.
What nobody in Washington seems eager to discuss is that 2026 is shaping up to be something the modern food system has never actually faced. Two independent shocks, one climatic and one geopolitical, are converging on the same harvest cycle at the same time. Not sequentially. Simultaneously.
Start with the weather. The Pacific Ocean is currently building toward what forecasters now openly call a record event. NOAA’s Climate Prediction Center puts the odds of at least a strong El Niño near 88 percent, with roughly two in three odds it reaches “very strong” status, the tier reserved for perhaps three or four events in the entire satellite era. Every major global model now projects a median peak in Super El Niño territory, and most of them project it exceeding the 2015-16 event, which until now held the modern record. Sea surface anomalies were already brushing the super threshold in mid-July, months before these events normally peak. The atmosphere has already shifted into El Niño mode, and the event is forecast to crest in late fall and early winter.
This is not about “climate change.” It’s about the standard cycles of weather, and the cycle we’re currently in is one that has likely devastated societies in the past. We’re better prepared as a society today, but not all Americans are equally prepared.
Serious households have started doing the quiet math on their own. Grocery bills tell part of the story, and the forecast maps tell the rest, which is why long-term food storage has moved from fringe hobby to mainstream line item in the family budget, with established suppliers like Heaven’s Harvest seeing demand from people who five years ago would have rolled their eyes at the idea. That instinct is not paranoia. It is pattern recognition, and the pattern is worth walking through carefully.
Editor’s Note: Heaven’s Harvest IS a sponsor, but the warnings of this article are real and would be written even if we didn’t have a survival food sponsor. With that said, those who take advantage of what they offer can use promo code “Patriot” for 15% off.
The Fertilizer Clock Is Already Running
While the Pacific warms, the second shock has been unfolding in the Strait of Hormuz. The conflict with Iran turned the world’s most important energy chokepoint into a contested waterway, and the consequences reach far beyond the gas pump. Roughly a third of global fertilizer trade moves through Hormuz, and the disruption sent urea prices up 86 percent year over year by March, with a 53 percent jump in a single month.
The World Bank projects energy prices rising about 24 percent in 2026 and fertilizer about 31 percent. By its own accounting, fertilizer prices ran 35 percent higher in the first five months of this year than the same period last year.
Here is the mechanism the nightly news will not explain. Fertilizer is not a grocery item. It is a time-delayed input. The nitrogen a farmer in Iowa or Punjab could not afford to apply this spring does not show up as a problem this spring. It shows up as a thinner harvest six to twelve months later.
The World Bank’s own food security brief concedes that the effects of reduced applications earlier this season “are likely to become visible only later in harvest outcomes.” Translate that from institutional language into plain English and it means this. The damage is already done, it is already in the ground, and we are simply waiting for it to arrive on the shelf.
Now check the calendar. Six to twelve months from the spring planting season lands us squarely in late 2026 and early 2027. Which is precisely when the strongest El Niño in the instrumental record is forecast to peak, bringing its signature droughts to Southeast Asia, Australia, southern Africa, northern Brazil, and South Asia, the very regions that grow the world’s rice, sugar, and oilseeds.
The World Bank warns openly that a strong El Niño “could disrupt multiple crop belts simultaneously” on top of the conflict-driven input costs. Their baseline projection assumes the Middle East disruptions ease by autumn. What in the last two years of Middle East history suggests that assumption is safe?
The System Has No Slack Left
The comfortable answer is that global markets always adjust. But adjustment requires slack, and the slack is gone. Global cereal production is expected to decline from last year’s records even before El Niño does its work. The UN World Food Programme, hardly a den of right-wing preppers, is calling this the most significant disruption to its supply chains since Covid and the invasion of Ukraine, and its supply chain director put the stakes bluntly.
Today’s supply chain challenges are tomorrow’s hunger crisis.
There is also a political dimension that markets cannot price. When food gets scarce, governments do not behave like economists. They behave like politicians. Export bans, hoarding mandates, and panic buying at the national level turned the modest rice shortfall of 2008 into a global crisis, and analysts are already warning that import-dependent nations are the first dominoes.
The 2015-16 Super El Niño, a far weaker event than what is now forecast, threw tens of millions into food stress across Africa and Asia. This one is projected to be stronger, and it arrives with fertilizer already rationed by price and shipping lanes already contested by missiles.
What Joseph Knew
Scripture does not treat preparation for lean years as faithlessness. It treats it as wisdom delivered in advance to those willing to act on it.
Behold, there come seven years of great plenty throughout all the land of Egypt: And there shall arise after them seven years of famine; and all the plenty shall be forgotten in the land of Egypt.
Joseph did not respond to that warning with a hashtag or a committee. He stored grain during the years of abundance, and when the famine came, Egypt stood while its neighbors begged. The lesson is not that famine is certain. It is that the time to prepare is precisely when preparation still looks optional.
Nobody who filled a pantry in a year of plenty has ever regretted it, and nobody standing in an empty aisle has ever been glad he waited for certainty.
None of this calls for panic, and panic is the enemy of sound judgment anyway. It calls for the same unglamorous prudence our grandparents considered ordinary. Keep some cash margin, know your local growers, and put real food in deep storage while it is cheap and available, because the entire arc of this story is that cheap and available is a closing window.
Families looking for a straightforward place to start can visit Heaven’s Harvest and use promo code Patriot for 15 percent off long-term storable food. The forecasts may yet soften, the strait may yet reopen, and we should pray they do. But hope is a fine thing to hold and a foolish thing to eat.
