Sectors To Watch: Public Sector Jobs Growth

| July 11, 2012 | 0 Comments

Unless you’re living under a rock, you’ve noticed election year politics are starting to heat up.  And the central issue for the majority of voters is jobs.

As you know, the unemployment rate has been stuck at a stubbornly high level in the aftermath of the great recession.  According to Gallup’s unemployment data, 8% of all Americans who want to work can’t find a job.

Here’s what’s even more distressing to me…

According to Gallup, 17.5% of all Americans are underemployed.  This number looks at people who are unemployed and those working part time but looking for full-time work.

Obviously, there are a lot of people who are in need of better paying jobs.

Here’s the thing…

Right now private sector payrolls are expanding.  However, unlike many recoveries before, public sector jobs are disappearing.

Take a look at this chart that’s been floating around the internet the past few days.  It compares private (gold line), state (green), and local (black) job growth during President Obama’s first term with that of President Bush.

As you can see, private payroll job growth has rebounded dramatically under President Obama.  However, headwinds from shrinking state and local payrolls have kept the unemployment rate high.

These state and local jobs are teachers, police officers, firemen, and other civil servants.  And there have been over 600,000 of them who have lost their jobs since Obama took office.

Look, it’s no secret state and local tax receipts fall in hard economic times.  And in order to keep their budgets balanced, these governments have to cut expenses.

But in past recessions, the Federal Government has funneled money to state and local agencies to prevent massive layoffs of our civil servants.  However, under the Republican led Congress, that money never came.

Simply put, Tea Party Republicans have sacrificed a more robust jobs recovery in the name of austerity.

Here’s the thing…

To those that are unemployed or looking for a full time job, it doesn’t matter who’s signing the check.  The money still spends the same no matter if it came from the government or a private business.

Simply put, if the US economy continues to shed public sector jobs, unemployment will remain at a higher level than it would be with those jobs.  

Keep that in mind as you hear politicians blame one another for the high rate of unemployment this election year.

***Editor’s Note***  Just as an FYI, my good friend and colleague Gordon Lewis is releasing a new penny stock in his Penny Stock All-Stars portfolio tomorrow. He tells me this stock is a tiny technical services company that should heat-up as the housing recovery rolls on.  Click here for access to the portfolio before he releases the name of this stock.

Good Investing,

Corey Williams

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Category: Technical Analysis

About the Author ()

Corey Williams is the editor of Sector ETF Trader, an investment advisory service focused on profiting from ETFs and the economic cycle. Under Corey’s leadership, the Sector ETF Trader has become one of the most popular and successful ETF advisories around. In addition to his groundbreaking service, Corey is the lead contributor to ETF Trading Research, where he shares his insights about ETFs and financial markets on a daily basis. He’s also a regular contributor to the Dynamic Wealth Report and the editor of one the hottest option trading services around – Elite Option Trader.

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