Employment Dynamics Suggest No Recession in '07

The BLS released its quarterly Business Employment Dynamics study today for the fourth quarter of 2007, reporting that the number of job gains from opening and expanding private sector establishments was 7.65 million, and the number of job losses from closing and contracting establishments was 7.333 million, for a net job gain of 317,000 from October to December 2007.

According to the BLS, "The Business Employment Dynamics (BED) data series include gross job gains and gross job losses at the establishment level by major industry sector and for the 50 states, as well as gross job gains and gross job losses at the firm level by employer size class. Gross job gains are the sum of increases in employment from expansions at existing units and the addition of new jobs at opening units. Gross job losses are the result of contractions in employment at existing units and the loss of jobs at closing units. The difference between the number of gross jobs gained and the number of gross jobs lost is the net change in employment."

On a percentage basis, gross job gains represented 6.8% of private sector employment in the fourth quarter 2007, and exceeded job losses of 6.5%, resulting in a net .30% job gain (see chart above). The fourth quarter 0.30% job gain followed a -0.20% third quarter loss, the first loss in 16 quarters.

Note that there were four consecutive quarters of job losses during the 2001 recession, and three consecutive quarters of losses greater than -.75% in that year. The BED data for 2007 suggest a possible slowdown in the third quarter, but do not support the possibility that a recession started in 2007.

(Note: For certain quarters in 2002, the net job growth was 0%.)