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By New_Deal_democrat March 20, 2014 9:08 am
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The US economic soft patch may be over, but significant job losses in coming months are a significant possibility

It appears that the soft patch the economy hit in December and January may have ended.  Of the four primary series measuring production (blue in the graph below), real sales (green), jobs (red), and real income (orange), all but jobs declined in both December and January:

 
 
But as the graph shows, industrial production, jobs, and real sales have all risen in February. (February personal income hasn't been reported yet).
 
Note, however, that real retail sales are still about 1% below their November peak.  As I wrote several weeks ago, this appears to be due not just to the unusually severe winter, but also due to 2,000,000 people being cut off from an average of $1200 a month extended unemployment benefits.  Since they tend to spend the entire sum for living expenses, simple multiplication tells us that is about a -$2.4 Billion hit to consumer spending, or roughly -1.5%.
 
Unfortunately, real retail sales lead employment.  Generally, if you take the YoY% growth in real retail sales and divide by two, that will be somewhere near the YoY% change in payrolls about 3-6 month later as shown in this graph:
 
Note, of course, as in 2010, this doesn't always occur.  But as a general rule I expect the decline in retail sales to filter through to a YoY deceleration in employment.  Several months of large job losses absolutely cannot be ruled out.
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