Austrian Business Cycle emphasizes that monetary distortions generate “clusters” of investment errors due to the manipulation of interest rates that artificially produces the appearance of profits from longer-term investments.
This clearly means that there would be a cluster of increased employments in these “higher order” and durable-goods sectors during the upturn of the cycle, and that a “cluster” of job losses would be centered in these sectors when the downturn phase of the cycle sets in.
While the media has focused on the change in the aggregate level of unemployment, looking beneath the “macro surface” at the “micro patterns” actually shows a different picture.
The greatest amount of greater unemployment over the last year (Nov. 07 – Nov. 08) has occurred in the building construction sector, an 11.4 percent decrease in jobs (a higher order sector of the economy), and automobile manufacturing and retail, 9.3 to 14.9 percent decrease in employment (a durable goods sector), and the textile industry (that has been experiencing a continuing general decline in the face of general global competition).
Most other private sectors of the economy have only shed jobs in the range of 1.8 percent over the last twelve months.
The private sector that has seen large employment growth over the last year, perhaps not surprisingly, has been energy (oil, gas, and coal), up 9.4 to 9.7 percent.
Also certainly no surprisingly, government jobs (local, state, and federal) have continued to grow during the last year between 1 and 1.6 percent. And jobs have expanded, as well, in those sectors heavily funded by government: education (up 3.6 per cent) and in health care (2.9 percent.)
The full data on these micro employment patterns are presented in a new piece that I’ve written called, “Unemployment Trends and Economic Recovery.”