August Economic Advisory Note

At best, the just-released July employment report confirmed the tepidity of the current recovery and at worst it heightened fears of a “double-dip recession”. Private non-farm jobs edged up by 71 thousand over the month – about half the expected amount. Since the recovery got underway at the beginning of this year, private non-farm jobs in the US have grown by an average of 90,000 per month – far below the pace that is typical of recent economic recoveries.

Although modest, employment gains are continuing in some key sectors such as healthcare, manufacturing and transportation. These three industries have accounted for about half of the 630 thousand jobs that have been generated by the recovery since the beginning of the year.

The disparity in job gains – both from one industry to another and from one state to another -- highlights the dilemma commercial lines carriers face in dealing with current soft pricing conditions. The rising tide of an economic recovery typically floats all boats by boosting insurable exposures. This time around, its benefits will be experienced only those carriers’ whose boats are moored in the harbors provided by certain state and industry segments of the broader commercial lines marketplace.