Glimmers of Hope for EmploymentThe unemployment data is mixed, but previously reported glimmers of hope are still there this month. A brief summary of the mixed data would include (with details to follow): Positive Factors 1. The official unemployment rate has improved from 10.1% in October to 9.7% in January. This is not a significantly significant change due to +/- 300,000 sampling error uncertainty in the DOL data, but the rate has remained below the October peak for three months now, which is significant. 2. Temporary employment is up 247,000 from a low in September. Using more temps often precedes adding permanent new positions.
Negative Factors1. Government employment decreased by 8,000 in January, despite a surge in Census Bureau temporary hiring. State and local payrolls decreased by 41,000. 2. Non-farm payrolls continue to decline, although at a low rate. 3. The unemployment rate remains high. 4. The shortfall in employment remains at historic levels, between 11 and 12 million below what would be expected for an economy experiencing the average job growth seen from1999 to 2007. 5. The four-week moving average of weekly initial unemployment claims has increased by 6.4% over the past three weeks. 6. We are missing 2.8 million people from the civilian labor force over the past nine months. 7. Permanent job losses and historic levels in duration of unemployment are still burdens.
UnemploymentEmployment peaked at 146.7 million in November 2007. In December 2009 it had declined to 137.8 million. January saw an increase of 541,000 to 138.3 million. That is a decline in employment of 8.9 million as of December before rebounding to a loss of 8.4 million in January. All numbers are seasonally adjusted. The not seasonally adjusted data produced a loss of 1.1 million jobs from December to January and 10.3 million jobs since November 2007. Lots of people talk about seven million jobs lost in this recession, but they are not using the official numbers from the U.S. Dept. of Labor. However 8.4 million job losses is only part of the story. For the years 1999 through 2007, an average of more than 1.5 million were added to the employment rolls each year. This average includes two years with employment growth in the 300,000 range and one year (2001) with a loss of 1.5 million, so it is a representative (not inflated) average. That means that employment should have grown by 3 million during this time if we had "average" economic conditions rather than recession. That puts the effective increase in unemployment between 11 and 12 million compared to what it would have been in an average economy.
The Declining Labor ForceThe civilian labor force has declined by 1.8 million from a peak in March 2009 of 155.0 million to 153.2 million in January 2010. Some have suggested that this might be due to a decline in illegal immigrants, but that is unlikely because the labor force identified as Hispanic or Latino has increased by 400,000 from 22.2 million in March 2009 to 22.6 million for January.
Rising Weekly Initial Unemployment ClaimsThe four-week moving average for weekly initial unemployment claims for the third week in a row. On Jan. 9, it was 440,750 and 468,750 in the latest report for Jan. 30. That is a non trivial increase of 6.4%. As reported last week here, this rise remains well within the parameters of unemployment claims in previous recoveries. However, if we get another 5% increase in weekly initial jobless claims in the coming weeks, the current unemployment behavior will move out of the range of the well behaved employment recoveries and into the realm of the jobless recoveries of the recessions ending in 1970, 1991 and 2001.