U.S. Bleeding Jobs; Wall Street Doesn't Seem to Mind

On Friday, December 5, 2008 the U.S. Department of Labor reported a sharp loss of 533,000 jobs in the month of November. The shocking figure calculates as the worst reading since the gruesome 1973-1974 recession and follows revised declines of 403,000 and 320,000 for September and October, respectively.

According to the National Bureau of Economic Research, today's recession began at December 2007. Friday's report is a significant indicator that this commercial debacle, originating with a housing bust that reverberated through credit markets has now debilitated the able-bodied worker. Indeed, labor and the consumer represent the final shoes to plunge into the abyss.

The unemployment rate has increased to 6.7% with the Labor Department identifying 10.3 million persons as unemployed. Alarmingly, 2.2 million of these hapless Americans have been out of work for at least seven months. The report indicates that the U.S. jobless ranks has increased by 2.7 million people, elevating the unemployment rate by 1.7% during this recession.

We must indicate that these numbers are misleading and under represent the true damage. The statistics do not include the underemployed or the legions of exasperated job seekers that have simply given up all hope in regards to any job search. The horde of part-time workers, involuntarily settling for minimal wages of any sort has been estimated to total 7.3 million - an increase of 2.8 million over 2007 levels.

608,000 discouraged citizens have thrown in the towel in frustration - refusing to waste additional resources participating in what appears to be a lost cause of finding work. This pool of labor, defined as 'marginally attached' has not actively sought employment over the prior four weeks and is not included within the aforementioned unemployment figures.

Logically, the U.S. population is carrying a total of 18.2 million unemployed, underemployed, and cynically hopeless individuals. 12% of the 154,616,000 civilian labor force, at least one in ten Americans is wanting for work.

The job losses have accelerated over the past ninety days, ravaging all industries outside of education, health, and government. Our manufacturing, construction, financial services, and retail sectors have proven to be especially susceptible to the fallout.

America's well-documented firm embrace of a service-model economy continues to batter the once proud Steel Belt into submission, converting large swaths of the Upper Midwest into an industrial wasteland; whereas construction payrolls have been compromised by the housing bust - precipitated the collapse of viable credit and therefore financial services.

Retailers, correctly rationalizing that the beleaguered U.S. consumer will forego his typical spendthrift machinations have slashed hours while dismissing seasonal hiring of any sort. The predicament is manifest in a spectacular 20% unemployment rate for teenagers actively pursuing employment. The cryptic scenario further highlights October's pitiful retail sales report courtesy of the U.S. Department of Commerce.

Interestingly, Americans fortunate enough to have secured employment have enjoyed a steady 3.7% rise of hourly wages to $18.30 that translates into $613.05 of weekly earnings.

We must speculate that this one silver-lining glimmer of hope has already been destroyed by the elevated housing and energy costs that marked the tail end of this credit bubble. Certainly, $2,400 of monthly income will quickly evaporate towards zero in the wake of taxation, fuel costs, rent, and utilities.

Sadly, Americans are scrounging for whatever spare coinage that remains lodged beneath the seat cushions in order to remit payment towards picked-over and discarded table scraps.

Wall Street does not seem to mind. The Dow Jones Industrial Average surged by 630 points, a 7.6% advance to 8,934 in the two trading days following the release of this report.

Comments

[freefall51:]

Wall Street will mind. If something does not sound right dont believe it (cit Skilling/former Enron employee).

2008 Dec 09 08:32 AM

[herbert hoover:]

The markets are totally ignoring the fact that unemployed people do not consume and that the fear of being unemployed will curtail spending for months to come. Good luck trying to convince these people that an i-phone or a new car is the best use of their money at this point in the cycle.

2008 Dec 09 08:44 AM

[socrateazz:]

I think there is just as likely for more failure. The new service economy will not be what the original service economy started out. I expect the government service to cost and pay more while the rest of the services will have less resources to trade back and forth. Real wealth is not in services! Service industries just redistribute available wealth. Production will ultimately be the wealth creator. The service industries can then use some of that wealth to trade back and forth.

2008 Dec 09 10:02 AM

[axelrod608:]

Good article. Last time I checked, Shadowstats showed "real" unemployment at around 15%. The government numbers are only those registered for Unemployment Compensation or regitered with a state Job Service.

Stock prices will go up and down forever - it's what they do. And eventually they come to reflect reality.

2008 Dec 09 10:06 AM

[Jason Rines...:]

Consistent rising unemployment was ignored for the better part of this year by government and Wall St. I found it fascinating posts about this topic had few comments. Monetary and stock charts are indeed useful, however I consider tracking the unemployment ratios critical if your selling to the consumer! Wall St. didn't seem to care until diminished earnings are revealed and Wall St. crashes. The effect of 'not enough wages to cover costs' are studied rather then the cause which are stagnant wages and rising unemployment. Further up the cause chain is societal and moral breakdowns creating the instant gratification culture.

2008 Dec 09 02:41 PM

[Kofi Bofah:]

The article has double entendre.

Yes, The Street has ignored the problem and markets eventually collapsed upon themselves.

However At this low point - the information may have already been discounted. Hence, the reason behind the two-day rally. The report detailed information that had already been apparent.

2008 Dec 09 05:45 PM

[biomedlives:]

Right on, "Herbert Hoover"! Just as people without jobs cut back on spending, people who have too much debt must, sooner or later, spend less. For that reason, I believe that efforts to stimulate more borrowing won't help much right here.

2008 Dec 10 09:07 AM

[notsosmart:]

wake up-sheeples. govt. figures cant be believed.

2008 Dec 10 01:50 PM