Jobless Claims Stuck at 570,000

The Department of Labor reported that jobless claims in the latest week decreased 4,000 from a revised 574,000 in the previous week. The figure was higher than analysts anticipated. Initially, the last week was reported as 570,000.

The 4-week average is now 571,250, marking the eighth consecutive week that initial claims for unemployment insurance have come in below 600,000. Initial claims are well below the peak levels from April, the decline being well within the norm for recessions over the past four decades.

However, this recession is not marked by an unprecedented surge in job loss. Job losses are not the problem. It is the lack of hiring, which has made the downturn so punishing for the jobs market. Gross job losses are less important than net job losses – and net losses is where we are struggling.

The ADP report yesterday indicates we were down another 298,000 private sector jobs in August – this after 17 straight months of job losses. Expect a similar number when the Employment Situation numbers are released tomorrow morning.

But, the lacklustre employment market dates back to the previous recession and jobless recovery. Non-farm payrolls are now lower than they were when President Bush entered office over 8 years ago in January 2001. This record is much worse than any period since the Great Depression. (Below I have constructed a chart using all available data to show the 100-month change in non-farm payrolls since January 1939 when record-keeping began).

Conclusion: The employment market is weak and – absent asset price inflation – it will be a drag on the ability for consumers to spend for some time to come. Tim Geithner is correct that ending stimulus now would throw the economy back into recession. Depending on your economic philosophy this is either a necessary end to artificial economic support or a vital lifeline preventing untold economic harm.

Comments

[yellowhoard:]

So, we're not in recession now?

Sep 03 07:46 PM

[Edward Harr...:]

Mark, I was looking at weekly initial jobless claims in this post - and they have been running at 570K per week. I think you're talking about the monthly employment situation summary -which is more analogous to the ADP number of 298K.


On Sep 03 07:41 PM Mayascribe wrote:

> Mark: Can't wait to see how you come up with your conclusion. Make
> sure you tip me off about that Instablog, buddy!
>
> Edward, I'm a little confused about your numbers. On September 1,
> I calculated that during the last 15 days of August the "Official"
> unemloyment numbers increased by 135,848. The "Actual" increase during
> the last two weeks of August was 155,624.
>
> If you double those numbers you arrive at about 271K lost jobs officially,
> and 310K "Actual."
>
> These numbers are in line with what the Street is predicting, which
> is 280K lost jobs.
>
> My figures were arrived at from a two week study of this website:
>
>
> usdebtclock.org

Sep 03 08:03 PM

[Roger Knights:]

"However, this recession is not marked by an unprecedented surge in job loss. Job losses are not the problem. It is the lack of hiring, which has made the downturn so punishing for the jobs market."

You'd never know that from reading some of the bulls' reporting on these numbers.

Sep 03 08:14 PM

[Joe Shareho...:]

Within the last two weeks US post office announced a 30,000 job cut, whirlpool announced 1100 and a plant closing in Evansville, IN, and Toyota announced a 4500 job cut and a plant shutdown in CA. We're not out of the woods yet.

All our so-called stimulus is a joke, however. Just reinflating bubbles and postponing the inevitable deflation. Rob Peter to pay Paul, or rather rob Peter's children to pay Paul.

Sep 03 08:38 PM

[Joe Shareho...:]

Why would anyone be hiring right now with as much uncertainty as there is out there. Obama's cap and trade certainly isn't industry friendly, and neither are the tax increases Obama has hit businesses with. Add health care increases because someone has to pay for the public option. Simply put, zero incentive.

Sep 03 10:10 PM

[billddrummer:]

The only sector adding workers right now is the Federal government, primarily because that sector has all the money.

I've learned of small business owners who haven't paid themselves in more than a year, and get concessions from relatives for space they rent.

Construction service companies have abandoned their offices and representatives are working from home.

Line space in new malls is going begging, and construction loans made to build them are getting ready to mature. No one knows whether the credit climate will allow for refinancing or extension of these loans, with 15%+ vacancy rates brought on by major anchors' demise (Mervyns, Linens & Things, Circuit City, Sharper Image, and several others I can't remember now).

And let's hope that the small auto dealers that are waiting for reimbursement for their Cash 4 Clunkers advances will get the money from the government before they run out of working capital.

Meanwhile, in Washoe County (northern NV), 600 Notices of Default were filed in the last week, representing over $61 million in past due mortgages.

Last month, more than 1000 Notices of Default were filed in the county. The largest city is Reno, but it also includes the resort town of Incline Village.

Sep 04 01:54 AM

[GeminiAtlas:]

I would agree. Business owners are wary to hire because of policy uncertainty. They don't know what's coming down the pike or not such as healthcare reform, cap and trade, etc. so they take the "wait and see" approach instead of being proactive. Of course, every business taking the "wait and see" approach at the same time doesn't bode well. So, in essence, the government is making the problem worse by even debating these "business friendly" issues. Same thing for students choosing a field to work in. "Is the gov't going to nationalize healthcare? Not sure, best to go into something else just to play it safe"
And a few years from now , we'll be wondering about a sudden drop in new healthcare workers who are already desperately needed.

On Sep 03 10:10 PM Joe Shareholder wrote:

> Why would anyone be hiring right now with as much uncertainty as
> there is out there. Obama's cap and trade certainly isn't industry
> friendly, and neither are the tax increases Obama has hit businesses
> with. Add health care increases because someone has to pay for the
> public option. Simply put, zero incentive.

Sep 04 07:30 AM

[MikeD71:]

yellowhoard,

Recession? What recession?? We've "bottomed". "Turned the corner". "Back from the brink". "Saved the world". Everything's cool, didn't ya know?
Guess you better watch more NBC, CBS, ABC, and CNN. Put on the rosy glasses and go shopping!

Sep 04 08:25 AM

[TCK:]

I am watching the commentators this Friday morning trying to spin the numbers into something positive. Unbelievable how losing jobs less fast is now a sign of recovery. Previously we were told that 100,000 jobs per month needed to be created just to break even with the growing workforce.

Whether these comments are from fund managers pumping stocks, or "Egg Head Economists" talking about a declining second derivative, I hope I soon see them in line with me at the unemployment office.

Sep 04 09:21 AM

[Mad Hedge F...:]

mcvhj. So who was the dummy that waited until August to lay off their workers? Fire the guy! Apparently, there are a large number of managers out there who don’t read newspapers, watch TV, or talk to anyone, and waited until the Great Depression was nearly two years old to cut costs. That is one of many conclusions I am forced to draw on the news that the August non-farm payroll showed a further hemorrhage of 216,000 jobs, better than the 230,000 consensus, and a big improvement over the 273,000 July figure. But it included downward revisions of 50,000 in June and July, not good. The unemployment rate came in at 9.7%, continue its relentless march towards double digits. The net net is that the economy has jumped off the top of the Empire State Building, but is now plummeting towards 5th Avenue at a slower rate. The usual culprits were there; 65,000 jobs lost in construction, 63,000 in manufacturing, and 27,000 in finance. What was truly amazing to me was to see looses in education at the start of the school season. And what is going to happen to the 1.5 million who will exhaust their unemployment benefits by year end? The figures are all proof that there will be no economic recovery without bank lending. Running a business without credit is like trying to complete a marathon while holding your breath. Bring on the “L.” My many US Navy readers should seriously consider re-upping, as the economy will not see net hiring for a very long time. Just hope we don’t invade anyone new.

Sep 04 09:44 AM

[TeresaE:]

You all must not be business owners.

We aren't "afraid" to hire.

We have NO work and our fixed expenses continue to inflate to unsustainable levels.

We CAN'T hire. For large parts of the country that are not on the government's short list of campaign paybacks, there is virtually NO work. And no money. And the banks are demanding we cash out deflated assets and pay them inflated loan values based not on payment history, but our financial reports.

Just like the American consumer is not "afraid" to spend. They don't have any money TO spend and the banks have took away the credit they did have.

Reality is that the government is gifting Wall Street & Banksters trillions and those same firms are turning around and screwing their paying customers. Which then forces more customers to not pay them back.

Euphemisms and niceties disguise the brutal reality that many Americans are living in.

I'm sorry to say that many that use such niceties will be in for quite a shock when the "recovery" hits their own homes.


On Sep 04 07:30 AM GeminiAtlas wrote:

> I would agree. Business owners are wary to hire because of policy
> uncertainty. They don't know what's coming down the pike or not
> such as healthcare reform, cap and trade, etc. so they take the "wait
> and see" approach instead of being proactive. Of course, every business
> taking the "wait and see" approach at the same time doesn't bode
> well. So, in essence, the government is making the problem worse
> by even debating these "business friendly" issues. Same thing for
> students choosing a field to work in. "Is the gov't going to nationalize
> healthcare? Not sure, best to go into something else just to play
> it safe"
> And a few years from now , we'll be wondering about a sudden drop
> in new healthcare workers who are already desperately needed.
>
>
> On Sep 03 10:10 PM Joe Shareholder wrote:

Sep 04 10:14 AM

[WheelsComin...:]

Wait, I thought the stimulus wasn't "big enough", according to Krugman (that dunce idiot). Maybe we should have "stimulated" $4 trillion. Can you imagine how much prosperity we'd be enjoying right now? We'd all be farting nickels and dancing in the streets in our brand new Prada jumpsuits!!

It's easy to claim that something would or wouldn't happen when there is absolutely no idea what the actual truth is. "Can you imagine where we'd be without the stimulus?" I can only dream...

"Tim Geithner is correct that ending stimulus now would throw the economy back into recession. Depending on your economic philosophy this is either a necessary end to artificial economic support or a vital lifeline preventing untold economic harm."

Sep 04 10:15 AM

[TeresaE:]

Too late, already here. And actually it is much higher than that as thousands become "fully employed" by working 15 hours at Walmart.

In Michigan, are un-fully employed rate is more than 30% already. In Detroit, it is "officially" at 27%, reality is over 50%.


On Sep 04 08:16 AM BORN1929 wrote:

> 30% unemployment is coming to a city near you

Sep 04 10:17 AM

[Mike Kane:]

good comments everyone and good article Edward...if companies don't hire and people don't spend money, the economy can't grow, that's just basic economics.

Sep 04 10:54 AM

[Stez:]

You take a 26 year high in unemployment at 9.7%. You have a shadow market of 16% unemployment and retail figures massaged like crazy.

Then key pivot points at 1006 and 1010 taken out you know there is some incredible Kool Aid being pumped into the stock market machine.

CNBC came out with the huge positive that the 10k less then expected lost jobs showed the market was powering.

El-Erian may be a bond guy but when he talks, of the equity sugar rush on CNBC, he should be referring to the crack pipe that everyone seems to be smoking when they cheer these numbers.

The stock market has been rising on bad and selling on good.
So we should be at 1100 at the end of the month after this reaction.

Sep 04 12:48 PM

[optionsgirl:]

16% will be "celebrating" labor day all week long.

Sep 04 05:04 PM

[i'mwithher:]

TeresaE- Don't worry, be happy. The president says it's all ok. cookies and milk for everyone.

Sep 04 08:30 PM

[leveraged:]

every american patriot should spend labor day at the mall.

Sep 04 09:06 PM

[Moon Kil Woong:]

The problem is stimulus is not really stimulus. Sure it gives us cash for clunkers and supports the banks, but it does not make jobs and most of the money just keeps flowing into the government buraucracy in budgetary increases creating more inefficiencies than help.

The only real support it gives is cash to States and local government funding in exchange for their loss of budgetary freedom to let the citizens of that state or locality decidetheir own needs and determine their own futures. Our ability for self reliance and independence are being hijacked by a government that thinks bribing Americans with money they print supported by their own taxes is just cause to demand you give up your State and local rights.

The founding fathers wanted States and localities to be diverse experimental labs competing with each other to remain efficient and prosperous. When we lose this we lose a lot.

Sep 05 02:13 AM

[TeresaE:]

"Kumbaya, my lord, kumbaya."

Milk & cookies in the food line this time instead of cheese and peanut butter.


On Sep 04 08:30 PM i'mwithher wrote:

> TeresaE- Don't worry, be happy. The president says it's all ok. cookies
> and milk for everyone.

Sep 08 08:41 AM