What Recovery? Unemployment at 25-Year High

Despite signs that the economy has started to recover, U.S. employers continued to cut workers.

In the latest employment report released Friday morning, the Labor Department said nonfarm payroll shrank by another 263,000 in September, pushing the monthly unemployment rate to 9.8%, the highest level since June 1983.

In September, the employment in construction fell 63,000 while the manufacturing sector lost 51,000 workers. Since the recession began, employment in construction and manufacturing has fallen 1.5 million and 2.1 million, respectively. The only bright spot in this gloomy job picture is health care, which added 19,000 new workers to the payroll in September.

According to the Labor Department report, since the recession began in December 2007, the number of people without a job has nearly doubled, from 7.6 million to 15.1 million while the unemployment rate more than doubled.

Comments

[Mad Hedge F...:]

isv For the last six months there has been a great big whopping contradiction in the markets. The stock market has been discounting a return to the “Roaring Twenties,” while the bond market has been anticipating another “Great Depression.” After yesterday’s publication of the Labor Department’s September nonfarm payroll number showing the loss of another 263,000 jobs, it looks like the bond market now has the upper hand. This takes the unemployment rate up 0.1% to 9.8%, and total job losses for this recession to 7 million. The really disturbing aspect of this number is that 57,000 teachers were fired, as states chop budgets to the bone. This is really eating our seed corn by the bushel full. Of course, I have been banging pots and pans, setting off distress flares, and yanking the fire alarm, trying to alert readers that this kind of disappointment was coming (click here for “Risk Reversals Can Be Such a Bitch” and here for “Stocks Offer No Value”). Shares have dropped 5% from last week’s peak, as the bond market soared, the ten year yield reaching nosebleed territory of 3.05%. The dollar maintained its flight to safety status, which to me is one of the great ironies of all time. It’s like that reprobate, alcoholic uncle with the bad teeth, who, when your car breaks down in the middle of a downpour in a bad neighborhood, will always let you crash on his sofa. Let’s call him your Uncle Sam. You have to hand it to PIMCO’s inveterate card counter, Bill Gross, who says this is all about transitioning to a “new” normal of 1%-2% real GDP growth. That’s why he was loading the boat with bond yields at 4%, a “ballsey” move at the time, which now smells like roses. I guess that’s why they call him the “Bond King.”

Oct 04 09:56 AM

[conceptwizard:]

A study from the National Longitudinal Survey of Youth, a government database, said the damage to a new career by a recession can last 15 years. And if young Americans are not working and becoming productive members of society, they are less likely to make major purchases -- from cars to homes -- thus putting the US economy further behind the eight ball.

A tiny car company backed by former Vice President Al Gore has just gotten a $529 million U.S. government loan to help build a hybrid sports car in Finland that will sell for about $89,000. [creates jobs in Finland, not the US – and luxury cars at that!]

The awards to Fisker and Tesla have prompted concern from companies that have had their bids for loans rejected, and criticism from groups that question why vehicles aimed at the wealthiest customers are getting loans subsidized by taxpayers.

Oct 04 12:03 PM

[ccerenz2:]

Ok, one more time. Unemployment is a lagging indicator. If you want to know where the economy is, or where it is heading, you are better served to study the leading indicators. According to ECRI, the growth index stands at the highest level since they started tabulating it...back in 1968. Clearly we are in somewhat of a unique situation, but let's at least talk about things relevant to accurate predicting where we are headed...and unemployment doesn't fit in that category.

Oct 04 12:16 PM

[Wayne Freeman:]

ccerenz2 says, "...Unemployment is a lagging indicator."

That is NOT true this time.. after 21 months of recession, unemployment has become a COINCIDENT INDICATOR.

Oct 04 01:36 PM

[Denis Gould:]

Unemployment numbers will always lag the cycle but that doesn't mean that it has nothing to tell us. 9.8% unemployed (17% if you widen the definition) at the start of a multi-year period of economic consolidation means the feedback loop from lower employment and income to lower spending to further job cuts is still in play. So weaker employment numbers do indeed tell us something about the future direction of the economy. And it isn't pretty.

Oct 04 08:16 PM

[j-dub:]

So a phony stock market rally that consisted of was 2 parts fantasy, 2 parts manipulation, 3 parts fraud, 2 parts hope and 1 part greater fool theory participation doesn't count as part of a real recovery?Hmmmmmmm........

psst.....The real economy is not sugary government numbers and sky high PE levels.

Sorry Washington and GS.
I'm sure there is a plan B.......................

Oct 04 10:08 PM

[a fat panda:]

"What we have since the debacle of the dot com boom a decade ago is smoke and mirrors. "

The employment numbers from today are not comparable with those of 25 years ago because the politicians have jiggled with the numbers so that reported unemployment would be lower. One thing that they introduced was the birth/death model which adds jobs that no one can track. As the housing market imploded, it added 17,000 jobs to the numbers.

And unemployment is a lagging indicator. It just hasn't bottomed, and neither has the economy.

Oct 04 11:33 PM

[Asbytec:]

Good point, Wayne. I'd go a bit farther and say high unemployment might be the norm in the coming decade.

Oct 05 01:32 PM

[Gedankonomist:]

Considering that the government does not account for unemployed no longer seeking employment, unemployment is probably much higher. It will continue be high until Americans go back into manufacturing. This "service economy" is what is really unsustainable. We need to make stuff again. The government needs to get off our back before that happens though.

Oct 05 02:55 PM