Jobs Report: Good News and Bad News

Source: Wall Street Journal

This chart projects our current employment - unemployment situation into the future based on job growth rates from the previous economic recovery. As you can see, it will be a long hard slog to get back to the level of employment we had back in 2007.

Good news & bad news

The good news is that the number of initial claims for unemployment insurance is heading down and that is positive. And, the number of people getting unemployment insurance also fell, but that statistic is less positive. The bad news is that many people leaving unemployment insurance programs were doing so simply because they had exhausted their benefits, not because they had found a job.

The Wall Street Journal reports on the results from its regular survey of 48 economists as the economists survey the issue of employment [emphasis added]:

Scarred Job Market Expected to Weigh on Economy (Wall Street Journal, October 8, 2009, Phil Izzo)

“Never before has business shed so many workers so fast, so many people failed to find work who are looking for work, and so many dropped out of the labor force as in the current circumstance,” said Allen Sinai at Decision Economics.

The labor market’s tough road was underscored by Thursday’s report on weekly applications for unemployment insurance. The Labor Department reported that initial claims fell 33,000 to 521,000 in the week ended Oct. 3. The number of people collecting unemployment insurance also fell, but remained above six million.

The decrease in continuing claims likely reflects people exhausting their unemployment benefits after several months of looking for work in vain.

…On average the economists — not all of whom answered every question — expect the unemployment rate to peak at 10.2% in February. But even once the employment situation stops getting worse, economists expect recovery to come slowly. “It could take until 2014-15 before we see a 5% handle on unemployment again,” said Diane Swonk at Mesirow Financial. Persistently high unemployment could prove a political hot potato not only for the 2010 midterm elections for Congress but also for the 2012 presidential election.

Looking back at prior recessions, for example, the early 1990s, unemployment continued moving up for 15 months after the recession ended. The last recession did not seek a peak in unemployment until 19 months after the recession ended. The economists in the Wall Street Journal survey see a peak in February 2010, which would be great although I would not hold my breath on that one.

However, as the chart at the top of this post shows, it could take many years for us to get back to the unemployment rates we saw in December 2007. This report from the Bureau of Labor Statistics is quite grim [emphasis added]:

The Employment Situation (U.S. Bureau of Labor Statistics, October 2, 2009)

Nonfarm payroll employment continued to decline in September (-263,000), and the unemployment rate (9.8 percent) continued to trend up, the U.S. Bureau of Labor Statistics reported today. The largest job losses were in construction, manufacturing, retail trade, and government.

…Since the start of the recession in December 2007, the number of unemployed persons has increased by 7.6 million to 15.1 million, and the unemployment rate has doubled to 9.8 percent…

As you can see, so far, 7.6 million jobs have been lost in this recession. To get back to low levels of unemployment we saw in 2007, we would have to make up all those jobs plus we would need jobs for all the new entrants to the labor pool. If the chart above is correct, that will not happen until 2014 or so.

Via: MarketBeat Blog

Comments

[Dave Wrixon:]

I think things would start to improve sooner if they actually sacked most of the economists.

Oct 15 07:46 AM

[enigmaman:]

Why doesnt the Fed report the numbers of those unemployed collecting benefits who fell off the roles because they have exhausted their benefits? Its easy enough to determine. Why not also report how many self employed, independent contractors etc who aren't eligible for benefits but are non the less unemployed, or out of business, that would be easy enough to discern or at least estimate? Unless all relevant information is reported and included, the stats as they are do not provide a clear picture as it relates to the real health of our economy .

Oct 15 09:08 AM