U.S. Employment Picture Remains Ugly 24 comments
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US non-farm payrolls fell a seasonally adjusted 190,000 in October whilst prior months had positive revisions. August was revised from -201k to -154k whilst September was revised from -263k to -219k. The 3 month moving average of monthly job losses fell below 200k for the first time since September 2008. Details of the establishment survey were as follows:
Construction -62,000
Manufacturing -61,000
Service providing -61,000
Retail trade -40,000
Professional and business services -18,000
Education and health services +45,000
Leisure and hospitality -37,000
Government 0
Positive revisions to prior months are good news, however that’s about where the good news in this report ends.
Since employment peaked in December 2007, 7.3 million US jobs have been lost amounting to 5.3% of the workforce and given the preliminary estimate of a further -824k for the annual revision to be announced in January, that number will likely to exceed 8 million. The chart above tells the full gruesome story, the current employment cycle has seen the deepest plunge in jobs since WWII.
The unemployment rate jumped to a seasonally adjusted 10.2% in October, the highest rate since April 1983. U6, which includes so-called discouraged workers and those working part-time for economic reasons, rose to a new record of 17.5%. Of course the unemployment rate is measured by the household survey which is different from the establishment survey used to calculate the non-farm payroll number. The 3 month moving average of job losses from the establishment survey is now at -188k whilst the more volatile household survey is at -589k.
Some have speculated that the divergence between the two surveys in recent months represents the skew of the establishment data which is better at capturing job losses at large corporations whilst the household survey more accurately captures small business job losses. The establishment data tries to make up for this via the controversial Birth/Death model which continues to show positive net additions of businesses each month, despite overwhelming evidence to the contrary. Thus, since small business is getting smashed by limited access to credit and crowding out from the government sector, the establishment data is possibly a more accurate picture of the employment situation.
In addition, the labor force participation rate continues to fall as shown above. Typically, when discouraged workers believe labor market conditions are improving, they will start looking for work again which has the effect of increasing the workforce and thus keeping the unemployment rate high. In September 1982, the unemployment rate punched through 10% for the first time since the Great Depression and remained above 10% for 10 months peaking at 10.8%.
Just a repeat of that performance would keep the current unemployment rate above 10% until July 2010. However, given that the current employment cycle is compounded by a credit crunch that restricts the ability of small businesses to expand, I wouldn’t be surprised to see the unemployment rate stay above 10% for all of 2010. That doesn’t mean that there can’t be an economic recovery, just that it will be a slow, jobless one akin to the 2002 – 2004 experience.
Also not encouraging was the average work week which remained at an all time low of 33.0 hours. Typically an upturn in average weekly hours is a harbinger of an improving labor market however, we have yet to see it.
The number of persons working part time for economic reasons or in other words, people who were working part time because their hours had been cut back or because they were unable to find a full-time job, hit another record (even adjusting for population) in October at 9.3 million.
On the duration front, the news continues to worsen with the percentage of the unemployed out of work for more than 15 weeks hitting a new record of 56.3% whilst the percentage of the unemployed out of work for more than 6 months remained at a record high of 35.6%.
Very little to be positive about in this report except that job losses are getting less worse. However as stated numerous times before, less worse does not equal good and definitely not good enough to stop unemployment from rising further in the coming months.
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This article has 24 comments:
I challenge the author to look into Architecture field on BLS. This is clearly a profession which has been dramatically impacted by job losses and mass layoffs. Underemployment is rampant.
BLS is claiming a 9 percent current unemployment rate!!! Not possible. And when I emailed the AIA (American Institute of Architects in Washington) they sent me a copy of the BLS statistics...they must understand that those figures are WILDLY INCORRECT.
Err ... shouldn't that be:
"the establishment data is possibly a LESS accurate picture ..."
OR
"he household data is possibly a more accurate picture ..."
The Middle Class still losing jobs and income at a depressing pace? Not relevant to the Statistical Recovery
Small bushiness failures very high and start ups very low? Not relevant to the Statistical Recovery
Credit scarce and expensive for businesses and people who are creditworthy and create real value? Not relevant to the Statistical Recovery
Corporate revenues well below a year ago and cash hoarding the norm amongst companies that have the means to do so? Not Relevant to the Statistical Recovery
Residential and CRE not even mid way through the debt default and equity extinction process? Not relevant to the Statistical recovery
Risk capital fleeing the US and investors fleeing the fake dollar? Not relevant to the Statistical Recovery
Govt consuming the substance of the Productive Economy and wall St devouring Main St ? Finally, something--- the only things---- relevant to the Statistical Recovery
Addicts' rule: If one is good, two is better.
When you act on these rules, you eventually destroy your relationships and your successes.
Now, project those individual behaviors to our culture.
Remember, a crowd is just an emotional person writ large.
That's us as a culture and now we are just begining to pay the price. Just beginning. When lives come apart they do not stop coming apart until they come completely apart...they hit bottom.
Question: Have we hit bottom?
I don't believe so. We keep thinking we will go back to where we were, or very close to it. We're still trying to make deals to get our fix.
Assumption: We cannot go back to where we were economically, as it was bubble based.
Is there any disagreement?
If that is true, we have not hit bottom.
Bottom is when you stop believing and acting on the old assumptions and act completely and totally differently that before. Because you know through and through you that the old way didn't work.
Does anyone believe that we have given up all the old assumptions and that we are starting anew, without our previous addictions?
If you believe we're cured, you will invest one way; "Play that rally baby, because the Good Times will begin to roll again. And, I'll be able to stop before I get hurt."
If you believe we are not cured, you will be pretty heavily into the euro, PM, and soon shorting, among other wys to play the coming bottom.
If President Obama and his Administration want to win second term, do everything they can to creat jobs. One he achieve this ultimate goal, America will give him anything he wants.
(Hilarious video)
All that money going into the 'money hole': planbeconomics.com.../
On Nov 08 08:48 AM Roger Knights wrote:
> "The establishment data tries to make up for this via the controversial
> Birth/Death model which continues to show positive net additions
> of businesses each month, despite overwhelming evidence to the contrary.
> Thus, since small business is getting smashed by limited access to
> credit and crowding out from the government sector, the establishment
> data is possibly a more accurate picture of the employment situation."
>
>
> Err ... shouldn't that be:
> "the establishment data is possibly a LESS accurate picture ..."
>
> OR
> "he household data is possibly a more accurate picture ..."
On Nov 08 12:59 PM Alphameister wrote:
> Excellent article and comment by thotdoc. While there is no evidence
> in recent history that Republicans are ready to offer the radical
> change needed to escape the mentality of instant gratification that
> has led us to this mess, I am hopeful that recent election returns
> and the rising popularity of Glenn Beck's message could be harbingers
> of a new revolution that could lead us back toward the founding principles
> of this nation, the principles of individual liberty and responsibility
> that led to greatness.
the survey with larger sample size....
47 million people the household survey covers just 50,000 individuals.....
The household survey has greater month to month volatility due to sampling error. However if there was a serious divergence between the two over many months, I would take the household survey every time.
I'm with you in that I do not buy the doom and gloom. In this report we have falling job losses in both surveys. Also in the establishment survey we have big gains in Temp Help Agencies - a good leading indicator for future job gains.
On Nov 08 07:08 PM bbro wrote:
> The establishment survey covers 390000 businesses which employs<br/>47
> million people the household survey covers just 50,000 individuals.....
On Friday on CNBC, Lee Easman said the establishment survey was more accurate. He was immediately corrected by the chielf economist from Standard and Poors who said that the household survey was more accurate in predicting a recover, which does not yet exist. We are headed for a Japanese style recovery, which is almost 2 decades long and getting worse.
'The establishment survey covers 390000 businesses which employs 47 million people the household survey covers just 50,000 individuals.....'
But has the BLS lost its credibility? Are the numbers adjusted in a meaningful matter?
will take a toll on consumer spending
even with unemployment benefits being extended.
I commend you for chronicling the issues at hand so well.
Things don't look good. The Real (note Real italics) is actually much worse. For example, the Statistical Recovery would have easily counted in those so-called "jobs saved and jobs created" by the administration as in the educational field and the health care fields, as those statistics are readily available and verifiable. However, those jobs are support jobs and are not in a sense real productive jobs. Some even called them "unreal jobs". As one leading SA commentator said last year in late 2008, there fields aren't much to be stimulated about.
On top of the above, I don't know what the continuing effects of the two wars on employment. True, there are a lot of ex-veterans now serving as contractors in the two war theaters, and monies are still pouring into the defense companies. However, once these are winded down, where will these folks be employed? In other words, the unemployment number is actually a lot worse if indeed being "normalized" by the above concerns.
Again, thank you for a very insightful comment, as always.
TK
On Nov 08 09:33 AM User 353732 wrote:
> In the New Economy recovery has been successfully decoupled from
> traditional engines of growth. This is the unheralded and mighty
> achievement of the US Regime which has found a way to tanscend the
> laws of economics, nature and morality.
>
> The Middle Class still losing jobs and income at a depressing pace?
> Not relevant to the Statistical Recovery
>
> Small bushiness failures very high and start ups very low? Not relevant
> to the Statistical Recovery
>
> Credit scarce and expensive for businesses and people who are creditworthy
> and create real value? Not relevant to the Statistical Recovery<br/>
>
> Corporate revenues well below a year ago and cash hoarding the norm
> amongst companies that have the means to do so? Not Relevant to the
> Statistical Recovery
>
> Residential and CRE not even mid way through the debt default and
> equity extinction process? Not relevant to the Statistical recovery
>
>
> Risk capital fleeing the US and investors fleeing the fake dollar?
> Not relevant to the Statistical Recovery
>
> Govt consuming the substance of the Productive Economy and wall St
> devouring Main St ? Finally, something--- the only things---- relevant
> to the Statistical Recovery
I appreciate it you're telling the truth as it is. Don't forget the BLS folks are bureaucrats. They mostly live in a world of their own.
(At this time my mind turns to one of my favorite folk songs sung by the 3 Australian Seekers - - - "We Live a World of Our Own", a 60's hit of such wonderful unforgettable lyrics and melody.
The real picture comes closer to what we encounter in our daily lives down in the trenches.
TK
On Nov 08 08:03 AM chris coonan wrote:
> After visiting the BLS website, I don't even believe the numbers
> anymore!
>
> I challenge the author to look into Architecture field on BLS. This
> is clearly a profession which has been dramatically impacted by job
> losses and mass layoffs. Underemployment is rampant.
>
> BLS is claiming a 9 percent current unemployment rate!!! Not possible.
> And when I emailed the AIA (American Institute of Architects in Washington)
> they sent me a copy of the BLS statistics...they must understand
> that those figures are WILDLY INCORRECT.
Notice that the next worst in duration before our current situation was 2001 - 2005. This points to a shift in jobs of production and in the service economy. We have a macro-trend of unemployment on the whole and working fewer hours or simply not looking for work.
Combine with this the tremendous shift from 1920's to the present of 70% of the population living on a farm to 2% today and you have a societal bubble of historic proportions.
Any true collapse in the economy, employment, and flow of money and food to urban and suburban centers will have a cataclysmic effect on the established order.
This is why you hear people talking about farmland and firearms and canning and food and water storage. Crazy? Just think about it - what if the rail cars and tractor trailers don't have a reason to roll into town with food and medicine?
Chaos, utter chaos.
On Nov 08 07:08 PM bbro wrote:
> The establishment survey covers 390000 businesses which employs<br/>47
> million people the household survey covers just 50,000 individuals.....
upside surprises in the coming months....NSA Nonfarm payrolls
over the last two months have increased by 1 million and the seasonal adjustment has subtracted 1.4 million...probably too much....
On Nov 08 10:39 PM Poor Texan wrote:
> On Nov 08 07:08 PM bbro wrote:
> 'The establishment survey covers 390000 businesses which employs
> 47 million people the household survey covers just 50,000 individuals.....'
>
>
> But has the BLS lost its credibility? Are the numbers adjusted in
> a meaningful matter?
Billionaire Steve wynn said it best,give employers a 30,000 tax credit AFTER they hire someone new and give them health insurance for 5 years
Instaed of a stimulus which is paid out to cronys and constitiuents actually CREATE jobs
If you want to be a socialist go to Europe