Unemployment datapoint of the day

By Felix Salmon
October 22, 2009
hitting new record highs for a while; it's now managed to pass the 6-month mark. That's much higher than any previous peak in this data series. And I fear that the only way it's likely to come down any time soon is as these people become so demoralized that they take themselves out of the labor force altogether.


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The length of time the average unemployed person has been without a job has been hitting new record highs for a while; it’s now managed to pass the 6-month mark. That’s much higher than any previous peak in this data series. And I fear that the only way it’s likely to come down any time soon is as these people become so demoralized that they take themselves out of the labor force altogether.

The overwhelming majority of the working population will never be able to prepare themselves for a period of unemployment lasting more than six months. As financial-market types worry about possible inflation in a few years’ time, tens of millions of Americans are finding themselves in a very real personal financial crisis to which there is no visible solution. Given the Fed’s dual mandate, it makes sense to keep interest rates low for the foreseeable future. Inflation is possible; unemployment is catastrophically real.

7 comments

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Interesting. If average duration of unemployment doubles while unemployment doubles, that would indicate no change in the number of people losing their jobs. That’s not quite what we have here — even putting aside the “discouraged” unemployed, the unemployment rate has a bit more than doubled, and the duration has not quite. Still, this suggests that the hit from slack in labor demand is somewhat concentrated; it’s not hitting an unusual number of people, but is hitting those it hits harder.

There will be millions of ruined families before this is over.

Does the Democratic Party even care anymore? They seem to be more interested in fund raising, fighting FOX News and creating bigger government programs instead of helping out working people. I really do not understand Washington anymore.

Posted by imapopulistnow | Report as abusive

dWj…” it’s not hitting an unusual number of people, but is hitting those it hits harder.” Did you work for Alan Greenspan’s economic analysis team?

The unemployment rate has not been this high since 1948 with the exception of 1982 and most analysts predict we will exceed 1982′s monthly high of 10.8. What Ivory Tower do you live in that you so easily dismiss the discouraged work force which drives the unemployment rate closer to 20%? Layoffs are hitting an unusually large segment of the population and yes, they are being locked out of the labor market for much longer.

Posted by csodak | Report as abusive

I fear that the only way it’s likely to come down any time soon is as these people become so demoralized that they take themselves out of the labor force altogether.

Hey — what if the reason this number’s so high is that people aren’t dropping out of the labor force for some reason? Too risky, or extended unemployment benefits, or something?

Posted by Noumenon | Report as abusive

I disagree with this statement, “The overwhelming majority of the working population will never be able to prepare themselves for a period of unemployment lasting more than six months.” If you strike the “be able to” I will be in agreement.

There is an old rule that you should save for 3-6 months of wages in case of unemployment. Having a business degree and being a student of history, I doubled this rule when I left college. This savings pot is to include only CDs and money market investments. The investments are a sepearate bucket.

Human tendency is to project current earnings into the future. This is the real issue.

Posted by David3 | Report as abusive

If you correct for the masses that are “getting into” growing pot in California, suddenly it all seems to make sense.

And, at least we’re getting back to the land… well an abandoned subdivision in Riverside anyway.

I predict the price of weed will drop by 2011. I hope it’s in the Fed models cause it’s gonna be huge.

Posted by VennData | Report as abusive

Here’s what I don’t understand about the inflation anxiety. Inflation results from aggregate demand rather than money supply. Dollars sitting in bank accounts shouldn’t affect prices. So I don’t think the low interest rates and massive deficits that are normally associated with inflation are at this moment, with private borrowing so far off, a danger to cause inflation. Now when the borrowing and lending come back our large deficits will become dangerous. We’ll need to raise taxes. I’m concerned we won’t have the will-power and the dollar will suffer.