The disappointing jobs situation
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The general reaction to this morning’s jobs report is “meh”, as you might expect, given the release, where the phrases “changed little”, “about unchanged”, “little or no change”, “unchanged”, and “essentially unchanged” all appear in the first five paragraphs. But that’s largely a function of the fact that the release attacks the unemployment figures first; when it comes to payrolls, they rose by a statistically significant amount — 192,000 jobs, and the trend, while modest, is clearly in the right direction:
Since a recent low in February 2010, total payroll employment has grown by 1.3 million, or an average of 106,000 per month.
The really good news in this report is that it’s looking increasingly as though the sharp drop in the unemployment rate over December and January, when it fell from 9.8% to 9.0% in two months, is less of an aberration than it might seem. The 8.9% rate, while undeniably unacceptably high, is the first time we’ve seen an 8 handle on this figure in almost two years. And remember that in October 2009, the number was 10.1%.
Given that unemployment by its nature falls more slowly than it rises, a decrease of 1.2 percentage points in 16 months has to be taken as an indication that something is, finally, going right. (Other unemployment rates, like the much-discussed U6, are also down sharply: it’s now 15.9%, from 17.0% in November.)
Even the worst news of the report, in table A-12, is something of a statistical aberration: while the mean duration of unemployment hit an atrocious new high of 37.1 weeks, that’s mainly because the upper bound for for unemployment duration was changed this year to 5 years from 2 years. The median duration fell, to 21.2 weeks. There’s still an American underclass of about 2.5 million long-term unemployed, but it does seem to be shrinking a little.
As for payrolls, everybody wishes they were growing more quickly. The current pace is far too slow, and isn’t even enough to keep up with population growth. Or, to put it another way, 2011 is a great year for the jobs report to look good, since for demographic reasons it’s the year when the total number of jobs would rise naturally at the fastest pace, thanks to the growing US population. It’s a good idea to mentally compare the payrolls report to the baseline in this chart, which sobers things up a bit.
The big picture here, then, is that the pace of recovery in the employment sector is real but disappointing. And given the new atmosphere of fiscal cutbacks at both the federal and state levels, I doubt it’s going to speed up any time soon.
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I told my wife, “the jobs report is about like every other economic report coming out lately; it’s kind of moving in the right direction, but not as quickly as you’d expect in an actual recovery.” cf. Q4 GDP.
Incidentally, participation was again slightly down, but not a lot. When participation starts going back up, assuming it doesn’t take the unemployment rate with it, then we will have turned a corner.
The numbers here like last month are suspect at best. I’m more inclined to think the decrease is due to unempolyment benefits expiring, and people no longer being counted then econimic growth.
What this administration doesn’t seem to understand is we need an influx of new revenue which could easily be remedied by drilling in ANWR, the Bakken, Wyoming, and the Rocky Mountains. This action would jump start the economy and bring real jobs now – unlike Obama’s version of the WPA (High Speed Rail is a joke).
Presently, the only entity growing is the federal government. The unemployment numbers are a fraud just like our “Grand Potentate” President.
@muse58
Are you from 1958 or something or just stuck in a time warp? Drill more Oil, that’s your idea?? Those locations are somewhat feasible but are relatively small fields that would be dry in 20 years if drilled now – and – these project don’t employ that many people compared to a nationwide High Speed Rail System which could be used for the rest of our lives; Oil runs out eventually.
Do they pay you to write this? Advocating a resource that millions of people and $$ are trying to replace?
Who do you think really benefits off Oil? The same people who made money off Oil the past 100 years or so.
Do the math. One benefits few – the other benefits many. And don’t say ‘It’ll lower gas prices!’ Because it won’t and wouldn’t last long enough to make any economic impact except make more Oil Barons rich.
Alleviating oil needs for transportation through the use of High Speed rail will have a much more dramatic affect on oil prices due to the new competition WPA would bring.
‘Only entity growing is the fed…’ GO TO COLLEGE stop watching TV
Being the Government guesses who might be ” marginally attached” to the labor force, the numbers of discouraged workers will likely have increased.
Pardon my cynicism, but marketing is something that a GE executive understands. Making that crucial dip in the numbers to 8 (point 9) …that is like the 99.99 in the corporate world. Looks good to our mushy brains, but in reality it will still cost over 100 bucks.
The Government is doing a disservice to the economy (not the almighty markets though, huzzzah) by skewing numbers that at first glance might look to be in their favour.
Doesn’t it give ya warm fuzzies to know we import 60% of our oil which could be invested in new jobs and deficit reduction? We must like fighting/dying over oil and tranferring our wealth to the likes of Gaddafy, etc! FYI: we’re sitting on 50 years worth of oil in Prudoe Bay alone-enough to transition to Green alternative if we could only find the will to change! We spend hundreds of Billions on imported oil every year and could drill our own! Anyone think third world countries are more environmentally responsbile than we are(now)?? Be intellectually honest now! We must be the laughing stock of the oil world!
The problem with the current economy is that corporations can get along just fine without hiring employees, raking in record profits and experiencing astronomical valuations. Take Apple, the world’s second most valuable company in 2011, topping a valuation of $300 billion USD (that’s a third of a trillion).
Where does all that cash go? Why, it’s hoarded in the bank, of course.
No matter how much money corporations amass, they simply are not going to hire more people because technology has empowered them to profit with relatively minimal staff. This is a new paradigm in business. In the past, companies flush with cash hired people even if they twiddled their thumbs for weeks between actual workloads (a condition known by the classic cliche “peaks and valleys”).
The younger generation of execs in today’s corporations have lost sight of the fact that the value of a currency like the USD is based in part on its circulation through the economy. Hoarding cash in lieu of hiring is destroying the collective purchasing power of that currency. “Use it or lose it” is true as ever.
I see no point in blaming today’s old corporations for being profitable.
Historically old companies have never been the source of lots of jobs. Companies hire a lot when they are young, and then they increase profitability and consolidate in their later years. That is nothing new.
We should ask, what is it about this economic climate that stops people from wanting to start or grow new companies?
If these old companies are so profitable, why aren’t new companies cropping up everywhere trying to eat their lunch? Classical econ says that new companies should arise and bring profit margins back down. That is what is happening in China, and what used to happen in America…
Some alternate data on the ‘discouraged,’
http://www.shadowstats.com/alternate_dat a/unemployment-charts
@hsvkitty – do you really think 22% of the adult population is unemployed and wanting to work? Or did you just want us to see a different set of stats?
@ylf910, do you really think unemployment is 8.9? I prefer reality to being lied to and appeased.
hsvkitty, I can’t speak to either number from personal experience. You would need to judge each on the methodology used.
Remember also that statistics depend on definitions. China announced a plan to eliminate poverty within ten years. Of course their present definition of “poverty” is a household income of $.50/day.