James Pethokoukis

Politics and policy from inside Washington

An improving job market

June 5, 2009

I wanted to elaborate a bit on the job market, with my first embedded graph of the blog! It shows the diminishing rate of job losses, though the unemployment rate will continue to rise, especially as more people try and return to the workforce.

09-06-05viewpt-14

Comments

For those who think the economy no longer is in free-fall, a jobless rate of 9.4% means approximately 15 million Americans are out of work. If family members are added to this equation, then the overall employment problem is directly impacting more than 45 million people here at home.

I am not suggesting I have the answer to this horrendous situation, but I do know there is a resource available to help those in need. Some call it the latest version of the Pet Rock. I prefer to think of it as a symbol of hope — something that gives people confidence to keep looking for new financial opportunities, no matter how difficult times become.

The Pet Rock of thirty years ago was a light-hearted, novelty item. Today, there is nothing funny about the state of the economy or how people are dealing with the loss of their jobs or homes. If some of your readers are among the 45 million Americans suffering because of the economic downturn, then I urge them to visit http://www.originalprosperityrock.com now.

Denny Freidenrich
668 No. Coast Hwy. #410
Laguna Beach, CA
949/494-2028

Posted by Denny Freidenrich | Report as abusive
 

It’s interesting to see so many commentators – people who arguably should know better – look at headline numbers and then argue/draw conclusions, without discussing some of the possible flaws in the data/argument. Only with some digging will you find out about the Birth/Death adjustment in the BLS statistics. I don’t suggest I understand it myself – all the adjustments, seasonality, etc., but the B/D adjustment is a statistical adjustment by the BLS to try to estimate how many jobs were created by new companies not in their database (births), and limit the downward bias of firms closing. For May, the B/D adjustment added 220,000 jobs (as I read it). Perhaps this might explain the difference between the 9.4% Household results (bearish) and the Establishment results (bullish – B/D adjustment and all). Hard to understand that more small companies are opening then closing right now. Oh, and how little press the U-6 number gets – 16.4% (a new record). Or how about the weekly hours worked, 33.1 hours – a new low, don’t necessarily reflect an improved labor situation.

Posted by John Thomson | Report as abusive
 

Shouldn’t the title read “A job market that is getting worse at a slower rate”? A couple of points about the new headline unemployment number. The gap between the full employment unemployment rate (the NAIRU rate is currently 4.8%) is now 9.4-4.8=4.6. Since the great Depression it has only been higher once: in 1983 it reached 10.8-6.0=4.8 (NAIRU was higher in those days). One more month like this and we’ll be in record territory. Also in comparison to the 1974-1975 recession this is now worse than its peak unemployment rate (9.0% when NAIRU was 6.2%). And the six month increase in unemployment (2.6%) is greater than any six month period on record except between October/November 1974 and April/May 1975 (2.8%).

Posted by Mark A. Sadowski | Report as abusive
 

John T,

Agreed that there is a problem with the birth/death plug. The problem is not that it is large. That is a seasonal artifact. The plug is large in May every year. The problem is that is it larger than May of last year, in fact, 25% larger than for May of last year. The plug for leisure and hospitality is up 2.7% even though room occupancy has gone through the floor. The plug for construction is up 7.5% despite job losses in construction in every month since last May. The plug for manufacturing is up 75% from last May, even as auto suppliers close down left and right. This is nuts.

Posted by kharris | Report as abusive
 

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
  •