Some interesting charts (via TNR) looking at the linkage between unemployment and disapproval ratings:
Politics and policy from inside Washington
Here are a few opinions about the jump in the unemployment rate that caught my eye:
1) Dean Baker, Center for Economic and Policy Research
The October unemployment rate is still below the 10.8 percent peak reached in December of 1982, but the workforce is considerably older now and in age cohorts where workers are less likely to be unemployed. If the workforce had the same age distribution as in 1982 but current unemployment rates for each age cohort, then the unemployment rate would be more than a percentage point higher. The 10.7 percent unemployment rate for men is 0.6 percentage points higher than the 10.1 percent peak in 1982. This is consistent with the massive job loss in construction and manufacturing.
In all likelihood, the economy will continue to shed jobs, at least through the rest of the 2009 and probably into the first months of 2010. The unemployment rate will probably not peak until the spring of next year, at close to 11.0 percent.
2) Michael Feroli, JPMorgan
Even worse than this were the figures reported in the household survey of employment. The unemployment rate smashed through the psychologically significant 10% level to hit 10.2% in October. This came even as the labor force participation rate fell another 0.1% last month to fall to 65.1%. Normally, a falling participation rate would be expected to temper any increase in the unemployment rate, as discouraged workers who drop out of the labor force no longer count as officially unemployed. Moreover, the measure of employment in the household survey fell 589,000 in October and has been significantly weaker than the establishment survey measure over each of the prior three months.
Among the other details in the household survey, the unemployment rate for college-educated persons has actually been roughly stable since June at 4.7%, while less-educated groups have seen a big move up. The male unemployment rate hit a post-war high of 11.4% last month, breaking the previous record of 11.2% in December of 1982. . According to the CPS labor force flow data, only 15% of unemployed persons found a job last month, a new low.
The 190k payroll drop, combined with the 91k in upward back-revisions, slightly outpaced assumptions. Yet, the workweek failed to rise from its 33.0 cycle-low, hence leaving a 0.2% drop in hours-worked that will weigh on Q4 GDP estimates, as will the hefty jobless rate surge to 10.2% that shattered the 10% psychological barrier. The household survey also revealed a sobering 589k drop in household employment, while hourly earnings failed to provide any low inflation solace, with a 0.3% gain.
Some quick hits:
1) Remember in the early 1980s 7 straight quarters of avg. GDP growth of roughly 7% (!) lowered jobless rate by only 2.5 percentage points. Hard to see economy booming like that between now and Election Day 2010.
2) Healthcare has added nearly 600k jobs during recession. Good thing Congress is leaving that sector alone. Oh, wait …
3) Obama’s lost year: 2009 may end with no HC, capandtrade, financial reform — just a $787b stimulus that didnt prevent 10.2% unemployment. That is going to be the economic assumption of the average voter, I would think.
4) Dem conundrum: the worse economy gets, more people distrust government. Bad economy was supposed to increase desire for “economic security” …this was reflected in Virginia vote, certainly
5) Will WH actually try and focus on fact that the economy lost 29k fewer jobs in Sept. vs. Oct.? Lead balloon.
6) It’s not that the recession is worse than WH thought, it’s that their model of how the economy works is dysfunctional.
7) End of the Affair? You can be sure liberals (like Krugman) are hugely second guessing Obama decision to not press for LARGER stimulus
Good point from David Goldman:
The big issue in the US economy is the massacre of small business. That’s why the household survey shows that 558,000 Americans “became unemployed” during October, while the establishment survey of payrolls shows a decline of only 190,000 jobs. The establishment data, which are collected from larger businesses, are more reliable; the household survey is based on telephone interviews with randomly-selected households. But the numbers are so large as to make clear that small businesses are shutting down.
With commercial and industrial lending by American banks down 13% since September 2008, and most banks continuing to “tighten lending standards” in the Fed’s official poll, this is not surprising. Wal-Mart will make it through a recession; not the tea-cozy shop down the mall corridor, much less the real-estate agency in the half-abandoned exurb. The global speculative grade default rate, as Moody’s reported this week, has risen to a post-Great Depression high of 12%. Credit lines for small businesses (including home equity, credit cards, and all the other devices entrepreneurs use to fund themselves) will continue to shrink.
Me: By the way, one-third of the revenue from the surtax in the House healthcare bill would come from small business.
This is an extraordinarily bad number, and makes this week a 1-2 punch for Democrats. A 10.2 percent jobless rate is the highest since April 1983, even though the labor force participation rate actually dipped a bit. The broader U6 measured surged to 17.5 percent. Recall that 7 quarters of average GDP growth of roughly 7 percent in the 1980s only brought down the unemployment rate by 2 1/2 percentage points. As the Labor Department sums things up:
The unemployment rate rose from 9.8 to 10.2 percent in October, and nonfarm payroll employment continued to decline (-190,000), the U.S. Bureau of Labor Statistics reported today. The largest job losses over the month were in construction, manufacturing, and retail trade.
In October, the number of unemployed persons increased by 558,000 to 15.7 million. The unemployment rate rose by 0.4 percentage point to 10.2 percent, the highest rate since April 1983. Since the start of the recession in December 2007, the number of unemployed persons has risen by 8.2 million, and the unemployment rate has grown by 5.3 percentage points.
The number of long-term unemployed (those jobless for 27 weeks and over) was little changed over the month at 5.6 million. In October, 35.6 percent of unemployed persons were jobless for 27 weeks or more.
Total nonfarm payroll employment declined by 190,000 in October. In the most recent 3 months, job losses have averaged 188,000 per month, compared with losses averaging 357,000 during the prior 3 months. In contrast, losses averaged 645,000 per month from November 2008 to April 2009. Since December 2007, payroll employment has fallen by 7.3 million.
Construction employment decreased by 62,000 in October. Manufacturing continued to shed jobs (-61,000) in October, with losses in both durable and nondurable goods production. Retail trade lost 40,000 jobs in October.
Health care employment continued to increase in October (29,000). Since the start of the recession, health care has added 597,000 jobs.
Temporary help services has added 44,000 jobs since July, including 34,000 in October.
The average workweek for production and nonsupervisory workers on private nonfarm payrolls was unchanged at 33.0 hours in October.
In October, average hourly earnings of production and nonsupervisory workers on private nonfarm payrolls rose by 5 cents, or 0.3 percent, to $18.72. Over the past12 months, average hourly earnings have risen by 2.4 percent, while average weekly earnings have risen by only 0.9 percent due to declines in the average workweek.
The change in total nonfarm payroll employment for August was revised from -201,000 to -154,000, and the change for September was revised from -263,000 to -219,000.