MacroScope

Economists seems to be having a difficult time sorting through the recent downward trend in jobless claims. On the surface, the news looks good. Benefit applications, which have been trending lower from a 26-year peak of 674k in March, fell to a nine-month low of 521k this week. Continuing claims also eased, and are now hovering just above 6 million.

On the one hand, this suggests the October employment survey could be a bit better following a September disappointment, particularly considering this is survey week for payrolls. At the same time, there are continued reasons to worry. JP Morgan’s Abiel Reinhart had this to say:

Claims are at their lowest level since the start of the year, although the level is obviously still high. To date, the four-week average of jobless claims is down 24,500 from the September payroll survey week, which is good news on the employment front. The downward trend in claims does suggest that payroll losses could moderate again in October. The insured unemployment rate fell to 4.5% from 4.6%. The fall in insured unemployment suggests that overall unemployment is approaching its peak.

Others aren’t sure the story is all that rosy. They worry that, given the time limitations on benefits (and despite their extension as part of Obama’s stimulus), many Americans are simply falling off the jobless rolls because they no longer qualify. Jan Hatzius et al at Goldman write:

A small step — not a giant leap — given the volatility of these data and the ongoing likelihood that the downward drift in continuing claims still represents exhaustions of eligibility for regular benefits more than actual rehiring.

In case you weren’t depressed enough about the state of the U.S. labor market and the 7.2 million jobs lost since the start of the recession, check out this factoid from JPMorgan economist Michael Feroli:

“We would need payroll gains of 200,000 per month every month for three straight years just to get back to late 2007 levels of employment, and even that calculation ignores the labor force growth over the intervening years.”

Take your pick of bad September job news: the average workweek declined; average hourly earnings increased a paltry 0.1 percent; the broadest measure of unemployment and underemployment rose to 17 percent; and the average duration of unemployment hit an all-time high of 26.2 weeks.

Reuters columnist Agnes Crane breaks down the latest job report:

The latest Blue Chip survey of economists is out this morning, and there’s general agreement on one point: the longest recession since the Great Depression is about to end, if it hasn’t already. Some 87 percent of the economists surveyed thought the National Bureau of Economic Research will eventually declare the recession ended prior to the end of September.

What happens next is up for debate. The survey found that about 16 percent expect a strong V-shaped recovery. An equal percentage expects a W-shaped double-dip recession. Most economists — about 65 percent — were lumped in the middle, looking for a long, slow U-shaped recovery.

They also seem to think that last Friday’s jobs report, which showed the jobless rate dipped for the first time in 15 months, was just a head-fake. The consensus view is that unemployment peaks at 10.2 percent, compared with the current level of 9.4 percent, and nearly half thought that level would be reached in the first quarter of 2010.

As part of a Reuters series on long-term unemployment, reporters spoke with those who are struggling to find work. For other profiles click here and here.

ALVIN GAINS, 56, former Chrysler worker

For the second time in 30 years, Alvin Gains is leaving his home state of Michigan and moving to Texas to find work.

“There are college kids who can’t find a job, so there’s no chance for someone my age,” said Gains, 56. “But people are hiring in Houston, so it’s time to go.”

The global recession may be showing signs of abating, but that hasn’t stopped the worldwide hand-wringing over job security. People across the globe are more worried now than they were six months ago about losing their job, and plenty more know someone who is no longer employed, according to a poll.

In the Ipsos/Reuters survey of 23,000 people in 23 countries, 53 percent named jobs and unemployment as their top concern — a 12-point increase in the past six months.  Nearly three-quarters said they know someone who has lost a job.

What worries are foremost on your mind?

As men bear the brunt of the economic downturn, could the so-called “he-cession” hold a silver lining for the opposite sex?

Men make up 82 percent of all recessionary job losses in the United States, according to a recent New York Times article, mostly due to declines in traditionally male fields like construction, where the unemployment rate skyrocketed from to 21 percent in March, from 12 percent a year earlier.

The unemployment rate for adult men was 8.8 percent in March compared to 7 percent for adult women.

At first glance, Germany appears to be feeling the global economic downturn harder than many of its European peers: Industrial output fell by nearly a quarter on the year in February — taking a bigger hit than Britain, France and even Italy — and economists expect the economy to contract by as much as 7 percent this year.

Yet two government policy measures are helping insulate ‘Otto Normalverbraucher’ (Joe Public) from the full impact of the downturn: ‘Kurzarbeit’, or short-term work, and the ‘Abwrackpraemie’ — a ‘cash-for clunkers’ car subsidy plan.

By taking advantage of legislation that promotes shortened　hours, many German firms have avoided lay-offs, helping limit a　rise in the unemployment rate, which now stands at 8.1 percent.　And the car subsidy has given a boost to the auto sector, to　which close to one in five jobs are linked in Germany.

Markets might have rallied on relief that the jobs data this morning wasn't worse than expected, but there's no getting away from the fact that an 8.5 percent unemployment rate is an ugly number. The March jobs figures showed U.S. employers slashed 663,000 jobs in March. The unemployment rate was the highest since 1983. Here is some reaction from the market:

ROBERT MACINTOSH, CHIEF ECONOMIST, EATON VANCE CORP, BOSTON:
"It's telling you we're in a deep recession and it's still going to be a while to get out of it, especially on the employment side of things. But you have to keep in mind that this is a lagging indicator, we're going to get bad employment numbers, along with the employment rate, even if the economy is starting to turn."

PIERRE ELLIS, SENIOR ECONOMIST, DECISION ECONOMICS, NEW YORK:
"The report does not contradict the growing notion that the economy is finding a bottom. Employment will not turn on a dime and certainly there's no sign of strength, but at least it's not getting worse and worse and worse."

It’s no surprise that the U.S. Bureau of Labor Statistics report on state unemployment is grim reading. Unemployment is up in 49 of 50 states (go Louisiana!). 

It may also be telling us something troubling about the prospects for recovering from this recession quickly. The states with low unemployment aren’t exactly the most exciting places to live, and even if you were prepared to move there’s the not-so-small matter of trying to sell your home in the middle of a housing crisis.

The states with the lowest unemployment include Wyoming, North and South Dakota, and Nebraska — far from the coasts where populations — and unemployment — are higher. Which brings us to the Oswald Hypothesis (don’t worry — we didn’t know what it was either until JP Morgan economist Michael Feroli mentioned it). Higher homeownership rates may increase the natural unemployment rate, essentially because that makes it harder for people to pick up and move.