Report from the U.S. Department of Labor statistics:
Nonfarm payroll employment continued to trend down this month (down 190,000 in October) but restarting a slowdown trend that was interrupted by a jump last month (263,000 in September, 201,000 in August (revised), 304,000 in July (revised), 467,000 in June, 345,000 in May, 539,000 in April and 633,000 in March).
The 3-month average job layoff figure has been dropping steadily. August through October was 232,000; July – September was 256,000; June – August was 324,000; May – July was 372,000; April – June was 450,333; March – May was 505,667.
The numbers still indicate that companies are approaching their maximum “leanness” and sustain perceptions that the economy gradually will swing to employment recovery.
The number of unemployed persons increased in October by 558,000. Previous month increases were September (214,000), August (466,000), July (267,000), June (218,000), May (787,000), April (563,000) and March (851,000).
Total unemployment has risen from 11.6 million (7.6%) in January to its current rate representing and additional 8.2 million workers unemployed since December 2007. Unemployment is the highest since April 1983. In a healthy economy, around 125,000 jobs a month must be added and filled just to keep the unemployment rate stable.
The current rate is 10.2% and the number unemployed is at 15.7 million.
The number of persons working part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed in October at 9.3 million. Previous month part time figures were September (9.2 million), August (9.1 million), July (8.8 million) and June (9.0 million). These persons had their hours cut back or were unable to find full-time jobs. Since the start of the recession, the number of such workers has increased by 4.4 million, and has remained relatively constant since March 2009.
Long-term unemployed persons (jobless for 27 weeks and more) has tripled since the start of the recession to 5.6 million since December 2007, adding 156,0000 to that number in October. One in three (35.6%) unemployed persons are in this category.
Ed.Note: It is possible that as consumer and business confidence is improving, more workers are starting to look for jobs again, returning to the workforce in anticipation of better employment conditions. This drives the unemployment rate higher.
Construction job losses led the month, down 62,000 in October. Previous month losses were September (64,000), August (65,000), July (76,000), June (79,000), May (59,000), April (110,000), and March (161,000), with a total of 1.6 million since December 2007.
Manufacturing was a close second, down 61,000 in October. Previous month losses were September (51,000), August (63,000), July (52,000), June (136,000), May (156,000), April (149,000) and March (161,000) with widespread job losses totaling 2.1 million since December 2007.
Retail trade employment dropped by 40,000 in October. Previous month losses were September (39,000), August (9,600), July (44,000), June (18,000), and April (47,000).
Education and health services continued to add jobs, with payrolls increasing by 45,000 in October. Previous month adds were September (19,000), August (52,000), July (21,000).
Professional and business services added 18,000 jobs. Previous changes were September (add 3,000), and losses in August (22,000), July (38,000), June (118,000), May (51,000), April (122,0000), and March (133,000).
Government employment stayed even for October. Previous losses were September (53,000), August (18,000) and July (28,000).
Unemployment spreads stayed relatively the same with the highest among teenagers (27.6%), followed down by African-Americans, then Hispanics. The lowest unemployment started with Asians (7.5%) followed up by Adult women (8.1%), Whites, then Adult men (10.7%).
The good news from this data, is that the job losses seem to be lessening. It is perhaps due to fewer jobs available to lose, but the lower figures are an encouraging sign.
The average workweek remained constant after edging down by 0.1 to 33.0 hours in August. This figure closely correlates with overall output and gives clues (when workweek hours increase) on when firms will start hiring.
Average hourly earnings (reflecting the recent increase in the legal minimum wage) edged up $0.05 to $18.72 for October, rising for a sixth straight month.
Workforce:
The total Civilian labor force stands at 153.9 million (down 31,000 from September). There are nearly a million fewer workers in the work force than in June (154.9 million).
The Civilian labor force usually grows as a recession winds down and optimism about finding work grows. But as long as Americans remain anxious about their jobs, consumer spending is not expected to grow enough to power an economic rebound.
The employment population ratio, at 58.5 percent, has declined by 4.2 percent since the recession began in December 2007.
Comparing now with the final month of the last major downturn in November 1982, the total Civilian labor force then stood at 111.1 million. In that month, there were 11.9 million people unemployed accounting for 10.8% of the available work force (average for the year was 10.6 million unemployed with the rate at 9.7%).
Looking at jobs needed to reduce unemployment
with the total Civilian labor force at 153.9 million:
| Rate%_ | Unemployed | ||
| 10.2 | 15.7 million | <= we are here | |
| 9.8 | 15.1 million | September | |
| 9.7 | 14.9 million | August | |
| 9.5 | 14.7 million | June | |
| 9.4 | 14.46 million | May,July | |
| 8.9 | 13.7 million | April | |
| 8.5 | 13.2 million | March | |
| 8.1 | 12.5 million | February | |
| 7.6 | 11.7million | January | |
| 7.0 | 10.7million | ||
| 6.5 | 10.0 million | ||
| 6.0 | _9.2 million | ||
| 5.5 | _8.5 million | <= target | |
| 5.0 | _7.7 million | ||
| 4.5 | _6.9 million |
.
To restore employment to the 5.5% level of 2008, about 7.2 million people will have to regain their job or start new jobs. It is a tall mountain to climb.
Ed.Note: Government and economists foretell that the “normal” unemployment rate will move up to 8% from its current 5.5% level. With the current Civilian labor force, that means that on a permanent basis there will be roughly 12.5 million people unemployed — more than 4 million more than at the “normal” level today.
Data collection:
The Census Bureau surveys 60,000 households across the country to insure an accurate demographic survey. The unemployment rates are extrapolated from the survey results.
The quoted unemployment rate excludes people who have stopped looking for work because they believe no jobs are available (discouraged workers) and others outside the labor force. They are counted separately. Their number has nearly doubled in the previous 12 months.
Stimulus (Recovery Act):
The president’s $787 billion stimulus bill signed into law hopes to create about 3.5 million jobs. Lower estimates put that figure at 2 to 2.5 million jobs by the end of 2010, reducing the unemployment rate to 8+%.
The White House Council of Economic Advisers released a report showing the plan would save or create 1.5 million jobs by the end of 2009 and 3.5 million by the end of 2010.
A senior White House official stated that the Obama administration’s fiscal stimulus plan will meet their previous estimates to save 3.5 million U.S. jobs by the end of 2010, but the unemployment rate at that time may be higher due to further deterioration in the economy. White House officials have been careful to point out that estimated jobs created and saved have merely slowed continued job losses.
Stimulus spending by state:
As of October 27, 2009, of the
$314,699,919,456 announced
$291,221,961,803 (92.5%) has been made available
$123,525,097,127 (39.25%) has been paid out to the states
http://www.recovery.gov/Pages/TextView.aspx?data=homeMap
Recession histories:
With Nov 1982 unemployment at 10.2%, and the government taking aggressive action, it was still more than five years (April 1988) from the peak before unemployment receded to 5.4%.
The approach that time, however, was to fix the economy at the expense of the worker.
Some compare the fall in employment to 1974-1975 and 1981-1982. If the comparison is accurate, the peak in unemployment may be reached within the next four to five months (past performance is no guarantee of the future).
Economist William Polley made a chart that includes every recession since World War II. It makes the chart pretty hard to read, so he simplified it with selected post-WWII recessions.
William Polley’s chart shows how the recovery from the 2001 recession took four years for employment to return to its February 2001 peak.
Using the Department of Labor unemployment tables of unemployment rates and 5.5% as the “normal” rate of unemployment, I have analyzed things a little differently. Of course, along the way, the Civilian labor force increases, so the percentages represent ever more workers.
The following table shows unemployment start dates, peaks and returns to the normal rate of 5.5%, Civilian labor force in millions of workers for that year, and the lengths of times from the start date in months:
Recession peaks 1974-2009
| Millions | Pct | Labor | Growth | Recession Period | |||
| Unemployed | Force | Length | |||||
| Start | July 1974 | 5.5 | 91.9 | ||||
| Peak | May 1975 | 8.4 | 9.0 | 10 mos | |||
| Return | May 1979 | 5.6 | 104.9 | 14.1% | 4 yrs 10 mos | ||
| Start | May 1979 | 5.6 | 104.9 | ||||
| Peak | Nov 1982 | 11.9 | 10.8 | 3 yrs 6 mos | |||
| Return | Apr 1988 | 5.4 | 121.6 | 15.9% | 8 yrs 11 mos | ||
| Start | Nov 1990 | 6.2 | 125.8 | ||||
| Peak | May 1992 | 9.7 | 7.6 | 18 mos | |||
| Return | Dec 1994 | 5.5 | 131.0 | 4.1% | 4 yrs 1 mo | ||
| Start | Nov 2001 | 5.5 | 143.7 | ||||
| Peak | June 2003 | 9.2 | 6.3 | 19 mos | |||
| Return | Feb 2004 | 5.6 | 146.5 | 1.9% | 2 yrs 3 mos | ||
| Start | May 2008 | 5.5 | 154.7 | ||||
| Peak | Oct 2009 | 15.7 | 10.2 | 18 mos | |||
| Return | 153.9 | So far | |||||
| . |
Note that the unemployment peak period that started in 1974 and ended in 1979 (lasting nearly five years) was followed immediately by another peak period ending nearly nine years later. By the end of that period, the work force had increased by more than 32%, meaning overall, almost 30 million new jobs had to be created.
The aggressive increase in the Civilian labor force in that period can likely be attributed to post-World War II babies reaching adulthood, with some entering the labor force after secondary school and the rest entering the workforce after further education.
The periods from 1988 to 1990 and 1995 to 2008 were periods of prosperity, with low unemployment (but a building bubble). Here is the same data in graphic form:
Unemployment rates:
It is interesting to recognize that in most cases, unemployment peaks roughly one-third of the timeline for unemployment to return to its “normal” rate, so we can double the number of months from the Start to the Peak to expect to arrive at an approximate return to “normal.”
We live in hope (again, past performance is no guarantee of the future).
The next Economic Jobs report will be found at:
Economic Picture: November 2009
The last Economic Jobs report will be found at:
Economic Picture: September 2009
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