A Deeper Look into Friday's Unemployment Numbers

The headlines hit the feeds, WOW! May nonfarm payrolls -345,000, while minimizing a 9.4% national unemployment rate.

Others, not really interested in lagging indicators of a possible recession bottom, questioned Huh?

I mean, really, talk about cheerleading!   A reduction in the collosal monthly rate of job losses over the last year or so is interpreted here as a slow-down in the recession?  How so?  A slow-down in job losses, perhaps, and probably a monthly blip, but an improving recession?    How is that connection established?   I'd say there's about as much substance to that statement as Bush's remark that "We don't torture".

In Jobless rate slows, unemployment up and traders are happy:

There are so many people that have run out their unemployment benefits and have either:

  • Just stopped looking and aren't working
  • They had to take part time work

In these economic times of a prolonged recession, oops better get my words in order her, call it an economic down turn.   Did the powers to be ever really say the R word.   Did we hit enough quarters for them?

Econbrowser (one of the best blogs out there for economics!) says it all with a couple of graphs:

may '09 unemployment
Log nonfarm payroll employment, Dec 2008 (blue); Feb 2009 (red); Apr 2009 (green); May 2009 (black). NBER defined recessions shaded gray. Source: BLS via FREDII, NBER, and author's calculations.

 

may unemployment 2
Log nonfarm payroll employment (blue); nonfarm payroll employment minus government employment (green); aggregate weekly hours index, total private industry (red), normalized to 0 at 2007M12. NBER defined recessions shaded gray. Source: BLS via FREDII, NBER, and author's calculations.

 

EPI adds to the stark reality with this graph on wages:

wages average EPI

 

Yet EPI economist Heidi Shierhol notes:

The loss of 345,000 jobs in May – 0.3% of employment – makes this jobs report the second worst in a quarter century not including the current recession, but in today’s economy a loss of only 345,000 jobs is welcome news.

So are all of those reports simply desperate to find some green shoots and thus going into a delusional state when reading the BLS reports?

Calculated Risk is trying to claim if one goes to college all is well. But the statistics are from 2008!

Economist's View also implies if one has a College degree they aren't hurting.

But the reality for many working professionals is they are forced out of their chosen career field (thus not counted in the occupational unemployment statistics), the BLS counts foreign guest workers in unemployment statistics (artificially inflating the employment rate), new college graduates cannot find a job and millions forced into earlier retirement.

In Temp Work Masks Joblessness Among Americans:

Consider these numbers:

  • The 8.9 percent April unemployment rate was based on 13.7 million Americans out of work. But that number doesn't include discouraged workers or people who gave up looking for work after four weeks. Add those 700,000 people, and the unemployment rate would be 9.3 percent.
  • The official rate also doesn't include "marginally attached workers," or people who have looked for work in the past year but stopped searching in the past month because of barriers to employment such as child care, poor health or lack of transportation. Add those 1.4 million people, and the unemployment rate would be 10.1 percent.
  • The official rate also doesn't include "involuntary part-time workers," or the 2 million people like Noel who took a part-time job because that's all they could get, plus those whose work hours dropped below the full-time level. Once those 9 million workers are added to the unemployment mix, the rate would be 15.8 percent.

All told, nearly 25 million Americans were either unemployed, underemployed or had given up looking for a job in April.

The ranks of involuntary part-timers has increased by 4.9 million in the past year, according to a May study by the Federal Reserve Bank of Cleveland. Many economists now predict unemployment won't peak until 2010. And since employers generally increase the hours of existing workers before hiring new ones, workers could be looking for full-time jobs for some time.

Chris Martenson says the May report isn't even believable by the birth-death model in the United States (h/t commongood):

All told, this resulted in 220,000 jobs being added to the reported number, which came in at 345,000 where 520,000 were expected.    This is an enormous improvement of +175,000 jobs over the expected number; the only problem is that 220,000 of these jobs cannot be counted, touched, or verified, as they were modeled.

Now I don't know about you, but in my neck of the woods, this year is much darker on the job front than last year.    Every piece of data I am reading suggests that this is a national phenomenon.   How many jobs were "modeled" and added last May?  Only 176,000.  So we might ask ourselves, again, what sort of a model is it that can find a way to add 25% more jobs this May than last May?     What exactly are the inputs that feed this model?

Check out his blog for it's quite the birth-death model analysis with graphs.

Shadow Stats (h/t again commongood) has an incredible graph with U6 above 20% (New Deal Democrat gives the Great Depression U6 T 37.5%):

 

Chart of U.S. Unemployment

 

Naked Capitalism is posting a series, from Pension Pulse on how retirement is now a thing of the past. Our pensions and retirement funds have been robbed blind. It's a very good series and I'm grateful we have some expert bloggers watch dogging and reporting on how retirement in America just got the pink slip.

I don't think Bloomberg and others are being cheerleaders. I think the Nation is still in denial about what is happening to their friends and neighbors. People are getting wiped out. The entire middle class is being eroded and it is now affecting the entire national economy.

All I can say is, folks, please demand one thing, in unison: jobs, jobs, jobs, jobs, jobs.

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Comments

I was just going to point out

that someone had brought up the ADP data on job losses a day or so ago, then found with a search that it was none other than our correspondent himself, Mr Oak!

There's a whole bunch of outrage on econ-fin issues over at correntewire.com, including the wonderfully titled "If you pump more blood into a zombie, it's still a zombie."

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I was thinking the same thing on Friday....

...that by almost any other standard the reported job loss would be considered VERY BAD. Talk about spinning. I'll believe we are in a recovery when I see an employment number with a + (plus) in front of it.

 

 

"....under Capitalism, man exploits man. Under Communism it's just the opposite..." ---John Kenneth Galbraith

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"....under Capitalism, man exploits man. Under Communism it's just the opposite..."

---John Kenneth Galbraith

Unemployment to drop again.....

Between May and December of this year, 99,050 Michiganders will exhaust their UI benefits. Since they have nowhere else to go, welfare numbers will sky rocket. Has anybody looked at DHS statistics?

The stimulus money is for job training for adults. It is loaded with red tape and crawling with feds. It is the wrong money for the job that needs to be done. What good is job training when there are no jobs? They should have poured money into public service employment instead of training. They did a version of this for summer youth, and in one county alone, 3,000 kids will have summer jobs. Since their parents have no money, this should help.

Both the meltdown and the fix are screwed.

YES WE CAN doesn't necessarily mean he will.

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