October Job Report

[Doc Holliday]

Well, not really, but I just thought I'd put in a place holder.

Anyway, today's unemployment insurance stuff. "In the week ending Oct. 31, the advance figure for seasonally adjusted initial claims was 512,000, a decrease of 20,000 from the previous week's revised figure of 532,000."

http://www.workforcesecurity.doleta.gov/press/2009/110509.asp

It's good that it's down, but it's bad that it's still above 500k. That simply can't mean anything but net job loss.

Productivity was way up. "Nonfarm business sector labor productivity increased at a 9.5 percent
annual rate during the third quarter of 2009, the U.S. Bureau of Labor
Statistics reported today".

http://www.bls.gov/news.release/prod2.nr0.htm

Tomorrow is the big day.

[Doc Holliday]

payrolls -190,000

unemployment rate (U3) 10.2%

http://www.bls.gov/news.release/empsit.nr0.htm

[Doc Holliday]

btw, one bright spot was temp help.....

[beattherap]

the ur is now 2.2 percentage points higher than white house economists predicted it would be with the stimulus bill and 1.5% points higher than they predicted it would be WithOut the stimulus bill ...

iow, the ur is more than 25% higher than the white house predicted...

in the spring, i doubted the stimulus bill would work, but said wait until oct./nov. to give a fair assessment...

the stimulus bill didn't come close to achieving its goals.

imfo.

[Former Juror]

Highest unemployment in 26 years. And, to think, we've got 3 more years of this. :scared:

IMO

[Doc Holliday]

the ur is now 2.2 percentage points higher than white house economists predicted it would be with the stimulus bill and 1.5% points higher than they predicted it would be WithOut the stimulus bill ...

iow, the ur is more than 25% higher than the white house predicted...

in the spring, i doubted the stimulus bill would work, but said wait until oct./nov. to give a fair assessment...

the stimulus bill didn't come close to achieving its goals.

imfo.

The payroll loss wasn't really all that unexpected - I figured it would be in the high 100k's, anywhere from 150k to 200k.

But I didn't think the UR would jump that far. We might be pushing over 11% by the time this war is over.

And the revisions the last two months seems big to me right now - August was revised way down to -154,000 from -201,000.

[Doc Holliday]

The employment hole got worse by 317,000, which means we need a future month with a 444,000 net payroll gain in order to make up for the loss this month, assuming a constant growth factor of 127,000/month.

[ninetoes]

The payroll loss wasn't really all that unexpected - I figured it would be in the high 100k's, anywhere from 150k to 200k.

But I didn't think the UR would jump that far. We might be pushing over 11% by the time this war is over.

And the revisions the last two months seems big to me right now - August was revised way down to -154,000 from -201,000.

Higher than I expected, to be honest. And although I am trying hard to learn and understand all the "ins and outs" behind all of this, I still get confused when one day we hear how production is up, how the GDP has risen, how consumer spending is up...yet we see numbers such as these. How can everything be "up", and job numbers be so bad?

[Doc Holliday]

Higher than I expected, to be honest. And although I am trying hard to learn and understand all the "ins and outs" behind all of this, I still get confused when one day we hear how production is up, how the GDP has risen, how consumer spending is up...yet we see numbers such as these. How can everything be "up", and job numbers be so bad?

One thing that strikes me is that higher output (GDP) produced by fewer workers (net payroll loss) goes hand in glove with the huge jump in the productivity number that was released yesterday....

[beattherap]

The payroll loss wasn't really all that unexpected - I figured it would be in the high 100k's, anywhere from 150k to 200k.

But I didn't think the UR would jump that far. We might be pushing over 11% by the time this war is over.

And the revisions the last two months seems big to me right now - August was revised way down to -154,000 from -201,000.
another negative if i understand correctly... the number no longer looking for work, who aren't counted in the ur, went up in oct. by around 150,000.

[ninetoes]

One thing that strikes me is that higher output (GDP) produced by fewer workers (net payroll loss) goes hand in glove with the huge jump in the productivity number that was released yesterday....

Yes, that would make sense, and I have witnessed businesses doing just that.

But I still get surprised when I read how houses and auto's are selling at higher rates than before etc. I suppose there are still folks that feel secure enough to do so.

[Doc Holliday]

another negative if i understand correctly... the number no longer looking for work, who aren't counted in the ur, went up in oct. by around 150,000.


Table A12 has the alternative measures of unemployment.

U6 is the widest measure, which includes discouraged workers and part timers, is now at 17.5%. http://www.bls.gov/news.release/empsit.t12.htm

17.5% unemployment is what it "feels" like to the average person in the street.

[Hey Paula]

The payroll loss wasn't really all that unexpected - I figured it would be in the high 100k's, anywhere from 150k to 200k.

But I didn't think the UR would jump that far. We might be pushing over 11% by the time this war is over.

And the revisions the last two months seems big to me right now - August was revised way down to -154,000 from -201,000.

Unless measures are taken to stimulate/incentivize job creation in the private sector, the unemployment rate will continue to rise.

Also, all social programs which increase taxes, attach penalties and increase business and personal expenditures, must be halted. Obamacare and tax & cap will increase the unemployment rate and will further erode and devastate the economy.

IMO

[ninetoes]

Unless measures are taken to stimulate/incentivize job creation in the private sector, the unemployment rate will continue to rise.

Also, all social programs which increase taxes, attach penalties and increase business and personal expenditures, must be halted. Obamacare and tax & cap will increase the unemployment rate and will further erode and devastate the economy.

IMO

I agree, but I think that's where we are headed as of today. Businesses really have very little incentive to "grow" when doing so results in enormous taxes.

[Hey Paula]

I agree, but I think that's where we are headed as of today. Businesses really have very little incentive to "grow" when doing so results in enormous taxes.

ITA, and that's why a stimulative/incentive plan must include tax cuts and tax credits for the small business community.

IMO

[beattherap]

Unless measures are taken to stimulate/incentivize job creation in the private sector, the unemployment rate will continue to rise.

Also, all social programs which increase taxes, attach penalties and increase business and personal expenditures, must be halted. Obamacare and tax & cap will increase the unemployment rate and will further erode and devastate the economy.

IMO
the new ur is bad news, but it might hit congress where they care the most--- reelection chances...

maybe this bad economic news, along with the gop winning nj and virg., will help the demise of cap n trade and the nutty health care bills.

imo.

[ninetoes]

the new ur is bad news, but it might hit congress where they care the most--- reelection chances...

maybe this bad economic news, along with the gop winning nj and virg., will help the demise of cap n trade and the nutty health care bills.

imo.

Im not sure the economy is much of a priority with this congress. Passing healthcare and Cap and Trade are the priority, even if it leaves the economy in shambles, IMO.

[beattherap]

Im not sure the economy is much of a priority with this congress. Passing healthcare and Cap and Trade are the priority, even if it leaves the economy in shambles, IMO.
i'm thinking, maybe, just maybe, the top priority is reelection and enough dems will take the 10.2% ur and losing nj and virg. as wake up calls... i admit, not likely, but a chance.

[Hey Paula]

the new ur is bad news, but it might hit congress where they care the most--- reelection chances...

maybe this bad economic news, along with the gop winning nj and virg., will help the demise of cap n trade and the nutty health care bills.

imo.

It should impact anyone with a lick of common sense, (including members of Congress who appear to live in a bubble) especially those who want to keep their jobs. The election landslide victories in VA and NJ, along with the presence of thousands of American citizens yesterday on Capitol Hill, protesting obamacare, should give all of them pause.

Brazenly, Barbara Boxer pushed a climate control bill through committee yesterday, despite Republicans boycotting the vote and Sen Baucus (D) voting against it. These people are arrogantly tone deaf and dismissive of the electorate. Carly Fiorina is vying for the Republican nomination for BB's senatorial seat. If she is selected as the candidate, I hope she will unseat this arrogant woman.

IMO

[ninetoes]

It should impact anyone with a lick of common sense, (including members of Congress who appear to live in a bubble) especially those who want to keep their jobs. The election landslide victories in VA and NJ, along with the presence of thousands of American citizens yesterday on Capitol Hill, protesting obamacare, should give all of them pause.

Brazenly, Barbara Boxer pushed a climate control bill through committee yesterday, despite Republicans boycotting the vote and Sen Baucus (D) voting against it. These people are arrogantly tone deaf and dismissive of the electorate. Carly Fiorina is vying for the Republican nomination for BB's senatorial seat. If she is selected as the candidate, I hope she will unseat this arrogant woman.

IMO

I think Pelosi is calling the shots. And, as she said, its worth losing seats to pass their agenda. Sad really, considering just how bad things are for the average american.

[Hey Paula]

I think Pelosi is calling the shots. And, as she said, its worth losing seats to pass their agenda. Sad really, considering just how bad things are for the average american.

I wonder how those who might lose their seats feel about this? Are they prepared to make the supreme sacrifice for the unpopular nationalization of America's health care?

I wonder how the callous, arrogant Pelosi feels about not only losing her Speaker position, but her congressional seat as well?

I find the lack of concern for losing their positions not only arrogant, but troubling as well. Their motives for defiantly ignoring the electorate and increased deficit burden truly concern me.

[Doc Holliday]

We've now suffered job losses for 22 months in a row, which we haven't seen since 1939 and this is what the employment hole looks like.

The total job loss so far, as reported by the BLS, is 7,300,000.

The revision which is coming up in early 2010 is for an additional 824,000 jobs lost.

That makes total job loss 8,124,000.

Assuming a constant population growth factor of 127,000, then the total hole is 10,918,000 (total job loss plus 127,000 per month).

Heidi Shierholz is an economist at the EPI who specializes in labor economics:

Since the start of the recession in December 2007, an estimated 8.1 million jobs have been lost. This number includes both the 7.3 million jobs lost in the payroll data as currently published, plus the preliminary annual benchmark revision released on October 2nd, which showed an additional 824,000 jobs lost from April 2008 to March 2009. And even this number understates the magnitude of the hole in the labor market by failing to take into account the fact that the population is always growing. To keep up with population growth, the economy needs to add approximately 127,000 jobs every month, which translates into 2.8 million jobs over the 22 months since the start of the recession. This means the labor market is currently 10.9 million jobs below what is needed to return to the pre-recession unemployment rate. In order to fully fill in the gap in the labor market by October 2011, employment would have to increase by an average of 582,000 jobs every month between now and then, a sustained rate not seen since 1950-51.

http://www.epi.org/analysis_and_opinion/entry/at_10.2_octobers_unemployment_is_a_wake-up_call/

Here's my calculations showing job creation each month and how long it would take to get out of the hole, assuming the 127k constant growth factor:

Jobs..................years to get out of hole
800,000...............1.3
700,000...............1.6
600,000...............1.9
500,000...............2.4
400,000...............3.3
300,000...............5.2
200,000...............12.5

IOW, if the economy creates an average of 800,000 net jobs per month, then it would take 1.3 years to get out of the hole and be back to where we were at the start of the recession. 1.3 years would be about the beginning of 2011.

Downloading the payroll data from here.. http://research.stlouisfed.org/fred2/ ...and then going through and by visual inspection picking out the best string of job creations for Bush and the best string for Clinton, I come up with a best average of 160,000 net jobs created per month for Bush and 234,000 net jobs created per month for Clinton.

Dismal at first, since that means it would take at least 10 years to climb out of the hole even if the economy creates jobs at the same rate as it did during the Clinton years. Plus, that gives you an idea of what the economy has done over the past 16 yrs.

However, if, somehow, the economy can add an average of 300,000 to 400,000 net jobs per month once things heat up, then we would be back to pre-recession levels in about 4 years.

Obviously, the economy has to perform extraordinarily well for the next several years in order for the unemployment rate to come down significantly, and I don't have a clue if that's going to happen.

This is definitely the most significant economic downturn since the Great Depression.

[Doc Holliday]

A lot of people like to point to the early 80's as being somehow worse than today because the unemployment rate got up to 10.8% in that one.

But there is no comparison.

Back then, job losses continued for 17 months in a row. Today we are on our 22nd month in a row.

Back then, the recession was, in essence, caused by the Fed wringing inflation out of the system by pursuing tight monetary policy. In this recession we are just like we were in the Great Depression - at the zero lower bound (the Fed has parked interest rates at 0 since December 2008 - IOW, the normal monetary policy isn't working).

Back then, once the Fed loosened things up, the economy surged back with strong job gains. September 1983 shows over a million net jobs added (although I have no idea why that is so...it's a huge number).

Now, there is no sign that the economy can surge back like it did then; most signs point to a recovery like the jobless recovery in 2001.

Also, we're now at 10.2% and I strongly suspect we'll ultimately push 11%.

[ninetoes]

A lot of people like to point to the early 80's as being somehow worse than today because the unemployment rate got up to 10.8% in that one.

But there is no comparison.

Back then, job losses continued for 17 months in a row. Today we are on our 22nd month in a row.

Back then, the recession was, in essence, caused by the Fed wringing inflation out of the system by pursuing tight monetary policy. In this recession we are just like we were in the Great Depression - at the zero lower bound (the Fed has parked interest rates at 0 since December 2008 - IOW, the normal monetary policy isn't working).

Back then, once the Fed loosened things up, the economy surged back with strong job gains. September 1983 shows over a million net jobs added (although I have no idea why that is so...it's a huge number).

Now, there is no sign that the economy can surge back like it did then; most signs point to a recovery like the jobless recovery in 2001.

Also, we're now at 10.2% and I strongly suspect we'll ultimately push 11%.

I agree, Doc. As much as I would LOVE to be able to jump up and down and say hoorah for the growth in GDP, and rise in production etc, the facts are what they are. I would love to be optomistic about the whole thing, heck, I have kids who will be impacted over the next decade as we fight our way back. But I just dont get a warm fuzzy about any of this. And, I think it will get worse long before it gets better :sad:

[theal3]

We've now suffered job losses for 22 months in a row, which we haven't seen since 1939 and this is what the employment hole looks like.

The total job loss so far, as reported by the BLS, is 7,300,000.

The revision which is coming up in early 2010 is for an additional 824,000 jobs lost.

That makes total job loss 8,124,000.

Assuming a constant population growth factor of 127,000, then the total hole is 10,918,000 (total job loss plus 127,000 per month).

Heidi Shierholz is an economist at the EPI who specializes in labor economics:



http://www.epi.org/analysis_and_opinion/entry/at_10.2_octobers_unemployment_is_a_wake-up_call/

Here's my calculations showing job creation each month and how long it would take to get out of the hole, assuming the 127k constant growth factor:

Jobs..................years to get out of hole
800,000...............1.3
700,000...............1.6
600,000...............1.9
500,000...............2.4
400,000...............3.3
300,000...............5.2
200,000...............12.5

IOW, if the economy creates an average of 800,000 net jobs per month, then it would take 1.3 years to get out of the hole and be back to where we were at the start of the recession. 1.3 years would be about the beginning of 2011.

Downloading the payroll data from here.. http://research.stlouisfed.org/fred2/ ...and then going through and by visual inspection picking out the best string of job creations for Bush and the best string for Clinton, I come up with a best average of 160,000 net jobs created per month for Bush and 234,000 net jobs created per month for Clinton.

Dismal at first, since that means it would take at least 10 years to climb out of the hole even if the economy creates jobs at the same rate as it did during the Clinton years. Plus, that gives you an idea of what the economy has done over the past 16 yrs.

However, if, somehow, the economy can add an average of 300,000 to 400,000 net jobs per month once things heat up, then we would be back to pre-recession levels in about 4 years.

Obviously, the economy has to perform extraordinarily well for the next several years in order for the unemployment rate to come down significantly, and I don't have a clue if that's going to happen.

This is definitely the most significant economic downturn since the Great Depression.

Yes, and we were told that ever since a little over a year ago, but some were experiencing it several years before the "crash." And yet, some seem to think it could be turned around in a few months, or expected it to be better by now. All I know, as ominous as it seems, it could have been much, much worse. There is no magic wand here. Ending the draining war expense would surely help.

Thx Doc for the info and analysis. Very helpful. I noticed productivity is up, business is getting more out of the employees they have, I guess cause employees must know, there are plenty waiting in line to take their jobs. Until Businesses start to grow and add employees, it'll be more of the same IMHO... hopefully the holiday season and new year may cause some optimism about the future. And folks with money of course are watching it closely, with the uncertainty and far too much of what they do make is going for healthcare and gas/oil. Discrentionary spending is down... folks are much more frugal than I've ever seen in my life time. And I think that may be good in the long run.

[Doc Holliday]

I agree, Doc. As much as I would LOVE to be able to jump up and down and say hoorah for the growth in GDP, and rise in production etc, the facts are what they are. I would love to be optomistic about the whole thing, heck, I have kids who will be impacted over the next decade as we fight our way back. But I just dont get a warm fuzzy about any of this. And, I think it will get worse long before it gets better :sad:

The unemployment rate will definitely get worse because once it turns the corner, it won't add enough jobs at first to keep up with population growth and there will be a sudden surge of people re-joining the labor force, both of which will cause a (hopefully brief) rise in the unemployment rate.