The latest Oregon unemployment number caught me by surprise but not because of job losses. Unemployment is a measure of all those residents who are actively looking for work and cannot find it. I knew the job loss number would be roughly 14,000, what I didn't expect was the surge in people looking for work.
I was chatting with a colleague the other week and was lamenting the fact that it was going to be a long time until we saw unemployment numbers like we enjoyed over the last few years. My argument was standard, once the recession bottomed out and economic activity started to pick up many people who were waiting out the recession would re-enter the job market which would put a damper on unemployment numbers and slow the recovery in the job market indicator. But what we are seeing is a much sooner surge in job seekers than I had anticipated which signifies that the downturn is having an especially severe effect on household budgets. [This may also be an artifact of the over-leveraging households engaged in over the last few years]
So what the March number signifies to me is the degree of distress Oregon households are in. Waiters can no longer afford to wait, spouses and children are looking to contribute to household income, retirees that have seen their retirement income plunge with the stock market are looking for jobs and, especially distressingly, college age kids are probably no longer able to afford tuition and are instead looking for work. This is why I called the number horrendous - not because of job losses (which decreased significantly from Feb - though this is traditionally a time of strong job gains) - but because of the job seekers.
I know economics is called the dismal science, but this is really upsetting. Oregon families are in deep distress and it is hard to see a light at the end of the tunnel right now.
So, what does this mean for future unemployment? It is really hard to say as unemployment is a combination of seekers and jobs. I expect the erosion of jobs to cease by the end of the year at the latest, but what about the job seekers? Are all those that can be forced to seek already out there or are there more out there? Will people start to leave the state to look for work elsewhere? These are questions that are hard to answer at this point. I really thought we would be able to avoid the 12% barrier, but now I have a hard time predicting. If the seekers side stabilizes or subsides we still may avoid 13% but I wouldn't put any money on it.
One bit of hope is that the effects of the federal stimulus are only just barely starting to materialize. Over the next two years, this should help significantly.