Friday, May 8, 2009

US Unemployment Hits 8.9%

Is this good news?  From the BLS:
Nonfarm payroll employment continued to decline in April (-539,000), and th unemployment rate rose from 8.5 to 8.9 percent. Since the recession began in December 2007, 5.7 million jobs have been lost. In April, job losses were large and widespread across most private-sector industries. Overall, private-sector employment fell by 611,000.

The unemployment rate is rising and over half a million jobs were lost in one month, how can it be?  Well, it appears that there is a clear trend of slowing job losses and it seems that this trend might be more robust than was forecasted - many economists expected to see over 600K this month.  Job losses now have slowed for three months in a row: 741K in Jan, 681K in Feb and 699K in March (okay, so not exactly monotonic, but nevertheless a pretty clear trend).  And since (as I have blogged about before) unemployment is one of the last things that recovers so this early trend could actually signal an economy beginning to recover.

As you may have read elsewhere, in the past when the job losses begin to slow down, the recession is generally over soon after.  [The usual caveat here, positive GDP growth means we are starting to recover, not back to pre recession economic activity - that is going to take years]  Here is a nice graphic from The New York Times illustrating this point:

So keep these little tidbits of information in mind when you vote in the new poll. So far my erudite readers have been pretty good on unemployment, let's see how good you are with recession dating.

1 comment:

Dann Cutter said...

It is important to note however that government census jobs, temporary by nature, made up a not unreasonable amount of the difference in expectations.

This may not be as clear cut as suggested.

As well, consumer spending typically is a necessity for a recession recovery, and given the 'how' of this recession, that may not return as quickly, as vectors from which spending has come (easy credit, and/or home equity) have evaporated.

All of this suggests that we may see a spike of job creation during the 3rd quarter stimulus, but I think we are deeper than it appears at the moment.

Now I must get back to NOT writing my thesis.