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Some More Charts: People Not In Labor Force, And Those Who Want A Job Now
Probably the most contradictory chart in today's NFP report: the number of people who are not in the labor force climbed to the second higher number ever, at 84,161K, a jump of 175K from the prior month, even as the number of people who declared they want a job now, surged by 230K, from 5,972K to 6,202K in September, also the second highest ever, and the highest year to date. In other words, people really want a job, but don't really want to look for one. Good luck reconciling that. All we can tell these people: QE2 will save you all, and some advice: become TBTF.
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everyone will be working for the tbtfs soon. excuse me, i mean the government.
Same diff, eh, Breezer?
There's another interpretation for it that is not a paradox: in the US unemployment insurance typically cover 26 weeks - with possibly 13 more weeks of extended benefits.
After that they are falling out of the statistics. 39 weeks is ~10 months - so those long-term unemployed workers who lost jobs 10 months or more ago, start to fall out of coverage and start to be counted as 'not seeking jobs' anymore.
This might also explain the desperation of job seeking: as the benefits end, so does the hardship and uncertainty increase even more.
Being unemployed is not a good state to be in, and 36% of former wages all but 'freeloading' - those folks are truly trying to get back to work - but they cannot, because the demand is simply not there so corporations are not hiring (and are downsizing/cutting).
This is not 'structural' unemployment at all - the unemployment is not just in housing or in banking - it's all across all major sectors.
This is how the whole austerity/deflation death trap works.
(These numbers are QE2 indicators btw.)
True, but that's primarily because there was such a spike in the number of real estate brokers and mortgage bankers that the rest of the economy committed capital to provide the goods and services that brokers and bankers demanded.
Now that the brokers and bankers are SOL, so is everyone whose business model top-line projections included broker/banker business -- and that's pretty much everyone.
This is what Mises meant when he said that government tampering with the money supply (I'm looking at you, Alan) warps the economy and inevitably leads to recession.
BTW, I like your point about the up-tick in "I want a job now" being correlated with the rise in exhaustion of unemployment benefits.
This claim does not match the numbers. Banking/mortgage roughly 10% of GDP, so only assuming that _all_of it is a bubble and was eliminated altogether (which clearly was not the case) would it explain the near 10% output gap that was created in 2008 and the 10% across-the-board unemployment.
The economy shrunk a lot more than bubble deflation alone can explain. There was heavy 'collateral damage'.
This is a well-known property of housing/financial shocks - they are sticky. What we had in 2008 was a such a massive financial and demand shock - which in all previous historic ZIRP examples produced long-term unemployment and a deflationary environment, affecting all sectors of the economy.
It's a self-reinforcing cycle that has little connection to the trigger condition (housing/finance).
Real estate was just the vehicle for the credit expansion. It's the credit expansion itself that is the problem. We had a bubble, a double digit bubble per year for a decade, in real estate. That hot money, when lent out again via fractional reserve lending, got multiplied greatly. All that additional hot money led to speculative investments that turned out to be malinvestments. How many Pizza Huts do we really need? How many stores does The Gap really need? Well, it turned out to be a lot less than those (and many other companies) thought.
So now we're getting the correction to the malinvestment that spun off the real estate bubble. Like I said, the real estate bubble was just the vehicle for the massive (and fraudulent!!) credit expansion which produced all this malinvestment. And malinvestment always eventually gets flushed.
What the US needs is what it won't get as long as we insist on "free trade" with a slave labor tyrant state like China or on one sided trade with countries that refuse to open their markets to us the same way we've opened markets to them, like Japan or Germany. Free trade has to occur between comparable partners and the US and China are not comparable at all, hence the huge wage arbitrage play by the multinationals which is aided and abetted by politicians insisting on MFN status for a dictatorial communist state that pollutes its environment far worse than we ever did and which exploits its workforce in ways that would have made Upton Sinclair cringe.
The US and Japan could engage in free trade as roughly equal nations in terms of how we protect our environment and our workforce but Japan doesn't allow that. No one can engage in free trade with China without devolving their own society into a fascist dictatorship where the middle class is driven into slave labor poverty first. So can you guess what's happening? It's not going to be China rising to our standards. It's going to be the US sinking to their standards. Welcome to the new normal, both politically and economically.
You appear to be making the assumption that an expanded money supply results in an increase of investment, and that it's also all malinvestment. Both statements are wrong.
Firstly, just consider the situation today: the system is aflush with 'easy money' at a rate of almost zero percent. Still the economy is struggling and investments are not happening and unemployment stays high. Why? Because the monetarist view is naive, the availability of money alone is not enough - it also needs demand and future demand to function.
Secondly, it's not all malinvestment - the MBS price instability was a problem to the banks, not to the businesses that made use of rather expensive (compared to today's rates) credit.
Also, we dont really have to guess about the size of the problem. How much did the banks 'lose' in the housing crash? Roughly the size of the TARP bailout: ~1 trillion dollars. This also matches up if you try to estimate the housing bubble based on MBS issuance rates:
http://modeledbehavior.files.wordpress.com/2010/08/image_thumb7.png?w=49...
The bubble can be measured as using 2001 and 2010 (both definitely down years) as lower bounds. From this it can be seen that the private mortgage industry blew much of the mortgage bubble in the 2003-2007 timeframe. The size of the bubble would be somewhere between 1 and 2 trillion dollars. (using 100-150b per month as a baseline)
The size of the US output gap was 8% at the depth of the crisis and is at 4% now - so calculating it across 2008, 2009 and 2010 it would already go beyond 2 trillion dollars - even with the stimulus spending included (which did not fully transform into demand).
So the US has already suffered much of its penitence for the housing sin - but there's no sign of the output gap closing and no sign of unemployment reducing.
The reason for that is the depressionary feedback loop which got started - it will keep on going regardless of how much of the 'housing sin' has been paid off - it's an independent mechanism that knows nothing about the roots of the problem. It can go on for 10 or 20 years, consuming tens of trillions of dollars in production.
If unchanged then it will wipe out the US as we know it.
Right now the bond market is betting that QE2 will fail to have any positive effect whatsoever. Historically, over the last 30 years, whenever the bond market and the stock market disagree, the bond market has been right. The bond market says the crap is going to hit the rotating propeller blades. The stock market says DOW 36,000, baby!
Since BEFORE Lehman, I am up 31% overall on all investments by staying out of this insane stock market. Everything I've done has been in and around the bond market, which is what has given me that return. No, I've not sat on bonds but most of you don't buy a stock and sit on it either, do you?
I am going to keep betting on the bond market being right for the foreseeable future. I may change my mind eventually but so far I see no indication whatsoever that I should change my mind. Stocks are in a hopium bubble as "da boyz" on Wall Street all sniff as much crap up their nose as Ben is willing to provide. But eventually all drug induced highs wear off. Beware your hopium withdrawal, folks. It won't be pretty.
No -- it's that there are 6,202k ex-real estate brokers and RMBS REMIC-churning jackasses and their lawyers sitting on the curb with signs that say "Will Securitize Your Cash Flow For Food."
Until they get new skill sets (e.g., learning how to wipe old folks' asses in Medicaid-funded nursing homes) they'll be right where they are now.
LOL
Sad but true
Yes, don't forget the people fleeing from monolines, most of which are in unwind mode. One I know took almost two years to find another job but eventually did...with a rating agency. Make sure that resume stays updated, k?
You are the smartest hamster I have ever known. Speaking of asses, where did you come from?
And people wonder why many are considering patriating out of the U.S.
Soon these people will be clamoring to work at the US Foxconn division for 80.00 monthly. Ever wonder why it is so imperative to keep troops overseas?
Certainly cannot have these guys and gals returning home and finding their are no jobs. Would not be pretty for the numbers. This is why folks need to collectively boycott all super corporations and consume locally.
Local banking, family owned supermarkets, do not shop at Bestbuy, purchase big ticket items on eBay or craigslist.
Eat out at family owned restaurants buy used cars. It's nearly impossible however since the chains are taking over but I myself am beginning to consider more and more each purchase. I now buy my coffee at the 60year old mans corner store in between the 7 eleven and Dunkin donuts even though it sucks.
Heard a local report on our local NPR station while driving this morning. They are having a diaper drive for poor folk. I guess that means Pampers for the Poor. I'm old enough to remember cloth diapers (not on me, of course). Whatever happened to a little elbow grease? Talk about your recyclable potential! There will be some reading this who are absolutely appalled at the idea of washing baby crap out of a cloth diaper. Well, as Mr. Munger would say, "Buck up!".
My mother says she washed our diapers out in the toilet bowl. I can't imagine anyone having children back then. Especially since boys take years to potty train - ugh!
Good points!
I now make my own coffee.
how do you do that? I heard coffee was hard to grow.
Growing your own spice & brewing your own beer make for happy campers too.
cheers,
Beef
disregard myself
But the jobless numbers are improving, the government says so! The economy is growing, just look at the stock market! You are out of a job you say? Well it's just you, the rest of us are gainfully employed, sorry about your luck. Now go away because according to the BLS you don’t exist, in fact…I can’t even see you…does anyone here a noise…?
Now the rest of you, move along, there is nothing to see here.
Protect yourself!
Stun gun and pepper spray? That's protection?
My new PROTECTION is on the way as we speak.
Had mine for a couple years... 45 bitchez
http://www.budsgunshop.com/catalog/product_info.php/products_id/69197
Got an AR15 and (2) SK47's... and a simi 12 gauge.. and a few other things.. ;)
LOL.
I am invisible. Prisoners and dead people got stimulus checks, but not me.
The government has no idea what I am doing. They don't know I want a job or not. They don't know if I'm looking for one or not. I wonder how many other people are invisible.
All of the students piling up at the end of the "higher" education assembly line, for starters. Can't lose a job you never had... but hey, no problemo, the government is just writing off most of their debt anyways. What's another trillion dollars or so.
The last numbers I heard was 52% of the unemployed weren't eligable to collect UI.
I've never even talked to anyone who has ever been surveyed about employment.
Oh don't worry after the 99th week expires for 25 million people, you will suddenly start to be more and more associated with the hidden unemployed.And while you are at work you are going to find that they in fact, do have some valuable skillsets. When in Rome, don't stop and ask the man on the highway for directions.....or so they said. Tsk, Tsk, you did not read "The rise and Fall of the _______ empire to see how this is going to go down?
QEII and a dollar worth less than a tp wipe will cure everything and create jobs galore.
Let's replace robots with people answering phones - or else, start taxing the robots and actually admit that human's jobs are now as consumers and just give all Americans $30K per year to go do their jobs as consumers. I know ;) ;) they won't be buying big ticket items, but we could also just give them upscale homes that have languished on the market for more than a year.
What a mess!
I don't know how anyone can possibly know if a person is looking for a job and/or wants a job. this makes no sense.
My thought exactly. The government's right hand has no idea what the left hand is doing, so how the hell could they know?
Plus, who would want to find a job right now? It sucks just as bad to be employed. Downsizing companies have squeezed and merged two or three former positions onto one poor sucker who is only getting paid for one job. To compound this, many have not received raises for two years. The upper eschelons have no mercy with their eyes on the bottom line. While Middle Class America works their fingers to the bone, the pigs increase their year-end bonuses but wag their fingers at anyone who wants a cost of living increase. As Arianna Huffington would say, "Welcome to Third World America."
I have no problem with my tax money going to unemployed Americans. My beef is with corporate welfare, TBTF and the incredible waste in government spending.
So what are you going to do about it?
What is there to do? My focus is on preparing my family so we are able to stay together when the SHTF. I am not a leader by nature. I will continue to vote for whoever I think will do the least amount of damage. I will continue to save for the rainy days that are coming. I will continue reading Zero Hedge and other sites to educate myself about the real world, not the saccharine drivel the MSM wants us to believe is real. I will continue to believe in my own common sense, as Buddha encouraged his students. I will continue to hope that the American dream is still alive in the hearts of common people. And I will continue to pray for a just, and hopefully nonviolent, revolution. We all have our parts to play, big or small. I will know when I hear the call.
Likely that many companies need workers.
And, oh BTW, 2009 job losses were underestimated by a million.
How much do you think 2010 job losses are underestimated?
FARCISM bitchez!
employment seekers looks pretty flat from this perspective
http://www.google.com/finance?q=GOOGLEINDEX_US:JOBS
Excellent... Thanks, ZH!
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