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Unemployment Falls to 9.7% (Did it Really?)
From The Daily Capitalist
The employment numbers for January 2010 came out today and the headline was that unemployment dropped from 10% to 9.7%. This is a significant event because we all want to see employment grow. My conclusion from reading the report from the Bureau of Labor Statistics is that it's very hard to tell if this increase in employment is real, a temporary bump from stimulus, or a fiction arising from assumptions used by the BLS.
There are two numbers to look at. First is the Household survey which is exactly what is says: 60,000 households report to the BLS and that report yielded the 9.7% number. The other statistic is the Establishment survey which polls private industry, and that report showed a 20,000 person decline in payrolls. These two ways of looking at unemployment often differ, but, as we are assured by the BLS, they tend to converge over the long term.
The increase of overall unemployment as a result of the change in the business birth-death model (see article) was figured into the mix and overall unemployment for the April 2008 to March 2009 increased by 902,000.
Areas of shrinking employment continue to be construction, transportation, and warehousing. The big increases in employment were in temporary services and retail trade. Also, growth in health services. While federal employment grew as a result of the hiring of Census workers, total actual government employment (federal, state, and local) declined by 8,000 workers.
Here are some of the more significant statistics from the BLS report:
- The number of unemployed persons decreased to 14.8 million, and the unemployment rate fell by 0.3 percentage point to 9.7 percent.
- The number of persons unemployed due to job loss decreased by 378,000 to 9.3 million
- Nonfarm payroll employment was essentially unchanged (-20,000)
- The number of long-term unemployed (those jobless for 27 weeks and over) continued to trend up in January, reaching 6.3 million.
- Since the start of the recession in December 2007, the number of long-term unemployed has risen by 5.0 million.
- The civilian labor force participation rate was little changed at 64.7 percent
- The number of persons who worked part time for economic reasons (sometimes referred to as involuntary part-time workers) fell from 9.2 to 8.3 million
- About 2.5 million persons were marginally attached to the labor force in January, an increase of 409,000 from a year earlier.
- Employment in manufacturing was little changed in January (11,000)
- The average workweek for all employees on private nonfarm payrolls was up by 0.1 hour to 33.9 hours in January
- The manufacturing work-week for all employees rose by 0.3 hour to 39.9 hours
- Average hourly earnings of all employees on private nonfarm pay-rolls increased by 4 cents, or 0.2 percent, to $22.45
- U-6 unemployment, the broadest measure of unemployment, which includes the 2.5 million workers who have given up looking, declined from 17.3% to 16.5%, which is also a positive indicator.
Here is an interesting chart from Calculated Risk showing where employment recovery is relative to other recessions:
My observations:
These numbers are still very weak. The growth of part-time workers reflects employers' uneasiness in taking on full-time employees. Much of this improvement is a wait-and-see attitude by employers. This is also reflected in the slight improvement in the average workweek and average hourly earning. Employers push their own employees harder first rather than hire new ones during economic uncertainty.
The opinions about these numbers today are all over the board: see David Rosenberg, Mish, and the WSJ's RealTime Economics for a sampling.
Rosenberg had perhaps the most interesting comment of all today:
While there will be many economists touting today’s report as some inflection point, and it could well be argued that we are entering some sort of healing phase in the jobs market just by mere virtue of inertia, the reality is that the level of employment today, at 129.5 million, is the exact same level it was in 1999. And, during this 11-year span of Japanese-like labour market stagnation, the working-age population has risen 29 million.
This is a startling statistic and shows the problem with the boom-bust cycles the Fed has gotten us into.
This is where one needs to be cautious. I have mentioned often the business cycle process that, regardless of government interference in the economy, economies do repair themselves. Bankruptcies, unemployment, management's drive for more efficiency, and debt reduction are all part of the process that goes on and is necessary for a recovery.
It is almost impossible to tell from this data whether the employment gains are a result from normal business cycle activity or is a temporary result from government stimulus. My personal view is that it is a bit of both, but mainly from federal stimulus which will fade by Q2 2010. I have been projecting that the stimulus's impact will be transitory, and like all government spending, never creates wealth or permanent jobs. I think Q2 or at the latest, Q3, we'll see GDP settling back down to low, stagnant growth.
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You know what liers always do? They lie. Count on it. The BLS has a fascist rat on board, running the numbers the way cap'n save 'em wants. Shhh! Phase two of the recovery is commencing.
Call it HYPE!
No Job Growth for Small Business Spurs Recovery Doubt
Feb. 8 (Bloomberg) -- Small businesses are becoming the Achilles heel of the U.S. recovery by limiting growth and job creation.
Companies with fewer than 500 employees, such as Phoenix Technologies Ltd, and Sonic Corp, helped lead the economy out of the four recessions since 1980. This time, they continue to cut capital spending and dismiss workers, eliminating 3,000 jobs in January, according to Roseland, New Jersey-based Automatic Data Processing Inc., the world’s largest payroll processor.
Improvement in the unemployment rate, which fell to 9.7 in January from 10 percent in December, may stall later this year if these firms aren’t hiring, and growth likely won’t meet the median 2.7 percent annual rate forecast for 2010 by 67 economists in a Jan. 14 Bloomberg News survey.
“Will you have a sustainable recovery a few years down the road without getting some small-business spending? No,” Cary Leahey, senior managing director at Decision Economics Inc. in New York and a former White House economist, said in an interview. “Wall Street gets it.” …
The National Federation of Independent Business’s index of small-business optimism has been near historic lows for 15 consecutive months, declining to 88 in December from 88.3 in November, the federation reported Jan. 12. During the four prior recessions, it dipped below 90 only once…
Because few economic reports capture small-business statistics, some economists say investors are being misled about the strength of recovery from the longest, deepest recession since the Great Depression.
Recent numbers suggest “the official data are too heavily weighted towards bigger companies, which are doing better than credit-constrained smaller firms,” said Ian Sheperdson, chief U.S. economist at High Frequency Economics Ltd. in Valhalla, New York. “The latter employ half the workforce.” …
The nation’s monthly payroll figures are inflated because the Labor Department model that estimates small-business hiring has overstated the number of jobs added during the recession, Shepherdson says.
According to the model, small companies created an average of 113,000 jobs a month from February through December -- a period when total employment fell by a nonseasonally adjusted 3.7 million, Labor Department statistics show.
The model “is creating jobs out of thin air that are not actually being generated,” Joshua Shapiro, chief U.S. economist at MFR Inc., an economic-consulting firm in New York, said in a Feb. 4 note to clients…
http://www.bloomberg.com/apps/news?pid=20601087&sid=apZULWyXpqhE&pos=7
How the hell did we go from the unemployment numbers to Sarah Palin. This says Palin is more then you all want to believe. By the way I already heard she donated her $100,000 to the tea partys.
Im in the Charles Biderman camp that says 104,000 jobs were lost in January.
http://foxmuldar-conservative-thinker.blogspot.com/2010/02/charles-biderman-economy-much-worse.html
Job losses are 5x as much as reported.
http://www.businessinsider.com/trimtabs-heres-why-the-real-jobs-loss-number-was-5x-worse-than-what-the-bls-reported-2010-2
Thanks to girl money for the info above.
LMAO when Obama proposed to double our exports.
I worked in the Printing Industry for @ 22 years. Of the library books I borrow, about 95% are printed in China. The only thing we export is financial folly and debt mentality.
Actually the revision said an additional 1.4 million jobs--on top of the widely estimated 7 million jobs had disappeared as a result of the recession.
Common sense would indicate that BLS is just BS.
Extend-and-pretend, and all that stimulus thrown at TBTF has done nothing for the economy. No jobs, no real recovery.
Trade deficits, sub-prime defaults, Bush's doubling of the National Debt and Obama's embrace of the morons who led us here (BB, Timmay,etc)--and the fact that nearly ALL manufacturing is gone pretty much guarentees that unemployment will be getting worse, not better. Pessimist? No, REALIST.
I am confused. If we had to revise another million people for the previous year, than the previous number of 10% was way higher right?
And if we take 0.3 of the higher number that has to be revised since 1 million ( almost) was missed in calculation - than the unemployment should be around 10.7
why be confused its all a made up number .. the unemployment rate is close to 20%
so to feel good ,, 9,7 is used .. but that does not change what is, .
but it give those who like to diag"nose" a dieing patient .. the luxury of making noise and trying to look statistical .. and green head shade like doing something.
taking apart a frog as a part of the experiement .. but leaving out the legs and head. it is not as messy,
What would be useful in the discussing "the economy" is to have a series of graphical illustrations depicting what that means by way of private/public sectoral dispersion by industry/service etc nationally.
Ideally, the way we were then and the way we are now and possibly the way we need to be someday...so to speak.
Since the so called FIRE economy done went and burned too hot...from whither then cometh the much hoped for and oft touted "recovery?"
Econophile, always enjoy your objective posts, designed to inform not indoctrinate. Do you have any charts along these lines or know where to find them?
Thanks for trying to balance optimism and realism.
Thanks.
Most stats come from the BLS. Use the first link in the article.
Government numbers on unemployment are whatever they want them to be, as far as accurate --- not even close. It is the prove them wrong, liar, liar pants on fire approach. Politicians have one goal apart from more power and that is getting re-elected.
unemployment decreased; but more folks are out of work. the former is based on a number, the latter on reality. the fundamentals speak louder than liars. with the exception of temporary census hiring, where exactly are all these supposed jobs coming from? which industries are suddenly kicking ass? and why are we even having these discussions about numbers created by an agency that has proven time and time again that it is either woefully inept or willfully corrupt?
i really feel for the people who buy into this BS.
Econophile,
Thank you for the work and the effort
Here are some real world concerns:
1) Lets think a moment about any data set that shows warehousing down and transportation down....but retail up. Please figure out how if goods are not being transported and goods are not requiring storage and movement in and out...retail stores need more people to sell the less goods moved and the less goods stored and shipped to them? Makes no sense whatsoever does it?
You cannot sell what is not moved and is not shipped.
And note...the 5.7gdp number contained speculative assertions that inventories were being replenished by cash starved companies. Note that they did this while transport and warehosuing was down?
2) Having owned several temp staffing companies in past decades I can assure you that in January of every year temp staffing increases in three categories:
A) For snow storms (sweepers, shovelors, plowers)
B) As accounting companies and large corporations hire accountants on contract for year end closings and then to work straight through the tax season
C) A ton of unsold retail goods go back to the supplier especially those sold on consignment (and some retail categories are sold on consignment and the unsold returned back (like books and music and movies and shoes) and to clear for spring lines. These are temporary jobs.
Add in census workers and you have the temp job number explained not as a prelude to more hiring...but as a normal cyclical pattern of temporary workers who will not get permanent jobs in the real economy.
Hope those thoughts help you as you seek to interpret the numbers
First of all, these all data are NOT direct statistics. The official unemployment data are just estimates and/or projections based on various surveys. They are very similar to election day exit pools.
Consequently, these unemployment data are not very accurate and can be easily manipulated.
Remember, there were two sets of data about unemployment:
- one falling to 9.7% and
- another rising by 20,000
Otherwise, select one you like more!
"First of all, these all data are NOT direct statistics. The official unemployment data are just estimates and/or projections based on various surveys."
Agree. As Biderman from TrimTabs points out:
TrimTabs: Here's Why The Real Jobs Loss Number Was 5x Worse Than What The BLS Reported
"At the time of the first release, only 40% to 60% of the BLS survey is complete and is subject to large revisions over the next two months."Among other outstanding observations in the BI piece.
Hey Econophile - admitting I haven't picked up the phone to call the BLS, I'm having a hard time finding the denominator to the household survey - the number that drives the un rate. It has disappeared from the new reporting format - seeing the 9.7% un rate meant to me about a million people left the country in search of work...
We need 120K job growth a month just to stay even with population growth so their numbers are a joke.
The only thing with Rosenberg's comment about 29 million more working age people is it is probably a little smaller because 29 million is about what we have added total so some of those have to be minors but it is a joke we have no more jobs than in 1999 but almost 30 million more people.
lawton,
Patience, you just came off the deepest recession in post-war history, and many of the jobs during the last boom were fluff in the red hot FIRE sector (finance, insurance and real estate). Economies do not go down forever, especially the US economy...SHEESH!
I don't think we are coming off anything....
just look at the red curve in Econophile's graph,
fucking scary...
Interesting observation:
I am married into a big family that immigrated into
the US in 1980. They also are very optimistic about
US economy, until very recently.
I conclude that we (the US) look a hell of a lot
better from the outside, looking in....than we
do from the inside...
FWIW
Agree, Leo, " forever " is time infinity.
And then there is J-A-P-A-N .
economies can and do go down forever....if you look
around south america, africa, asia, europe you will
find plenty of examples of extended decline and
stagnation....
but even the case of the usa, during the great
depression the economy was either down or failed
to provide full employment from 1929-50....
unemployment peaked at 28% c. 1932 then declined
to 14% before returning to 19% c. 1939 after
which 3 years later massive war
mobilizations began to absorb excess laborers...
and then after the war lots of unemployment until
about 1950....
today there is structural unemployment caused
entirely by fiscal, monetary, and regulatory
pathologies all of which originate from the
federal government and federal reserve...
hope is not a strategy or a policy...
The problems we face in employment will compound once state and local governments begin to jettison staff because they can no longer cover the payroll for current employees plus the pensions for retirees. The Federal Government can't possibly absorb all unemployed onto their payroll. To some extent the problem is self-correcting as boomer's are rolling quickly into retirement and hopefully removing themselves from the workforce. Over the next ten years the unemployment rate will by force of nature decline.
I know this isn't Leo's post - but I like Leo weekends as some of the most interesting comments seem to surround his optimism. I don't agree with him but I know we need his input on pensions because they will blow a hole in the ship.
"I know this isn't Leo's post - but I like Leo weekends as some of the most interesting comments seem to surround his optimism"
I was thinking the exact same thing yesterday.I
feel a bit bad for Leo, he takes quite a beating,
but would appear capable of handling it.
Its very difficult to make proper investment decisions
based on all the bullshit government data.
I base my decisions on Trimtabs and similiar,
and figure in that the actual figures are worse...
exportbank,
I agree with you on this as pensions are a slow death akin to Chinese water torture. City & state public finances are in terrible shape so you will see hiring freezes, job cuts and pension reform. But the private sector is where most of the hiring will take place in 2010, not the public sector. One thing that does concern me is that the spike in temp workers may be more pronounced this time around because companies do not want to give employees benefits.
I think that is a net neutral now because so many older people are staying in the workforce longer keeping positions from opening for younger people adding to their unemployment.
The Police and Firefighter salary and pensions are totally out of control in many places as they went through the roof with the housing bubble property tax windfall and now that the windfall is gone they dont want to budge on any of it. You will see many municipalities eventuaslly filing bankruptcy to let a bankruptcy court reduce them despite the unions - I dont see any other way since things are already taxed out.
I doubt very much that there was any census hiring of any significance that influenced these numbers. The census is currently accepting job applications and giving tests but to my knowledge there has been no hiring (of any significance). The first step in the process takes place in April when the census forms are mailed out. Approximately 1 month later there will be significant part time hiring to track down those who have not responded to the mailings (including jail population).
We are going to get a big bump in temporary workers hired after April. But by August the will all be back on the dole.
The census numbers are likely to give a false look to the numbers for a while now. But by September any benefits will have been lost. It is the 3rd and 4th quaters of this year that most troubling for the jobs market. If at that time the economy is not creating jobs from the private sector we will have unemployment rising by year end.
I live in one of the 2 or 3 (still) wealthiest towns in America. Yet each day, as I drive my cab down the 40 block-long Main Street, I see another 2 or 3 small-to-medium businesses closed down, more and more jobs gone. Seems like the yawning gap between the real world and the NY-D.C. axis is growing ever wider.
People lost their loyalty long ago. Instead of spending a little bit more buying locally, they'd rather save 15 cents at the walmart.
Now they're jobs have come back to roost as they support a company that only buys overseas.
I'm not picking on Walmart, I'm just saying that greed in general has made people so short sighted that it's effecting them now.
The Wal-Martization of the country was probably inevitable, in my opinion. When you have a country that is rapidly growing its population, the need for affordable resources in whatever their forms becomes a leading priority. In a market economy, businesses that can meet this priority are typically going to prosper over those who cannot.
Most people aren't going to care what the long-term implications of overseas manufacturing are going to cause if they see that they can keep themselves and their children clothed right now, at this moment, by purchasing those goods.
Hell, go to any supermarket (which had been around decades before Wal-Mart even came into the picture)--how much of that food was grown locally, and how much of it was made in a factory or came from another state? If individuals in the US actually had to produce their own food, at least half the country would starve. But the growth of agribusiness is the price the country paid, at least in the short-term, for keeping hundreds of millions of people fed.
It's not just greed that's played into these developments, although it's certainly an important factor. It also boils down to the plain old need to basically survive on a day-to-day basis. And with a population as large as ours, it was likely going to happen anyway.
Dow 10,000; Unemployment 10%, those are the double no-touch areas for this cheating american government
ever noted how the realists talk in specifics whilst the optimists speak in generalities ?
+1
+1
Also, a realist is a balance between optimism and pessimism. Even when a realist becomes overtly pessimistic she is still neither a nihilist nor fatalist.
personally, i think we can probably have a bit less optimism , pesimism and realism and have a bit more wisdom instead. (i don't know exactly what wisdom is, but i know it when i hear it)
its not pesimistic to buy gold with the stupid decisions that governments and banks are making, and the blind optimism exhibited by some that we are in or even approaching a recovery is obviously ridiculous.
While this site has some of the most intelligent and nice people that I've met in my entire life, and I accept most of the words here, even opposing views -
I have found that there are many on this site who trend toward overwhelming pessimism. They are the crowd who believes that the world will end and our economy can never recover... the "gold bitchez" crowd.
(and I'm not saying YOU or really even most of the people in this thread)
There's a difference between realism and being overly pessimistic. I think that sometimes being overly pessimist seems to win the day in these forums.
Poster Cognitive Dissonance provides much needed psychological perspective on whether or not the average ZHer is "over-zealous". My view is that a continual slide into a hyper-surveilled prison planet without human rights will nullify any and all investment gains made today or tomorrow. Is it unreasonably cynical, or realistic, to acknowledge that market fundamentals have been suspended in favor of open corruption?
The bigger picture is what drives the general sentiment around here. The American Empire cannot escape ignoring the gangrenous limbs beyond salvation. Total collapse is the lesser of two evils - another Pyrrhic victory for mankind.
How many were totally eliminated from any unemployment compensation measure because they finally fell off the back end and ran out of benefits?
The problem with this is that at some point it becomes meaningless. If you have only one person working but no one else gets counted because of the technicalities of the methodology then technically you have 100% employment.
Time to go back and look at the federal outlays or perhaps look at the state computations.
Based on what I see in the Great State of Illinois, Chicago region, there is no recovery whatsoever and housing prices continue to decline.
Neither withholding tax deposits nor HI (Medicare) contributions for January support the household survey whatsoever. They do support the weekly unemployment reports for January - especially the NSA numbers. Next month's revisions should be interesting.
Leo
I know you're very green on the whole recovery thing, but bubba I gotta tell ya you can sit and look at what the Gov.com puts out or you can go out into your community and have a look around. Where I live ( NW suburbs of Chicago )it took a while but its starting to set in here - more and more spaces for lease, the guys on the bench at the union hall waiting for work. Look at the face of where we are instead of making calls based on what you read. I have a friend who works with the numbers " I can make the numbers say what-ever I want "
Just a thought, Peace
Ever hear of the statistician who drowned crossing a stream with an average depth of six inches.
But probability may have told him he had a 1 in 2 chance of crossing. A bunch of 6 inch high islands... (+6")(# of Islands) and 8 feet of water, (-8)... 6 inch average.
Forget the statistical average... always refer to Gauss and his equation for probability and normal distribution.
Great post Econophile, I always love your posts! I was arguing with one of my friends about this just yesterday. He was trying to tell me there was a trend reversal and we are in recovery now! *sigh*
I wish someone on ZH would make a post about why the decision in Citizens United vs FEC was GOOD, since a lot of the posts here end up being political anyways. I'm getting highly tried of the "progressive" zombies trying to scare everyone into thinking this has to do with unlimited buyouts of politicians by big business when it really has absolutely nothing to do with this and everything to do with small groups of people being able to produce/broadcast/publish speech whether in book, broadcast, or internet form.
This case was about a small non-profit organization being gagged because their speech cast an unfavorable opinion on Hillary Clinton. If SCOTUS had not struck this down it would have made political speech by groups of individuals in corporate form a crime if it put a politician or a government sponsored proposition in an unfavorable light around election time. Certainly the kind of speech the first amendment was designed to protect. (along with all other speech which isn't fraud or libel)
@andrei vyshinsky,
My apologies if this is old news, but found this while web-hopping for free sources of realtime national payroll tax and fund flow data (as an individual trader, can't get a trial subscription to Trimtabs)
House Dems Propose A Constitutional Amendment For Citizens United
http://www.govtrackinsider.com/articles/2010-02-03/House-Dems-Propose
Sorry to have missed your comment until now, girl money.
Truthfully, attempts to change this people and democracy hating decision by statute, even if successful, are ultimately doomed to failure. A court, one member of which has openly expressed sympathy with the practice of torture, can hardly be expected not to argue its way past changes in the law by even more innovative readings of the Constitution. The possibility of seeing an end to the dreadful rush of this nation toward the interment of its democracy seems now to be best abandoned. We've lost control and even those who one might think would find that development a tragedy, the libertarian TeaPartites, seem to exult in it. Only mass demonstrations and the general strike offer any hope of there being a remedy.
You do realize media corporations are corporations, right? So only they are allowed freedom of speech? or do you think they should just get an exception while other corporations do not? So ignoring first amendment issues, wouldn't that be a violation of the equality clause? Don't you understand why the MSM hates this decision so much? Are you really that brainwashed? Why couldn't big rich corporations just create a "media outlet" to step around the restriction anyways. Then you'd only be blocking small groups of people who have enough money to pay for ad time on a tv stations, while not blocking the uber rich capable of just bypassing the restriction by creating a "media corporation"??
Please, explain your logic as to why the decision in FEC vs Citizens United was bad. You have yet to explain your logic. I explained mine in my first post. You haven't said ANYTHING of substance yet... I'll be waiting.
"I wish someone on ZH would make a post about why the decision in Citizens United vs FEC was GOOD ..."
One assumes that next we'll hear from you about granting the franchise to corporations or even elephants, perhaps? I mean why limit your sociopathological notion of "liberty" to human beings when there's a veritible zoological garden of critters regnant in government quite logically expecting to lock on to the largesse emanating from this decision. Your's, clearly, the fatal flaw of Tea Party fascism, sir.
And while we're on the subject, I see that Sarah Palin, in a question and answer session following a speech she gave to the National Tea Party Convention in Nashville today, enthusiastically calls for the GOP to "absorb" your libertarian co-religionists:
"The Republican party would be smart to absorb as much of the Tea Party as possible. The Tea Party is the future of politics. It is shaping the way of politics in the future."
Just how is it that the Tea Party National Convention makes Sarah Palin, the worst sort of fascist tool, their featured speaker? What was her entrance music, Die Fahne Hoch? Some "peoples' movement", these libertarian Tea Parties.
Andrei, just because I think free speech is a good thing, doesn't mean I'm a Palin supporter. Keep in mind the law in question was called McCain-Fiengold. I actually quite loathe Palin. I do like the tea party, just not Palin. I don't think "we win, they lose" is anything which can be described as intelligent foreign policy.
"Keep in mind the law in question was called McCain-Fiengold."
You imagine me to have have some affinity with Feingold? Son, I haven't voted in twenty years, something more people that claim to be "anti-regime" ought to consider doing themselves.
"I actually quite loathe Palin. I do like the tea party, just not Palin."
Then I'm sure you'll have a lot of mental gymnastics to experience when asked to explain Palin's presence at the Tea Party's national convention as keynoter this weekend. She didn't get there by accident, you know. And this business of the formation of a Tea Party equivalent of MoveOn.org to fund the campaigns of conservative politicians? How anti-system can that be? I'm not making up these things, damage.
Also, notice I did not bold Feingold, I bolded McCain. Palin was McCain's running mate last year, just in case you need to be reminded.
Sir, McCain IS Feingold and Feingold, McCain. It wouldn't make any difference who it was you'd "bolded". What's there to remind?