Comparing BLS Job Losses and DOL Unemployment Claims
Calculated Risk, September 7, 2009
A frequent question is how do the 570,000 initial weekly unemployment claims, as reported by the Dept of Labor (DOL), correspond to the 216,000 in monthly job losses as reported by the Bureau of Labor Statistics (BLS).

http://www.calculatedriskblog.com/2009/09/...es-and-dol.html

Bad Future for Jobs?
Robert J. Samuelson, Washington Post, September 7, 2009
As the country recovers, will American jobs come back, too?

http://www.washingtonpost.com/wp-dyn/conte...ss=rss_opinions

How Bad Will Unemployment Get, And What Can We Do About It?
George Washington, Naked Capitalism, September 9, 2009
Until the causes of, and solutions to, high levels of unemployment are understood, we will not be able to solve the problem.

http://www.nakedcapitalism.com/2009/09/gue...o-about-it.html

Jobless in America: Is Double-Digit Unemployment Here to Stay?
By Joshua Cooper Ramo
Friday, Sep. 11, 2009

It was not a lesson Lawrence Summers mastered with great ease. But after nearly a decade working beside sphinxlike Alan Greenspan, and having watched his own tenure as president of Harvard cut short by a phrase that slipped too nimbly from brain to mouth, Summers, director of the President’s National Economic Council, has become a restrained public man. Gone are the days when he would glibly compare flailing financial markets to jet crashes, as he did to TIME in 1999. He is mindful of how ill-considered asides by policymakers can cause financial-market angina. So you can probably imagine the ripple that ran through the Peterson Institute for International Economics in Washington in July when Summers looked up from his prepared speech, flashed a grin and loosed the sort of utterance that once upon a time marked imminent indiscretion. "There was," he told the room, "a fight about whether I was allowed to say this now that I work in the White House."

What Summers proceeded to offer was, in fact, an unusually candid insight. And though couched in jargon, it was an insider’s confession of why our present economic moment is fraught with both danger and opportunity. There appears to be, Summers told the suddenly very attentive crowd, a strange bit of physics working itself out in our economy. The problem is related to a hiccup in an economic rule called Okun’s law. First mooted by economist Arthur Okun in 1962, the law (it’s really more of a rule of thumb) says that when the economy grows, it produces jobs at a predictable rate, and when it shrinks, it sheds them at a similarly regular pace. It’s a labor version of how the accelerator on your car works: add gas, go faster; less gas, go slower.

What made Summers’ frank comment important is that it suggests this just-add-gas relationship may now be malfunctioning. The American economy has been shedding jobs much, much faster than Okun’s law predicts. According to that rough rule, we should be at about 8.5% unemployment today, not slipping toward 10%. Something new and possibly strange seems to be happening in this recession. Something unpredicted by the experts. "I don’t think," Summers told the Peterson Institute crowd — deviating again from his text — "that anyone fully understands this phenomenon." And that raises some worrying questions. Will creating jobs be that much slower too? Will double-digit unemployment persist even after we emerge from this recession? Has the idea of full employment rather suddenly become antiquated? Is there something fundamentally broken in the heart of our economy? And if so, how can we fix it?

More…
http://www.time.com/time/printout/0,8816,1921439,00.html

KYW1060.com
Philadelphia Prepares to Pull the Trigger on Thousands of Layoffs
KYW1060.com
by KYW's Mike Dunn Barring a last-minute reprieve from Harrisburg, Philadelphia mayor Michael Nutter intends to send out thousands of layoff notices on ...
http://www.kyw1060.com/Preparing-to-Pull-t...Trigger/5230509

Teacher Layoffs
New York Times
“Stimulus-Assisted Schools Still Facing Crippling Cuts” (front page, Sept. 7) captures many of the issues facing schools as they seek to use federal ...

http://www.nytimes.com/2009/09/16/opinion/l16teach.html?_r=1

Unemployment Hits 10.3% in New York City
By PATRICK McGEEHAN
Continuing layoffs on Wall Street drove the city's jobless
rate to a 16-year high in August.

Full Story:
http://www.nytimes.com/2009/09/18/nyregion...amp;tntemail1=y

Will Obama, Fed tolerate another jobless recovery? (McClatchy)

http://www.mcclatchydc.com/329/story/75533.html

California, Nevada Reach Record Unemployment Levels
Bloomberg
The US economy has lost 6.9 million jobs since the recession started in December 2007, the most of any downturn since the Great Depression.

http://www.bloomberg.com/apps/news?pid=206...id=aNfVuMdRsGgA

Jobless rate tops 12% in 5 states
California, Nevada and Rhode Island hit record-high unemployment rates, Labor Department says.
By Julianne Pepitone, CNNMoney.com staff reporter
Last Updated: September 18, 2009: 1:44 PM ET

NEW YORK (CNNMoney.com) — Five states posted jobless rates above 12% in August, according to federal data released Friday.

California, Nevada and Rhode Island each hit record-high rates, the Labor Department said.

Michigan led the nation in unemployment, with a rate of 15.2%, while Nevada was next at 13.2% and Rhode Island was third at 12.8%. California and Oregon were tied for the fourth spot, each with unemployment at 12.2%.

"The losses tend to be heavy in states that have a high concentration of manufacturing jobs or were hit hard by the housing bust," said Mark Vitner, economist at Wachovia.

In August, 27 states and the District of Columbia recorded month-over-month unemployment rate increases, while 16 states posted a decrease in unemployment and seven saw rates hold steady.

The total number of nonfarm jobs fell in 42 states and the District of Columbia, while 8 states saw an increase.

More…

http://money.cnn.com/2009/09/18/news/econo...yment/index.htm

The Misery Map
September 18, 2009
The Carter years saw the Misery Index, the combination of the inflation rate with the unemployment rate. Here comes the Misery Map More

http://www.americanthinker.com/blog/2009/0...misery_map.html

http://urbansurvival.com/week.htm

Where Are The Comedy Writers?

3,711. That's the number of bank branches that have failed since IndyMac in May 2008. This week, while the failure of two banks may not seem like much, it's still 27 branches of additional capacity that have been turned over as the weeding out/concentration of power continues in the banking revolution that's underway in America.

This week's changeovers?

Irwin Union Bank and Trust Company of Columbus, IN and

Irwin Union Bank, F.S.B. of Louisville, KY

...which between them had 27 branches and assets of (Where's my calculator?) $3.2 billion, or near enough. I'll have to look in again on the FDIC web site in the event that more are added. There is something of a tradition here that the FDIC closures, reorgs, and shotgun marriages are announced over the evening hours on Friday's after the markets are closed. Gosh knows, we wouldn't want to upset the market's apple cart, would we?
---

The Dow closed out the week at 9,820.20 which means from last week's close the Dow has picked up 214.79 points and at this rate, your 401(k) might actually gain back a little bit of its former glory.

But, I wouldn't bet on it. The real game in the financial circles is for the people on top (ThePowersThaBe) to give you only so much hope - then dash that on the rocks of despair and walk off with the bulk of the loot.---

"What about the comedy writer's comment, Ure?"

Ah... I see the coffee is sinking in.

The reason I feel we need to discuss the comedy of the situation is that there's an air of Keystone cops evolving in economic coverage of late. Highly entertaining, like a cat chasing its tail, but not getting us much of anywhere. In other words, a lot like comedy of the slapstick variety.

To show you what I mean, consider that report out of California which got about zippo coverage in the MSM: "California's unemployment rate hits 12.2% in August." as reported in the LA Times. In more rational times, that would have been an "OMG, this is the Second Depression for sure!" context. It would have logically fit with the West Coast Ports Disaster - which I briefed you up on yesterday and in addition, with the 'ghost fleet" still at anchor of China - and the Baltic Dry Index sucking air, we'd have a logically consistent view develop: The economy sucks and except for some contextually improperly reported housing numbers, we should all be wringing our hands in woe with what's still ahead for America.

INSTEAD, however, we have seen a strange countercurrent of events this week. For one thing, a number of market prognosticators have been busily changing their gloomy outlooks such that the 'new consensus' is that over the next couple of weeks, the market seems destined (according to these pundits) to make a 50% retracement move off the March lows vis' the 2007 high.

In Washington, the policy response is "Obama calls for Finance Reform" while other coverage revolves around the administration being critical of 'big business ads".

If you're wondering "Where's the beef?" - on key issues like the additional 13-week extension of unemployment bennies, all you have to do is wait until next Tuesday according to the headlines out of the Detroit Free Press - which understandably watches the subject closely because of all the autoworkers who have been sidelined lately.

Bankers to the front of the line, corporations, you're next. Humans? Back of the line. Got it?---

That's why I've concluded that economic coverage is best done with a shot of humor and why comic writers seem to have taken over business editor duties at most media outlets.

The 'business news' coverage of what's an incredibly dire situation with the second leg down of the Second Depression at hand is being written like comedy/fiction with laughable lines like "Transparency!" and "Financial System Reform!".

These won't do a damn thing to bring back your once great 401(k), which by now has been reduced to a 201(k).

http://www.bloomberg.com/apps/news?pid=206...id=aDx_Srx0Sv8Q

Unemployment Confronts Obama Rhetoric With Chronic Joblessness


By Rich Miller

Sept. 28 (Bloomberg) -- Full employment ain’t what it used to be.

Economists since the mid-1990s have reckoned that full employment was equivalent to about a 5 percent unemployment rate, taking into account the time required to switch jobs. Now Nobel Prize winner Edmund Phelps and Pacific Investment Management Co. Chief Executive Officer Mohamed El-Erian say the fallout from the deepest recession in more than five decades is driving the so-called natural rate higher, perhaps to 7 percent.

“We are in the midst of a large and protracted increase in both actual unemployment and its natural rate,” said El-Erian, 51, whose Newport, California-based company manages the world’s largest bond fund. Even with the economy growing, “it will take at least a couple of years” for joblessness to fall to 7 percent from 9.7 percent now.

That may keep the federal budget deficit near a record $1.6 trillion into next year and might prevent the Federal Reserve from raising interest rates in 2010, said Bruce Kasman, chief economist at New York-based JPMorgan Chase & Co., the second- largest U.S. bank. Elevated unemployment will also “dampen the recovery in consumption and economic growth,” El-Erian said.

President Barack Obama has highlighted job creation as the ultimate measure of the economy’s health, telling CNN television on Sept. 20 that it is “the single most important thing we can do.” By this measure, the U.S. is still coming up short, he added. That may hurt Obama’s Democratic Party in the November 2010 Congressional elections.

Rising Unemployment

Government data to be released Oct. 2 will probably show that unemployment rose to a 26-year high of 9.8 percent in September as companies pared payrolls by 180,000, according to the median forecast of economists surveyed by Bloomberg News.

Obama, 48, has also pledged a sharp reduction in the budget deficit -- a task that would be made more difficult if unemployment stays high, boosting government spending on people who are out of work and reducing tax revenue. The administration’s mid-term review forecasts a decline in the deficit to $917 billion in 2019 as unemployment drops to 5.2 percent.

A rise in the natural rate -- the level below which joblessness can’t fall without sparking inflation -- would also create a dilemma for Federal Reserve Chairman Ben S. Bernanke and his central-bank colleagues.

High unemployment argues for a loose monetary policy now; former Fed governor Lyle Gramley sees the central bank holding the federal-funds rate -- the rate banks charge each other for overnight loans -- near zero until early 2011. Later, there’s a risk Bernanke will ignite inflation if he tries to push the jobless rate down to the 5 percent equilibrium level that’s prevailed in the past.

‘Profound’ Implications

“The implications over the next five to 10 years for fiscal and monetary policy are very, very profound” if the rate has risen, said Neal Soss, chief economist in New York for Credit Suisse Holdings USA Inc., a subsidiary of Zurich-based Credit Suisse Group AG, Switzerland’s second-biggest wealth manager. In that case, the best investment in the medium term might be to buy Treasury Inflation Protected Securities, said Soss, a former Fed official.

TIPS of all maturities are headed for their fifth straight monthly gain as investors hedge against the potential for inflation, even as it has yet to materialize. The securities have gained 7.49 percent this year compared with a 2.65 percent decline for conventional U.S. government debt, according to the Merrill Lynch U.S. Treasury Inflation-Linked Master Index.

Permanent Destruction

Kasman ties an increase in the full-employment rate to the permanent destruction of hundreds of thousands of jobs in industries from housing to finance.

Since the nadir of the last recession in November 2001, the U.S. has lost 839,000 jobs in the private sector, based on data from the Bureau of Labor Statistics -- the first time that’s happened over the course of a business cycle since 1980-82. Manufacturing and construction were particularly hard hit.

Permanent layoffs -- for workers who don’t expect to ever regain the same job -- hit a record 53.9 percent of the unemployed in August, according to the bureau. Some 33.3 percent of the jobless had been out of work for 27 weeks or longer last month, down from a record 33.8 percent in July. And at 59.2 percent, the share of Americans who are employed is at its lowest level in 25 years.

“The labor market is showing signs of very considerable stress,” said Gramley, 82, a senior economic adviser for New York-based Soleil Securities.

Job-Growth Engines

Every state, the District of Columbia and Puerto Rico have seen unemployment rise during the recession. What’s more, the states that have been job-growth engines in the past -- including California, Florida and Nevada -- have been among the hardest hit as real-estate values plunged, said Lawrence Katz, a professor at Harvard University in Cambridge, Massachusetts.

The 30 percent decline in house prices during the last three years also makes it hard for some Americans to seek work in another city or state, he said. About 26 percent of U.S. homes with a mortgage were worth less than the amount owed, according to a recent report by analysts Karen Weaver and Ying Shen in New York at Frankfurt-based Deutsche Bank AG, Germany’s biggest lender. Ultimately, as many as 48 percent of mortgages may be “underwater” as house prices fall further, they forecast.

Katz identifies labor mobility as a key factor in reducing the natural rate of unemployment. Mobility fell last year to its lowest level since records began in 1948, according to the Census Bureau. The so-called national mover rate declined to 11.9 percent of the population in 2008 from 13.2 percent in 2007 as 35.2 million Americans one year or older changed residence.

Deep Recession

Mobility is likely to fall further this year in response to the deep recession, said Peter Francese, demographic-trends analyst for New York-based Ogilvy & Mather, which is owned by WPP Plc of London, the world’s largest advertising company.

“It will plummet so close to zero you’ll be surprised,” said Francese, who founded American Demographics magazine. That will likely depress consumer spending, which historically accounts for about 70 percent of gross domestic product.

“People who move spend a bundle, on draperies, furniture, rugs,” he said.

A shift in the Beveridge curve is also signaling an increase in the natural, or non-accelerating inflation, rate of unemployment to between 6 percent and 7 percent, said JPMorgan Chase’s Kasman.

Worker Skills

Unlike the more popular Phillips curve, which compares unemployment to inflation, the Beveridge curve looks at job openings in relation to employment. A high level of both vacancies and unemployment suggests that workers lack the skills to fill the jobs available and that the natural rate, or NAIRU, is higher.

The curve, developed by the late British economist William Beveridge, is more accurate at presaging changes in full employment than its Phillips counterpart, according to research by Brookings Institution Senior Fellow William Dickens that was presented at a Federal Reserve Bank of Boston conference last year.

Many economists, including Gramley, don’t believe the natural rate has risen. Fed policy makers seem to be in that camp. They put the longer-run unemployment rate -- a proxy for the NAIRU -- at 4.8 percent to 5 percent, according to the minutes of their June 23-24 meeting.

That may be too optimistic, said Phelps, 76, a professor at Columbia University in New York who won the Nobel Prize for Economics in 2006 for his theories on the interplay between inflation expectations and employment.

“There’s a bit of whistling past the graveyard here,” he said.

---------------


This is why simply blowing off high unemplyment as a "lagging indicator" doesn't pass the smell test.

"I'd love to change the world,
but I don't know what to do...
So, I'm leaving it up to you" -
Ten Years After

Unemployment: The Gathering Storm by Charles Hugh Smith

http://seekingalpha.com/article/163566-une...rm?source=email

Anemic Job Creation During The "Schumpeterian Depression"

The Wall Street Journal is discussing some interesting trends in business creation and small business hiring. Please consider Sharp Drop in Start-Ups Bodes Ill for Jobs, Growth Outlook.

New companies will be crucial to the strength of any economic recovery. Businesses in their first 90 days of life accounted for 14% of hiring in the U.S. between 1993 and 2008, according to the Bureau of Labor Statistics.

But this recession is taking a particularly heavy toll on business creation, as sources of small-business funding dry up and would-be entrepreneurs become more risk-averse. When entrepreneurs do launch businesses, they are hiring fewer employees on average. The trends threaten to damp growth in jobs and economic output for years.

Company formation typically dips slightly in recessions, says Brian Headd, a Small Business Administration economist. Earlier this decade, business starts -- including new businesses and units of existing businesses -- fell 9% between the third quarter of 2000 and the first quarter of 2003, the BLS says.

This time, the decline has been steeper. Business starts fell 14% from the third quarter of 2007 to the third quarter of 2008; the 187,000 businesses launched in that quarter were the fewest in a quarter since 1995. The number ticked up slightly in the fourth quarter, the latest data available. But those new establishments created only 794,000 jobs, the fewest since the government began tracking the data in 1993.

To be sure, as in past recessions, some laid-off workers are starting businesses to stay afloat, or testing long-held dreams. The Kauffman Foundation, a nonprofit research group that promotes entrepreneurship, says more Americans started businesses last year than in 2007. Kauffman cites research by University of California, Santa Cruz, economist Robert Fairlie, who analyzes different BLS data.

Mr. Fairlie, says statistics suggest more businesses are being created more out of "necessity" than "opportunity." That "does not bode as well for economic growth," he says.

The number of new businesses with relatively low income potential -- such as baby-sitting and house-cleaning services -- grew last year. But compared with 2007, there were fewer new businesses with high income potential -- like law firms, medical offices and manufacturing outfits.

http://globaleconomicanalysis.blogspot.com/

Sharp Drop in Start-Ups Bodes Ill for Jobs, Growth Outlook

http://online.wsj.com/article/SB125409527512844979.html

Thoughts on the Schumpeterian Depression

My friend "BC" writes:

During Schumpeterian Depressions, large, cash-rich firms dominate and push increasing scale and standardization, whereas small firms suffer from a lack of capital and a reluctance by banks to lend.

This trend should persist well into the next decade, as deflationary depressions and the associated demographic cycle reduces business start-up activities, and this time around Venture Capital activity.

Also, younger workers of a peak demographic cohort lack the capital and longevity in the occupational structure to have made sufficient contacts and gotten access to capital and equipment in order to reach the necessary critical mass of experience, reputation, and problem solving one demonstrates sometime in their mid- to late 20s to early to mid-30s.

Thus, we are not likely to see a new wave of incremental innovation and new capital formation and business start ups until no earlier than the mid-to-late '10s to early '20s. In the meantime, mass cross-industry consolidation, R&D moving inside large firms, spin-offs, firings, wealth consumption, and shifting composition of household spending led by Boomers in late life will combine to slow growth for years to come.

Moreover it is questionable as to whether China and India can buck the larger demographic and Schumpeterian-curve trends, as they have come to rely so heavily upon US supranational firms' Foreign Direct Investment in plants, equipment, trade credits, and intellectual property. The growth of US and Japanese firms' FDI will likely continue to decelerate with "trade" for years to come.

For more on Schumpeterian Depressions, please see Creative Destruction.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

My DOL bulletin states:

In the week ending Sept. 26, the advance figure for seasonally adjusted initial claims was 551,000, an increase of 17,000 from the previous week's revised figure of 534,000. The 4-week moving average was 548,000, a decrease of 6,250 from the previous week's revised average of 554,250.

Read the full news release release.

Employers in U.S. Cut More Jobs Than Forecast; Unemployment Rises to 9.8% Employers cut more jobs than forecast last month and the unemployment rate rose to a 26-year high, calling into question the sustainability of the economic recovery.

http://www.bloomberg.com/apps/news?pid=206...id=aZCXOOaX_XWI

Bernanke Says Jobless Rate May Be Above 9% at End of 2010 Amid Slow Growth Federal Reserve Chairman Ben S. Bernanke said U.S. economic growth next year probably won’t be strong enough to “substantially” bring down the jobless rate, which may remain above 9 percent at the end of 2010.

http://www.bloomberg.com/apps/news?pid=206...id=aGF8BaePGjJg

Companies in U.S. Cut More Jobs Than Forecast; Unemployment Rises to 9.8% U.S. job losses accelerated last month and the unemployment rate climbed to the highest level since 1983, stark reminders of how the worst financial crisis in a generation may undermine consumer spending and economic growth in the months ahead.
http://www.bloomberg.com/apps/news?pid=206...id=a9pGHoU62vaU

Stocks in U.S. Drop on Bigger-Than-Estimated Job Losses; GE, Chevron Fall U.S. stocks fell for a fourth day as a bigger-than-estimated loss of jobs spurred concern the highest unemployment rate in 26 years will stifle an economic recovery. Oil, copper and aluminum prices slid.
http://www.bloomberg.com/apps/news?pid=206...id=axtESrCjNjKo

Factory Orders in U.S. Unexpectedly Drop 0.8%; Ex-Transport Increase 0.4% Orders placed with U.S. factories fell unexpectedly in August, restrained by long-lasting items such as commercial aircraft, construction machinery and electrical equipment.
http://www.bloomberg.com/apps/news?pid=206...id=aHoCIz1cbXzY

Unemployment: Stress Tests, Unemployed over 26 Weeks, Diffusion Index

http://www.calculatedriskblog.com/

Note: earlier Employment post: Employment Report: 263K Jobs Lost, 9.8% Unemployment Rate. The earlier post includes a graph of percent job losses in a recession - the current recession is the worst post-WWII.

The DOL report yesterday showed seasonally adjusted insured unemployment at 6.1 million, down from a peak of about 6.9 million. This raises the question of how many unemployed workers have exhausted their regular unemployment benefits (Note: most are still receiving extended benefits, although many workers are starting to exhaust their extended benefits too).

The monthly BLS report provides data on workers unemployed for 27 or more weeks, and here is a graph ...

According to the BLS, there are a record 5.4 million workers who have been unemployed for more than 26 weeks (and still want a job). This is a record 3.5% of the civilian workforce. (note: records started in 1948)

Diffusion Index

Employment Diffusion IndexThe BLS diffusion index is a measure of how widespread changes in employment are. Some people think it measures the percent of industries increasing employment, but that isn't quite correct.

From the BLS handbook:

The diffusion indexes for private nonfarm payroll employment are based on estimates for 278 industries, while the manufacturing indexes are based on estimates for 84 industries. Each component series is assigned a value of 0, 50, or 100 percent, depending on whether its employment showed a decrease, no change, or an increase over a given period. The average (mean) value is then calculated, and this percent is the diffusion index number.

Think of this as a measure of how widespread the job losses are across industries. The further from 50 (above or below), the more widespread the job losses or gains reported by the BLS.

Both the "all industries" and "manufacturing" employment diffusion indices had been trending up - meaning job losses were becoming less widespread. However both turned down in September. This series is noisy month-to-month, but it still appears job losses are widespread across industries.

Ugly. Ugly. Ugly.

From the BLS:

Nonfarm payroll employment continued to decline in September (-263,000), and the unemployment rate (9.8 percent) continued to trend up, the U.S. Bureau of Labor Statistics reported today. The largest job losses were in construction, manufacturing, retail trade, and government.

Employment Measures and Recessions Click on graph for larger image.

This graph shows the unemployment rate and the year over year change in employment vs. recessions.

Nonfarm payrolls decreased by 263,000 in September. The economy has lost almost 5.8 million jobs over the last year, and 7.2 million jobs during the 21 consecutive months of job losses.

The unemployment rate increased to 9.8 percent. This is the highest unemployment rate in 26 years.

Year over year employment is strongly negative.

Percent Job Losses During Recessions The second graph shows the job losses from the start of the employment recession, in percentage terms (as opposed to the number of jobs lost).

For the current recession, employment peaked in December 2007, and this recession was a slow starter (in terms of job losses and declines in GDP).

However job losses have really picked up earlier this year, and the current recession is now the worst recession since WWII in percentage terms, and 2nd worst in terms of the unemployment rate (only early '80s recession was worse).

The economy is still losing jobs at about a 3.2 million annual rate, and the unemployment rate will probably be above 10% soon. This is a very weak employment report - just not as bad as earlier this year. Much more to come ...

Note: The the preliminary benchmark payroll revision is minus 824,000 jobs. (This is the preliminary estimate of the annual revision - this is very large).

263,000 Jobs Lost Is Way Worse Than Expected

http://www.businessinsider.com/clusterstock

There's the bad market report:

http://www.marketwatch.com/story/us-job-lo...mber-2009-10-02
Economic Report
Oct. 2, 2009, 9:48 a.m. EDT ·

U.S. job losses accelerate to 263,000 in September
Unemployment rate rises to 9.8%, a 26-year high

By Rex Nutting, MarketWatch
WASHINGTON (MarketWatch) -- Job losses accelerated in September, driving the U.S. unemployment rate to a 26-year high
of 9.8% and casting a cloud over the incipient economic recovery.

Nonfarm payrolls fell by a greater-than-expected 263,000 in September, the Labor Department reported Friday.
It marked the 21st consecutive month of job losses. Since the recession began in December 2007, 7.2 million jobs
have been lost and the unemployment rate has doubled.

Details of the report were almost universally dismal, with the number of unemployed people rising by 214,000 to 15.1 million.

Of those, 5.4 million have been out of work longer than six months, accounting for a record 35.6% of the jobless.
More than a half a million people dropped out of the labor force, and the employment participation rate fell to 65.2%, the lowest in 23 years.
An alternative gauge of unemployment, which includes discouraged workers and those with part-time employment,
rose from 16.8% to 17%, the highest in the 15-year history of the data.
...


...and, the really bad household data report:

-----------------------------------------------
The Market Ticker
Commentary On The Capital Markets

Friday, October 2. 2009
Posted by Karl Denninger in Macro Economics at 08:50

September Unemployment: ACTUAL LOSS 995k

YOUCH.

Headlines: 263,000 "jobs lost" and unemployment rate up to 9.8%.

That's not good - there goes the "second derivative" argument.

Weekly earnings are also down by $1.54, which is bad news too.

But the Household Data is VASTLY worse than reported.
Here are the month-over-month changes,
and they're in the realm of frightening. (all numbers in thousands)

Civilian Labor Force: 154,879 to 153,617 this month.
Employed: 140,074 down to 139,079 this month.

That's a loss of 995,000 jobs, not 263,000, and the labor force contracted by 1,262,000 people!

The participation rate was absolutely decimated, down 0.6% this last month alone. The people "not in the labor force"
rose by a staggering 1,516,000 in the last month.

The government doesn't count people as "unemployed" who have given up and exited the labor force,
but as I have repeatedly noted whether the government counts them or not the corner store owner sure as hell does!

The fact of the matter is that nearly 1 million fewer people were working in September as compared to August;
there has been absolutely no improvement in that trend whatsoever.

YOUCH is right!

Where are those "shovel-ready" jobs, Mr President?

We could use them RIGHT NOW.

Fuggeddabout the Olympics. Come home. You are needed here.

Why the September Jobs Report Is So Brutal
U.S. News & World Report
These trends are the sorts that haven't been seen since the Great Depression. Indeed, the number of workers who have been unemployed for 27 weeks or ...

http://www.usnews.com/money/careers/articl...-so-brutal.html

US Job Losses May Be Even Larger, Model Breaks Down
Bloomberg - Carlos Torres - ‎
Oct. 2 (Bloomberg) -- The US economic slump earlier this year was so severe it short-circuited the government's model for calculating ...

http://www.bloomberg.com/apps/news?pid=206...id=aGBkhROUjNds

JOHN WILLIAMS’ SHADOW GOVERNMENT STATISTICS

FLASH UPDATE

October 2, 2009

__________

BLS Revision Nightmare: March 2009 Payrolls Overstated by 824,000

Birth-Death Model Falsely Boosted Jobs Reporting in Recession Environment

Monthly Jobs Loss of 263,000 (Payroll Survey) versus
Monthly Employment Decline of 710,000 (Household Survey)

September Unemployment Rates:
U.3 = 9.8%, U.6 = 17.0%, SGS = 21.4%

__________

PLEASE NOTE: The next planned Flash Update is for Friday, October 9th, following release of the August trade deficit.

– Best wishes to all, John Williams



Employment/Unemployment Overview Remains Bleak. The U.S. economy continued in an ongoing recession, which has been deeper than previously estimated, per today’s Bureau of Labor Statistics (BLS) reporting of its labor-related coincident indicators of economic activity for September. Further, the limited value of headline monthly payroll reporting as a short-term indicator of underlying economic conditions was confirmed in several areas. The preliminary estimate of a pending massive downward annual benchmark revision was announced for the payroll series; the discrepancies between the payroll and what I consider the statistically-sounder (the BLS disagrees on this point) household series have pushed to an extreme; and unusual revision patterns to recent months were increasingly evident, clouding the substance of the current monthly payroll report.

Benchmark Revision and Overly Optimistic Payroll Reporting. The BLS announced a preliminary estimate of its annual benchmark revision, due on February 5, 2010, indicating that the not-seasonally-adjusted March 2009 employment level would be reduced by 824,000. Such was based on benchmarking the payroll data against state unemployment tax records in March. As this revision pattern gets redistributed across time by the BLS in its benchmarking, current-period reporting could be revised lower by as much as 2,000,000 jobs. The full revisions also should show that the annual percentage decline in nonfarm payrolls already has been the worst of the post-World War II era.

While still shy of reality, the preliminary March 2009 benchmark number largely is confirms the underreporting of jobs losses in the last two years, as indicated by the concurrent seasonal factor bias (CSFB) discussed below. It also serves as a broad confirmation that the assumptions underlying the birth-death model (the old monthly bias factor) are not valid in times of a severe economic downturn. The birth-death model currently adds a net gain of about 900,000 jobs per year to payroll employment reporting, on top of BLS assumptions that jobs lost from companies going out of business are offset equally by the number of jobs created by new businesses.

Unusual Revisions. While the concurrent seasonal factor bias (CSFB) reversed its usual trend in the September report, suggesting that consistently applied seasonal factors would have produced a smaller-than-headline jobs loss, such was against an unusual pattern of prior monthly revisions. On a not-seasonally-adjusted basis, total August payroll employment was not revised (seasonally adjusted it was revised higher by 15,000), yet July’s unadjusted level was revised lower by 55,000, following a 136,000 downside revision to July in the reporting of the month before. Seasonally adjusted, July’s initial estimate of a 247,000 jobs, revised subsequently to losses of 276,000 and today’s estimate of 304,000, which still is 134,000 shy of the downside revisions to the raw data. While these numbers showed unusual revision and seasonal-factor patterns, they were a month removed from being reflected in the CSFB, which deals only with the prior month’s revisions.

Household versus Payroll Series. I long have contended that the household survey (unemployment, measuring the employment status of individuals) is statistically sounder than the establishment survey (payroll employment, measuring the number of nonfarm jobs). (See the Employment and Unemployment Primer on www.shadowstats.com.) The BLS attributes narrower statistical confidence intervals around the payroll numbers, claiming a broader-based survey. While the payroll survey is broader based, the BLS never knows what it really is receiving in data (did a company just not get its report in on time, or did it go out of business?), and revisions over the last year or two have been well outside the bounds of the estimated confidence intervals. The household survey, however, is one where the sampling universe is fairly well established, and the unadjusted raw data are not revised. The issues with the household survey usually are more in the area of how survey questions are defined, rather than problems with the nature of survey’s universe.

That said, accounting for all definitional differences, the BLS never has been able to reconcile fully the numbers in the two surveys. In September, the number of employed individuals (household) dropped by 785,000 versus a payroll employment drop of 263,000.

More Disappointed Market Expectations Ahead. The consensus outlook and continued hype from Wall Street and political Washington on improving economic conditions remain irrationally optimistic. As underlying reality continues to surface in most upcoming economic reporting, consensus economic expectations should soften anew. With the constraints on broad systemic liquidity still tightening, unhappy surprises are likely in that area as well. Accordingly, as the lead-time (six-to-nine months) between any stimulus action and potential economic impact starts to push against the 2010 mid-term elections, some renewed activity by the Administration, Treasury and/or Fed to boost the economy and systemic liquidity is a good bet, irrespective of current strong protestations to the contrary.

Accordingly, there should come a point where more-traditional relationships should begin to resurface in the markets, where a weaker U.S. economy has negative impact on the U.S. dollar’s foreign exchange rate, and where a weakening U.S. dollar begins to restrict domestic liquidity, hitting both the equity and credit markets.

September Employment/Unemployment — Percent Jobs Loss Worst Since Great Depression:

Payroll Survey. The BLS reported a statistically-significant, seasonally-adjusted jobs loss of 263,000 (down 276,000 net of revisions) +/- 129,000 (95% confidence interval) for September 2009, following a revised 201,000 (previously 216,000) jobs loss in August.

From peak-to-trough (the peak month was December 2007; the current month of September also is the short-lived trough of the current cycle), payroll employment has declined by a seasonally-adjusted 7,205,000 jobs, or by 5.2%. Net of the pending benchmark revision, the peak-to-trough decline likely has been closer to 9 million jobs or 6.5%.

Year-to-year contraction (unadjusted) in total nonfarm payrolls narrowed a notch or so to 4.2% in September versus a 60-year low of a 4.4% decline in August. Adjusted for the benchmark revision, however, September’s annual decline likely was around 5.2%, the most severe contraction seen since the production shutdown following World War II. That extreme likely was passed by May 2009. Disallowing the post-war shutdown as a normal business cycle, the annual decline would be the worst since the Great Depression.

Underlying economic series (such as the purchasing managers and help-wanted advertising surveys, and new claims for unemployment insurance) are consistent with a monthly September jobs loss in excess of 500,000. Such reflects likely revisions and aggregated birth-death model understatements of roughly 200,000 jobs per month.

Concurrent Seasonal Factor Bias. The pattern of impossible biases being built into the headline monthly payroll employment reversed again, with a downside bias of 146,000 jobs in September 2009 reporting. Instead of the headline jobs loss of 263,000, consistent application of seasonal-adjustment factors — net of what I call the concurrent seasonal factor bias (CSFB) — would have shown a less-severe monthly jobs loss of about 117,000. This factor has generated an upside reporting bias seen in 9 of the last 12 months, with a rolling 12-month total upside headline-number bias of 935,000. Distorting factors are discussed in the Overview, above. A worksheet on this is available upon request. (See SGS Newsletter No. 50, for further background.)



Birth-Death/Bias Factor Adjustment. As discussed in SGS Newsletter No. 51, Birth-Death Model biases tend to overstate payroll employment during recessions. Never designed to handle the downside pressures from an economic contraction, the model adds a fairly consistent upside bias to the payroll levels each year, currently averaging about 74,000 jobs per month. The unadjusted September 2009 bias was an addition of 34,000 jobs, up from 18,000 the year before, and up from 118,000 in August 2009.

Household Survey. The usually statistically-sounder household survey (see Overview comments), which counts the number of people with jobs, as opposed to the payroll survey that counts the number of jobs (including multiple job holders), showed September employment dropped by 785,000 in September, versus a decline of 392,000 in August.

The September 2009 seasonally-adjusted U.3 unemployment rate showed a statistically-insignificant increase to 9.83% +/- 0.23% (95% confidence interval), from 9.66% in August. Unadjusted U.3 eased to 9.5% in September, from 9.6% in August. The broader September U.6 unemployment rose to an adjusted 17.0% (16.1% unadjusted), from 16.8% (16.5% unadjusted) in August.

During the Clinton Administration, "discouraged workers" — those who had given up looking for a job because there were no jobs to be had — were redefined so as to be counted only if they had been "discouraged" for less than a year. This time qualification defined away the long-term discouraged workers. The remaining short-term discouraged workers (less than one year) are included in U.6.

Adding the excluded long-term discouraged workers back into the total unemployed, unemployment more in line with common experience — as estimated by the SGS-Alternate Unemployment Measure — rose to about 21.4% in September, up from 21.1% in August. See the Alternate Data tab at www.shadowstats.com for a graph and more detail.

Broad Money Growth Continues to Falter. Last night’s (October 1st)weekly reporting on M3 components (seasonally adjusted) M2 and institutional money funds showed continued weekly contractions. While I am still a week shy of publishing a formal estimate of September’s SGS-Ongoing M3, annual growth in the measure likely will slow again, nearing 2% annual growth versus the 3.9% estimated at present for August. There is nothing in the data of the last month that would alter the content of the September 2nd Alert.

Week Ahead. August Trade Balance. Due for release on Friday (October 7th), reporting of the August trade deficit is at some risk of deterioration, assuming the catch-up reporting seen in the July report carries through into the current number. Such will be the last trade deficit estimate before the "advance" estimate on third-quarter GDP is published at the end of October. Significant deterioration in the deficit could soften some of the stronger forecasts surfacing for the current quarter’s GDP growth.

The Scariest Jobs Chart Ever
from Clusterstock by Henry Blodget

It's now official: The country has lost more jobs as a percentage of peak employment than any time since the Great Depression.

This includes the recessions of the early 1980s, even if when are combined.

Those looking for a v-shaped recovery keep insisting that jobs will come roaring right back, the way they did in the 1948 recession (see the blue line in the chart from Calculated Risk below).

Anything's possible, but this seems unlikely. In 1948, U.S. consumers were not still saddled with the massive debts that are stifling consumption today. And consumers still represent 70%+ of spending.

Regardless of what the jobs recovery eventually looks like, moreover, it hasn't started yet. The economy is still losing 250,000+ jobs a month. The average workweek, which should be the first indicator to turn up, also fell in August to match its record low. This would not seem to be consistent with a sustained, v-shaped recovery.

Calculated Risk:

http://www.calculatedriskblog.com/search?u...p;max-results=5

We are looking at an "L" shaped recovery

The Jobs News Gets Worse
By FLOYD NORRIS

How bad is this recession in terms of job losses? The government’s data since 1939 shows only one time when there was a larger percentage decline in civilian jobs.

http://www.nytimes.com/2009/10/04/weekinre...ml?ref=business

So far we are. But then again, I'm waiting for the C wave down.

Only buy gold if you like to wear it.

Americans Are Jobless and Scared -- The Government Must Spend More to Kickstart Our Economy
Robert Reich, Robert Reich's Blog
Corporate Accountability and WorkPlace: The federal government should be spending even more than it already is. This is the only way to put Americans back to work. We did it during the Depression. It was called the WPA.

http://www.alternet.org/workplace/143067/a...art_our_economy

"W" and the Stimulus Package in Perspective
Menzie Chinn, Econbrowser, October 4, 2009
In the wake of some recent economic reports, most prominently the employment report, there's some discussion of how the recovery is in doubt, possibly leading to a "W", or double dip.
http://www.econbrowser.com/archives/2009/1..._the_stimu.html

bama's permanent depression
The toxic cocktail of fiscal stimulus combined with near-zero interest rates in the United States allows financial institutions to profit while further depressing the productive economy. The resulting deteriorating jobs market is now instilling panic in Barack Obama's White House. The parallels with Japan in 1989 are uncanny. Japan, though, had one advantage: it knew how to export. - Spengler

http://www.atimes.com/atimes/Global_Economy/KJ06Dj04.html

CHAN AKYA
Double or quits
As the employment picture in the United States grows ever more bleak, Keynesian economists are producing their standard calls to government - spend more, and the good times will come. This after seeing vast amounts already poured into rescuing the economy come to little effect. It is the cry of despair of a failing gambler.

http://www.atimes.com/atimes/Global_Economy/KJ06Dj05.html

Shamus Cooke
A Jobless Recovery

http://www.counterpunch.org/cooke10052009.html

Greenspan No Pollyanna on Joblessness
Wall Street Journal (blog)
Let me get this straight: The Head of the Federal Reserve that missed the Housing Expolsion, missed the DEPRESSION, missed Bank Failures. ...

http://blogs.wsj.com/washwire/2009/10/04/g...on-joblessness/

Unemployment Figures Increase Odds of Jobless Recovery
Money Morning
The increase added fuel to fears that the worst financial crisis since the Great Depression may further chill consumer spending and economic growth in the ...

http://www.moneymorning.com/2009/10/05/unemployment-rate-5/

Unemployment Is Much Worse Than 9.8% - Editorial, Washington Times

http://www.washingtontimes.com/news/2009/o...its-17-percent/

Structural unemployment crisis stalking U.S. economy

http://www.reuters.com/article/GCA-Economy...E5955NE20091006

WASHINGTON (Reuters) - Millions of American job-hunters risk permanent unemployment as industries undergo radical change and some skills become irrelevant in the wake of the worst U.S. economic recession in 70 years.

There are troubling signs that unemployment in the United States is taking on a structural dimension, though the extent of it may not become clear until the severe downturn that started in December 2007 finally ends, analysts said.

Government data last Friday showed that in September, 5.4 million people had been out of work for over 27 weeks. That was up from 5 million in August and represented a startlingly large 35.6 percent of the total of unemployed Americans.

State of the U.S. economy:

Time to tackle America's widening inequality
Matthew Slaughter, Financial Times, October 6, 2009
Income inequality pressures have been overshadowed by the financial crisis. But will soon be centre stage, writes Matthew Slaughter.
http://www.ft.com/cms/s/0/da086502-b2aa-11...144feab49a.html

We Aren't There Yet
Thomas F. Cooley, Forbes, October 7, 2009
Unwarranted optimism about the U.S. recovery.
http://www.forbes.com/2009/10/06/china-ind...ed=rss_opinions

Obama, labor's lackey
Matthew Continetti, Los Angeles Times, October 7, 2009
The president's bias toward unions is bad for the country.
http://www.latimes.com/news/opinion/commen...0,2141103.story

Obama's Secret Jobs Plan
Simon Johnson, The Daily Beast, October 6, 2009
Tuesday's market plunge for the dollar wasn't an accident, says MIT economist Simon Johnson. It's how Obama intends to restart the manufacturing sector-and win the midterm elections.
http://www.thedailybeast.com/blogs-and-sto...d=hp:mainpromo2

Where Will Unemployment Be in 2012?
Noam Scheiber, The Stash (TNR), October 7, 2009
It's going to be a long, long time before unemployment returns to its pre-recession levels.
http://www.tnr.com/blog/the-stash/where-wi...loyment-be-2012

Recovering the New Deal Ideal
Harold Meyerson, Washington Post, October 7, 2009
Break the cycle of high unemployment and income stagnation with public investment.
http://www.washingtonpost.com/wp-dyn/conte...ss=rss_opinions

Bernanke works on
as jobless tally mounts
The number of jobless people in the United States has officially doubled as Federal Reserve chairman Ben Bernanke has pursued his loose monetary policy, with the real count much worse. With that policy unlikely to change in the near future, the tally will keep rising. - Hossein Askari and Noureddine Krichene

http://www.atimes.com/atimes/Global_Economy/KJ08Dj03.html

Recession in U.S. May Erase Previous Expansion's Jobs, Goldman Sachs Says For the first time in three decades, a U.S. recession may wipe out all the jobs created during the previous expansion, according to Ed McKelvey, a senior economist at Goldman Sachs Group Inc. in New York.

http://www.bloomberg.com/apps/news?pid=206...id=aBH460YDfWSs

Fed's Bullard Says US Unemployment Rate May Rise Above 10%

http://www.bloomberg.com/apps/news?pid=206...id=aHDg_g7I9CZA

The Job Market, in Charts
Catherine Rampell, Economix, October 12, 2009
A roundup of some graphs on America's tough employment situation that go beyond the headline overall unemployment rate.
http://economix.blogs.nytimes.com/2009/10/...rket-in-charts/

Global Worker Surge Was Behind Recession
Michael S. Derby, Real Time Economics, October 12, 2009
A new paper published by the National Bureau of Economic Research, by Ravi Jagannathan, Mudit Kapoor and Ernst Schaumburg, argues imbalances caused by a jump in the world's labor force are the key reason for the global recession.
http://blogs.wsj.com/economics/2009/10/12/...hind-recession/

Employed Taking Deeper Pay Cuts (Except on Wall Street, of Course)
Yves Smith, Naked Capitalism, October 14, 2009
Deflation, anyone?
http://www.nakedcapitalism.com/2009/10/emp...r-pay-cuts.html

Job Sharing: Tax Credits to Prevent Layoffs and Stimulate Employment

The unemployment rate is expected to average 10.2 percent for 2010, 9.1 percent for 2011, and 7.3 percent for 2012. With this in mind, a new CEPR Issue Brief describes a job sharing tax credit, designed to provide a quick and substantial boost to the economy. The tax credit would allow firms to shorten the typical workweek for each employee while keeping pay constant. This should cause employers to want to hire additional workers with an estimated effect of between 1.3 and 2.7 million jobs created.The analysis can be found here.

http://www.cepr.net/index.php/publications...ing-tax-credit/




Washington Must Do More to Put Unemployed Americans Back to Work

http://www.cepr.net/index.php/op-eds-&...oyed-back-work/


Quick, What's Wrong With a Tax Cut that Shortens Work Hours?

http://www.cepr.net/index.php/op-eds-&...ens-work-hours/

Counting on Unemployment? Think Again
by Marianne Hill, Dollars and Sense

http://www.alternet.org/workplace/143278/c...nt_think_again/