11 January 2010

US unemployment: a few must see charts

Friday, I commented on non-farm payrolls weak numbers. Today, I am providing several charts from various sources that put these in perspective together with additional comments.

1. Employment and the 2000s: the lost decade

the number of jobs at the end of a decade has been anywhere from 20% to 38% greater than 10 years prior. This sub-par job growth is particularly noteworthy due to the fact that the US population has increased by 10% in addition to a significant increase in global wealth during the same time frame.

2. The unemployment situation in the current economic recession compares very badly with past one since WW II

This recession is the worst recession since WWII in percentage terms, and 2nd worst in terms of the unemployment rate (only early '80s recession with a peak of 10.8 percent was worse). We are lower as the 1948 recession but will recover like the 2001 recession i.e. very lengthy recovery.

3. Monthly Changes in Non Farm Payroll, 2004-09

This graph jut shows the gross figures. It is evident that the pace of job shedding is abating, but does not point towards a fast recovery in the employment situation.

4. The percent of those employed 27 weeks and over 27 weeks and over is at record high since WW II at 40%, almost twice the previous peak
Unemployed are having more difficulties to find a job. It is important for this number to decrease since then next step is for unemployed to no longer looking for a job.

5. The employment rate is now at the lowest since August 1983 at 58.2%

The decline has been particularly sharp.The US finished the decade at 130.9 million, practically unchanged from the start of the decade. Meanwhile, the total pool of available labour rose from 146 million to 159 million. Therefore we have 13 million more people competing for the same number of job than in 2000.

6. Temp help is improving

This is a positive signal since temporary jobs is a leading indicator on the unemployment situation. December was the 5th positive number in a row.

No doubt that we are seeing modestly positive growth in the economy and that the pace of job declines is moderating. This however has been the result of an unprecedented public sector intervention. The private sector is still idle despite the magnitude of a fiscal and monetary stimulus of of historical proportion.

The leaves me worried about the macro-economic outlook since the extraordinary measures taken in 2008-2009 cannot be repeated if the private sector does not roll again.


Chart of the Day

The New York Times: The Labor Picture in December

Calculated Risk: Unemployment Report

Bruce Steinberg: Employment Report

Gluskin Sheff