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Unemployment Report: January 8, 2010

Posted by Larry Doyle on January 8, 2010 9:09 AM |

The widely anticipated January Unemployment Report covering the month of December was just released. Let’s dive right in and take a look at the numbers . . .

I. UNEMPLOYMENT RATE
August: 9.4%
September: 9.7%
October: 9.8%
November: 10.2%…revised to 10.1%
December: 10%
– January Consensus Expectation: 10.0%
– January Actual: 10.0%

>> LD’s comments: unchanged on the month, in line with expectations. The November rate was revised from 10.2% to 10.1%. The underemployment rate worsened to a rate of 17.3%  from 17.2%. How do I read this? The rate of decline may be flattening, but there is absolutely no reason to believe this is destined to improve, especially anytime soon. The fact that the underemployment rate inched higher is a stronger sign as to the real health (or illness) of the labor market.

II. NON-FARM PAYROLL (click here for definition of this term)
July: loss of 463k
August: loss of 304k
September: loss of 154k
October: loss of 139k
November: loss of 111k…revised to a loss of 127k jobs
December: loss of 11k…revised to a gain of 4k
– January Consensus Expectation: flat
– January Actual: a loss of 85k jobs.

>> LD’s comments: for my money, this report is decidedly worse than expected. Temporary workers grew by 47k. Government jobs declined by 21k. The positive spin being put on the December revision to a gain of 4k jobs should be looked at in the context that November’s loss was revised lower in an offsetting fashion.

III. AVERAGE HOURLY EARNINGS
August: .3%
September:  .4%
October: .1%
November: .3%
December: .1%
– January Consensus Expectation: +.2%
– January Actual: .2%

>>LD’s comments: as expected.

IV. AVERAGE HOURLY WORKWEEK
July: 33.0 hours
August: 33.1 hours
September: 33.1 hours
October: 33.0 hours
November: 33.0 hours
December: 33.2 hours
– January Consensus Expectation: 33.2 hours
– January Actual: 33.2 hours

>> LD’s comments: as expected

V. FURTHER COLOR

Why is it that I have a mental picture of the economy personified as an individual sinking to the bottom of a pool? While the distance to the bottom of that pool is lessened each and every month, once the body comes to rest at the bottom, it just sits. Can that body be pulled back and resuscitated or will it merely lie at the bottom of the pool?  This month’s job report is an indication that the economy continues to be in a state of decline and likely to remain depressed.  

The Fed will read this report as an indication that rates should stay unchanged for an extended period.

VI. MARKET REACTION

Post-report at 9:00am

2yr Tsy: .96%, the rate has declined by 5 basis points,
10yr Tsy: 3.79%, the rate has declined by 3 basis points
DJIA Futures: -31 points indicating a slightly weaker opening
U.S. Dollar Index: 77.57, a decline of .35%

Questions, comments, constructive criticisms always encouraged and appreciated.

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Thanks.

LD

  • Aaron Kramer

    Next month we will get the yearly benchmark revisions stated in the headline number. Last year the BLS subtracted over 350K jobs from the initial estimate for January. Look for this years revisions to be at least the same or greater. The U -2 number looks better than it appears because over 500K people stopped looking for work. This is reflects a worsening employment situation and Mark Zandi, the worlds preeminent economic expert on data collection, stated that “If the government does nothing the number will rise to 11% by November 2010”

    Can you say double dip?

    Additionally the NYTimes article conveying James Chanos’ warning about the bubble in China. A collapse in the Chinese economy will send us into a global Depression and a massive deflationary spiral. It will also lead to protectionist trade policies an social unrest.

    http://www.nytimes.com/2010/01/08/business/global/08chanos.html?ref=business

    Overall very bad news and yet people are still behaving like it is 2005.

    • Patriot

      Aaron,

      Great points. Also if and when the economy starts to stabilize and truly improve, we should expect the actual rate of unemployment (the U-2) will move higher as the underemployment (U-6) perhaps inches lower.

      How does a 12% quoted rate of unemployment sound while the underemployment rate comes in at 15%? Not outside the realm of possibilities? In fact very little truly has to change from the current reality.

    • Aaron Kramer

      I want to correct an inaccuracy in my post yesterday. The headline unemployment data was listed as U -2 incorrectly. As LD pointed, in a later post, the headline number is U – 3. I know better and again I apologize for misstating the name of the report.

  • Sader98

    LD,

    I like the analogy that the employment situation in this country is like watching an individual slowly sinking to the bottom of a pool.

    I believe that the individual (jobs market) will stay under for a while for several reasons which my favorite economist, the former Henry Hazlitt so eloquently states from his most famous book, “Economics in One Lesson”:

    When a corporation loses a hundred cents of every dollar it loses, and is permitted to keep only 60 cents of every dollar it gains, and when it cannot offset its years of losses against its years of gains, or cannot do so adequately, its policies are affected. It does not expand its operations, or it expands only those attended with a minimum of risk. People who recognize this situation are deterred from starting new enterprises. Thus old employers do not give more employment, or not as much more as they might have; and others decide not to become employers at all. Improved machinery and better-equipped factories come into existence much more slowly than they otherwise would. The result in the long run is that consumers are prevented from getting better and cheaper products and that real wages are held down.”

    So, until the feds start cutting I don’t foresee the overall jobs market in America doing anything other than try and hold its head above water.

  • Sader98

    btw,

    The feds need to start cutting taxes – among other things!

  • Larry Doyle

    Sader98,

    I always enjoy and appreciate seeing the names of new economists cross the landscape here at Sense on Cents. I can not say I disagree with your assessment and that of Mr. Hazlitt but the chances of taxes being cut are less than zero. The massive and overwhelming deficits will very likely be met with an array of tax increases and service cuts under the current administration in Washington. Given the disaster in most state and municipal finances, I have to believe taxes are likely headed higher there as well.

    Add it all up and it means lower and slower growth as we try to work our way out of the mountains of debts we have accumulated over the years.

  • kbdabear

    http://michaelscomments.wordpress.com/2010/01/08/boring-unemployment-news/

    Two charts at this link, the U-2 rate (will Bono throw us a benefit concert?) vs Christina Romer’s chart with and without the Stimulus.

    A second chart plots the total number of jobs in the economy. It’s not pretty.

    • Larry Doyle

      kbdabear,

      Interesting link. Thanks. All about one’s perspective. For another take, check out the next commentary going up at Sense on Cents momentarily.

  • Bill

    The December report, for Nov. data,
    revised upward to 4K gain, would be much
    worse–on the order of -96K, but for a
    statistical revision. The labor force
    was actually decreased by 100K for the
    computation, due to a seasonal
    adjustment or whatever by BLS, or
    whichever agency it is that compiles it.

  • RUINZ

    Let me start by saying these comments that I make are not assumption, made up none factual numbers. Written facts by the average American. I see not assume 3 out of 10 of my friends are now unemployed including myself. I see state,city governments taxing fuel,tobacco,alchohol at every angle, when other angles have failed, when the people voted against it. Groceries prices rising at an astronomical rate. I see the American dream being handed over to foreiners. Don’t believe me go to the closest mom and pop store or restaurant. I see classrooms crowded at my daughters school while teachers are looking for work. I see companies billing me with fees that magically appear. Credit card companies raising interest rates at the snap of a finger. I see republicans and democrats bickering in office in a controlled civil war while the people suffer to to find food and warmth. I see average americans pan handling, with their children beside them. I see congress waiting to the last minute to pass a unemployment bandaide just before the holidays while the people wait their fate. I see our president enjoying his vacatation at hawaii when Americans are looking for help. I see people getting layed off, getting unemployment for two weeks just to have it end on the 20th of December while other people have been on it for two years. I see roads with potholes that can’t be filled because of funds, while 8 city employees shoot the bull while 2 work on a stop sign. I see wages getting lower because of higher competition with less hours. I see a stimulation package that saved jobs ,but didnt create any. Untill somethings done about all of these conditions they will keep us pinned down at the bottom of that pool while we hold our childrens hands.

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