Chart of the day: Unemployment? What unemployment? This is the new normal. And the private sector is “doing fine”.
Or so President “a step in the right direction” Obama would have you believe about this week’s job numbers. We’re making progress. Really. Come on. Really. Just look:
Ok, don’t.
Forward!
~McQ
Twitter: @McQandO
Jobs for June? Not many
But the “official” unemployment rate stayed at 8.2%. The broader measure of unemployment – includes job seekers as well as those in part-time jobs – inched up from 14.8% to 14.9%.
GDP? Predictions have been revised down:
Federal Reserve officials last month lowered their economic-growth projections to between 1.9% and 2.4% this year, and forecast the jobless rate would hold between 8.0% and 8.2%.
That’s not a recovery rate by any means (and given how accurate former predictions have been, I wouldn’t count on the unemployment rate staying as low as 8.2%). But it is the reality of the situation and one that will definitely have an effect on the election. That is if people are reminded of some promises made by the administration. You remember these:
Can you say “utter failure”? Of course you can. As with ObamaCare, the people were sold a bill of goods about the recovery plan. In fact it ended up being a huge political payoff plan while our leaders told us they were focused like lasers on recovery. 4 years later, here we are.
We were supposed to be at 5.6% now, with the stimulus plan enacted.
That was the promise.
Of course, this administration has promised all sorts of things it hasn’t delivered, so I’m sure that their failure here doesn’t necessarily come as a surprise to anyone but the media.
Forward.
~McQ
Twitter: @McQandO
Observations: The QandO Podcast for 03 Jun 12
This week, Bruce, Michael and Dale talk about the economy and the election.
The direct link to the podcast can be found here.
As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2010, they can be accessed through the RSS Archive Feed.
Open thread
I’m in a series of meetings today so I’m unlikely to get any serious blogging done.
You guys talk among yourselves.
Suggestions: “flip-flop” is now “evolution”? Really?
And, dealing with just the politics of Obama’s gay marriage announcement, guess what we won’t be talking about again today?
~McQ
Twitter: @McQandO
Observations: The QandO Podcast for 06 May 12
This week, Bruce and Dale talk about what the Trayvon martin case says about the media.
The direct link to the podcast can be found here.
As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2010, they can be accessed through the RSS Archive Feed.
Unemployment: The myth and the reality
And all of it brought to you in charts via Zero Hedge.
The myth:
The "official" unemployment rate is 8.2%. Zero Hedge claims the real unemployment rate is 14.8%.
The reality in two charts. Chart 1:
In case you’re missing the point, 88 million are not participating. That is a whole lot less than when this started. As Zero Hedge asks ‘must be that everyone is able to retire’. Uh, yeah, right. That chart and number provides context for the next chart.
Lets go to Chart 2. This is the chart that tells the tale and kills the myth:
This is the chart that the GOP nominee ought to have permanently hanging at every single event he holds during this election season. This is indicative of the real unemployment picture and it isn’t pretty.
Certainly, many Baby Boomers are choosing to retire, but as I said on the podcast, a) we’re just getting into Baby Boomer retirements and b) no one would dare argue that everyone has the ability to retire right now. So there is a serious discrepancy between the official unemployment rate and the real unemployment rate. That discrepancy is evident with these charts and destroys the myth of an improving unemployment picture.
~McQ
Twitter: @McQandO
Quote of the Day: Unemployment reality check edition
James Pethokoukis provides us with the quote (a little context when you hear all the “sunshine and roses” employment reports):
[T]o restore the job market to the state it was in back in 2007, before the recession, would require the creation of 14.8 million jobs in today’s terms, a daunting task to say the least.
FRED supplies the graphic:
Enough said.
~McQ
Twitter: @McQandO
The economy: A little graphic context
This chart will blow you away (via James Pethakoukis):
The NY Fed explains:
The first figure shows how these three labor market variables evolved over the four post-1973 business cycles (excluding the short 1980 cycle), along with developments in the Great Recession and current recovery. We start at the lowest level of the unemployment rate before the recession and then follow the changes for three years after the rate reaches its maximum level. For the current expansion, the maximum unemployment rate occurred in October 2009.
The employment-to-population ratio displays a classic V-shape recession and recovery pattern in the 1970s and 1980s. In the recession and recovery of the early 1990s, however, the employment-to-population ratio instead displays a U shape, only returning to its pre-recession level three years after the peak in the unemployment rate. In the recession and recovery of the early 2000s, neither the participation rate nor the employment-to-population ratio returns to its previous level, so we see an incomplete U-shape pattern.
In the most recent cycle, the employment-to-population ratio traces out an L shape, but the unemployment rate falls because the participation rate declines substantially (a much more gradual decline was expected by many given the aging of the baby boomers); in other words, a larger share of the population is out of the labor force rather than participating and being unemployed.
We’ve seen a lot of happy talk about how well the economy is doing now. Most of that comes from the media which has about as much of a grasp on the economy and how it works as does the current occupant of the White House.
A look at those four recessionary cycles gives context to the depth of the one we’re currently battling. If you look closely at the part of the chart depicting our current situation, you realize that while we’ve seemingly bottomed out, the employment-to-population ratio is not rising. And that, of course, is because of the horrendous drop in the labor force participation.
It points out two things – one that the “official” unemployment rate should be taken with a grain of salt. And two, that the stimulus had little apparent effect (sorry, but I don’t buy the “it could have been worse” argument. We have no way of knowing that) if the purpose was to shorten the recessionary cycle and keeping employment below 8%. It did neither of those things.
Finally, no matter what numbers and happy talk the media and administration throw out there, unemployment and the state of the economy are a very personal things to voters. Those who remain unemployed certainly aren’t seeing an “improvement” in the economy from where they sit. And it is from there they’ll make their decision as to who they’ll vote for in November. All the media smoke and mirrors about the improving economy aren’t likely to sway those who remain unemployed or are underemployed to see it their way. They’ll, instead, vote the reality of their situation and are unlikely to vote for the candidate who they feel has done little to ameliorate their situation.
~McQ
Twitter: @McQandO
Are the recent employment gains real?
Over the last several months, we’ve seen moderate gains in non-farm payroll jobs, with the rate of job creation running at about 200,000 jobs a month. That’s seems good, as does the continuing drop in initial claims for unemployment to around the 350,000 level weekly.
The thing is, how real is this job creation, in an environment where the past year showed a rate of GDP growth of 1.8%, and the most optimistic forecasts for this year indicate a 2.5% rate of GDP growth? Those rates of growth are significantly below the long-term trend rate of growth for the US economy, which is between 3% and 3,5% per year. How is employment increasing when GDP growth is so slow?
Well, the answer is, it may not be. Take a look at the charts below, They are taken from the historical A tables of the Bureau of Labor Statistics’ (BLS) household survey. This is the survey where households provide employment data.
The first chart shows the number of people in the Household survey who’ve declared themselves to be employed since January of 2002.
That does indeed indicate a moderate rate of employment growth since January of 2010. So far, so good.
The next chart, however, shows those who are employed as a percentage of the civilian, non-institutional, adult population.
This provides a far more negative picture of employment. Essentially, the percentage of the population that is employed has crashed, and the percentage of employed was lower in 2011 than it was in 2010. As a percentage of the adult population, peak employment has declined every year since 2007.
Essentially, a additional 4% of the adult population is now jobless, compared to 2007, and that jobless percentage has been increasing, not decreasing, over the last two years, despite mild declines in the official unemployment rate.
~
Dale Franks
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The unemployment numbers: good news, but lack context [UPDATE]
Obviously any time you are in a recession and the employment numbers are in positive territory, that’s good news. And, as Dale reported below, last month we saw jobs grow by 227,000.
But … and you knew there had to be one… what does that mean in relation to the job losses we’ve suffered during this recession?
In the past, the number for this month would have been a good number because it would have reflected a maintenance level of job creation. Essentially the number of jobs created kept pace with the expansion of the labor market as new workers entered it.
But we’ve lost millions and millions of jobs in the past 39 months. So what is it going to take just to get back to even (i.e. where we were prior to the recession)?
Here’s an infographic to graphically present the problem:
To actually climb out of the unemployment hole that the recession dug, we need to see 755,000 jobs a month for 7 months to bring us back to pre-recession job levels. Why 7 months? Heh … well, you figure it out.
UPDATE: According to James Pethakoukis, the unemployment rate also lacks validity. He makes a point Dale has made any number of times:
If the size of the U.S. labor force as a share of the total population was the same as it was when Barack Obama took office—65.7% then vs. 63.9% today—the U-3 unemployment rate would be 10.8%.
~McQ
Twitter: @McQandO