Econs, Officials & Bloggers React:
Barry Ritholtz
The Mother of All Jobless Recoveries?
Nice chart via Annaly Capital, showing the “Mother of All Jobless Recoveries.”
You can see why the Rutgers study showing a full jobs recovery not taking place until 2017 is very possible.
Annaly Capital Management
Defining Recovery Down
The job numbers out this morning-non-farm payrolls down another 263,000, the unemployment rate ticking up to 9.8%, hours worked slipping-remind us of the phrase “defining deviancy down,” Daniel Patrick Moynihan’s famous coinage regarding the gradual acceptance of lower cultural standards in America. With every month of falling job rolls, the markets seem to be “defining recovery down” and accepting that since month-to-month job losses are not as steep as they were a year ago it constitutes a bottoming out, an improvement in the rate of change. We suggest it should instead be described in absolute terms: Another month of evidence that our economy is mired in an intractable recession. We’ve updated the graph on jobs lost and months to recovery….it is now the worst post-WWII recession in terms of percentage of jobs lost from peak employment.
As we watch the US unemployment rate climb and then stagnate, we are concerned that the corollary to defining recovery down is a growing acceptance of and reliance on government support in the absence of economic growth. As the deflationary picture continues to unfold, impaired incomes, rising taxes and tough choices for legislators and consumers lie ahead...
CEPR
Decreased Jobs and Hours Push Economy Back to 1997 Hours Level
The loss of 263,000 payroll jobs, coupled with a 0.1 hour decline in the average workweek, pushed the index of aggregate hours to 98.5, slightly below the 98.6 level in December of 1998. Hours worked have now declined by 8.6 percent from the pre-recession peak...
The 0.1 percentage point rise in the unemployment rate was coupled with a 0.4 percentage point drop in the employment rate, as there was a sharp decline reported in the size of the workforce. The employment to population ratio (EPOP) is now 4.6 percentage points below its pre-recession peak and 5.9 percentage points below the peak reached in 2000...
The data in this report indicates that a turnaround in the labor market is not imminent. Continuing losses of jobs and declines in hours, coupled with stagnant or declining real wages, means that workers’ purchasing power is still falling. There are no further tax breaks scheduled to boost demand and state and local governments are cutting back and raising taxes to address budget shortfalls. The immediate future does not look good.
Federal Reserve Bank of Atlanta
Economic troughs, changes in the unemployment rate, and fed policy
Recent data on the U.S. economy have been mixed. But today's weak labor market report (discussed more here, here, and here) provides a reminder that thinking of the economy as being in anything other than a technical recovery at this time is likely an exaggeration. The report showed the unemployment rate inching higher to 9.8 percent-and it would have been even higher absent a measured decline in labor market participation. Those active in the labor market declined by an estimated 571,000 in August. Discouragement about job prospects is a likely explanation for at least part of this decline...
Mish Shedlock
Jobs Contract 21st Straight Month; Unemployment Rate Hits 9.8%
...Some "Recovery"
In a typical recovery, the participation rate should go up not down. The reason is people hear there is a recovery, hear things are getting better, hear the talk about "green shoots" and think there might be a job if they go looking.
Instead we see the participation rate drop by .3 and the civilian labor force drop by 571,00 workers. In normal condition, the civilian labor force ought to be growing by 120,000 a month due to increasing population and immigration.
Is this a "recovery"?
Grim Statistics
The official unemployment rate is 9.8% and rising. However, if you start counting all the people that want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.
It reflects how unemployment feels to the average Joe on the street. U-6 is 17.0%. Both U-6 and U-3 (the so called "official" unemployment number) are poised to rise further although most likely at a slower pace than earlier this year.
Looking ahead, there is no driver for jobs and states in forced cutback mode are making matters far worse.
Unemployment is likely to continue rising until sometime in 2011.
Depression Level Statistics
I consider these job losses to be depression level totals. Admittedly conditions are not as bad as the great depression, but this is certainly no ordinary recession by any economic measure including lending, housing, bank failures, jobs, the stock market, commodity prices, treasury yields etc.
Huge Downward Revisions Coming
Paul Krugman
Mission Not Accomplished
Stocks are up. Ben Bernanke says that the recession is over. And I sense a growing willingness among movers and shakers to declare “Mission Accomplished” when it comes to fighting the slump. It’s time, I keep hearing, to shift our focus from economic stimulus to the budget deficit.
No, it isn’t. And the complacency now setting in over the state of the economy is both foolish and dangerous.
Yes, the Federal Reserve and the Obama administration have pulled us “back from the brink” - the title of a new paper by Christina Romer, who leads the Council of Economic Advisers. She argues convincingly that expansionary policy saved us from a possible replay of the Great Depression.
But while not having another depression is a good thing, all indications are that unless the government does much more than is currently planned to help the economy recover, the job market - a market in which there are currently six times as many people seeking work as there are jobs on offer - will remain terrible for years to come...
Wait. It gets worse. A new report from the International Monetary Fund shows that the kind of recession we’ve had, a recession caused by a financial crisis, often leads to long-term damage to a country’s growth prospects. “The path of output tends to be depressed substantially and persistently following banking crises.” ...
Catherine Rampell
Comparing This Recession to Previous Ones: Job Losses
