Again the headlines were pre-printed. The employment numbers had to be grim right? So let's go ahead and print the story... even though the real underlying data is not there to support the gloom.
We already documented last week (with all your primary research) that firms indeed are hiring. And now the details of the Initial Claims report helps us further make the claim:
Firms announced the layoffs to satisfy shareholders, then turned right around and started hiring again.
Where's the data?
First let's remember this. Initial claims for unemployment are just that, initial claims. For those of you who have gone through the process, you know that frequently an initial claim is never converted to payment (or eligibility). The most common reason? Because you find a new job.
So here's the punch line (thanks to reader John C for catching this on Bloomberg), the unemployment rate among people eligible for benefits, which tends to most closely track the actual jobless rate, held at 3.6 percent in the week ended Jan. 24.
Digging a bit deeper into the report we find:
Forty-eight states and territories had a decrease in new claims for the week ended Jan. 24, while only five reported an increase.
Two more pieces of evidence pointing to this downturn's end by independence day.
(Did you catch a good news story on the economy today like John C.? Keep those emails, comments, and statistics coming this way.)
Thursday, February 5, 2009
Jobs Data: Take a Closer Look
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Here's what I don't about the shock and awe the media is reporting.
ReplyDelete"Worst job losses since 1974"
Lets put things a bit in perspective. The population of the US in 74 was approximately 214 million and Dec 74 had a job loss of 602K. That was .28% of the population. Given the current climate of fear, the job loss for Jan was 598K making it .2% of the population. In other words, it was 40% higher in Dec 1974 than it was last month! In comparison to todays population of 306 million, that would have meant a job loss of 860K.
The media has lost perspective of this any will only report superficial data for the shear shock value. My concern is not with these initial high numbers. If these high numbers occur over a prolonged period of time, then the economy would be in a serious dilemma.
I love you blog. A different perspective is always nice.
Cheers!
I work with commercial real estate developers and they seem to think that the near term economic data is not good. They see high unemployment and continuing difficulty getting financing for new construction projects. Some developers are even shutting down projects under construction because they can't get financing to complete them. Also, if the actual number of unemployment claims is a smaller percentage than claims filed back in '74, isn't it also true that if we compare the current unemployment rate of 7.2%, the actual number of unemployed is higher than the same % 26 years ago? I certainly don't want to add to the doom and gloom and appreciate any good news you can find, but I think we also can't ignore some of the real problems we are facing in this over-leveraged economy.
ReplyDeleteSuggestions on how we make the mainstream media get a grip?? I had to chuckle at the comment "shock and awe" media reporting.
ReplyDeleteI agree with the second comment, but this should still be put in perspective.
ReplyDeleteI was a senior consultant in the tech boom of the nineties and remember the bust quite well. While it was a recession, IT experienced a meltdown in the same fashion that the real estate market is currently experiencing. While normal professional services had an unemployment rate of 3%, IT exceeded 10% and took years to recover. With real estate being the epicenter of the current crisis, it has experienced among the highest rates of unemployment when compared to other industries.
As for Dec 1974, yes the unemployment rate was 7.2%, but the unemployment rate is always a lagging indicator in a recession. It actually peaked at 9% in May 75 and did not reach back to 7.2% until April 1977. I fully expect to see further deterioration of the employment situation as a part of the normal cycle of a recession.
Having said that, I firmly believe that the sky is not falling, and that this too shall pass.
Thank you Eldon for your great site.
Eldon,
ReplyDeletePlease comment on the U-6 release.
Cheers,
energyecon
Energyecon,
ReplyDeleteI would propose that going forward using U3, then adding in U6, provide it monthly with year over year changes. I am for letting everyone see the full picture, via all the BLS data.
No matter what the data when we can find a silver lining we will report it here. If not and it's negative, we'll let the remainder of the media outlets report on it.
What are your thoughts?
Thought you might find this interesting. Companies may have cut too many jobs.
ReplyDeletehttp://archive.gulfnews.com/business/Economy/10283133.html