Weatherdem's Weblog

Bridging climate science, citizens, and policy

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Economy Still Struggling

I know what’s going to happen soon.  Republicans will, at some point, begin complaining that President Obama’s economic policies aren’t working – if they were, why would we still be in a recession.  That’s why President Obama continues to personally address the American people, explaining his administration’s moves and why they’re being taken.  The American people in turn recognize that recovering from this economic disaster will take time and patience.  Not endless amounts of either, but reasonable doses.  The most recent corporate earnings reports haven’t thrilled Wall St.  Big deal – they shouldn’t thrill Wall St.  The fundamentals are still recovering from decades of economic mismanagement – initiated by Republicans and supported by Democrats.

That’s why it’s no surprise that sales of existing homes in the U.S. fell 3% again last month.  Markets in the West recovered, selling homes at 23% more than last year’s numbers.   That’s a sharp recovery, but I’m not convinced it will be long lived.  Those markets were overpriced for many years before taking a hard tumble in this recession.  Did they fall far enough so that market fundamentals can support their prices?  Or are people still trying to squeeze unsustainable returns from their properties?

Continued economic weakness is the message in this article about additional unemployment news.  The Labor Department reported today that initial claims for unemployment compensation rose to a seasonally adjusted 640,000, up from a revised 613,000 the previous week.  More bad news: 6.1 million people continue to file claims for benefits.  Few companies are hiring – they won’t until the economic outlook improves.  That means we’re a long way away from recovery.  It’s a bad chicken-or-egg problem that more and more Americans are suffering under.  These claims mean that the unemployment figures for April are likely to go higher than March’s (which was over 15%).


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Real March 2009 Unemployment: 15.6%

The U.S. Labor Department released March 2009 unemployment numbers today.  The most common number being reported by the corporate media is the U-3 number: 8.5%.  As I’ve written before, this number is used to undercount how bad un- and underemployment really are in America.  The more complete number, called U-6, is at 15.6% this month, up from 14.8% last month and 9.1% in March 2008.  That 15.6% number is the highest ever recorded (going back to 1994).

663,000 jobs were eliminated last month, as the Con 2008-09 recession continues to deepen.  The underemployed are becoming a large problem: The average work week in March dropped to 33.2 hours, a new record low.

Previous months’ numbers were updated: January came out much worse than originally thought; February was unchanged.  January’s job loss number went from an initial 655,000 to 741,000.

Since the recession began in December 2007, the economy has lost a net total of 5.1 million jobs, with almost two-thirds of the losses occurring in the last five months.

At this point, I still don’t thinkthe Obama administration has done enough to pull the economy out of its deep recession.  We still don’t know what millions of mortgages and other financial instruments are really worth.  The credit markets are still largely frozen.  Banks are walking away from houses, leaving their previous owners stuck with properties that are upside-down in value.  These unemployment numbers will continue to get worse for the forseeable future.  I expect the U-3 number to get above 10% and the U-6 number to bump up against 20%.  Combine those numbers with millions of workers that aren’t on the official rolls of companies and we’ve got huge problems.

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Jobless Claims Jumps; Unemployment Number Too Low

The largest number of jobs were lost since Dec. 1974 in Nov. 2008: 533,000.  The already announced September and October numbers were revised … downward.  403,000 jobs were lost in September (284,000 was the previous number) and 320,000 were lost in October (240,000 was the previous number).  Since the Bush/Con-servative recession began, over 1,900,000 jobs have disappeared.  Bush has set yet another milestone: the fewest number of jobs have been created during his presidency than at any time since the Great Depression.  Bush didn’t fail Con-servatism, as right-wing pundits would have us believe.  Bush executed Con-servative policies to the letter.  What’s happening today is, unfortunately, a predictable result of those policies.

The title menioned bad unemployment numbers.  I’ve written about this before and this month’s reported number provides a very good example of what I see wrong with it.  The article says that the unemployment rate catapulted from 6.5% to 6.7% from October to November.  Really?  The largest single month’s job loss in the past 35 years happened and the rate increased a whopping 0.2%?!  If that doesn’t make sense to you, there’s good reason.  And it’s why the rate doesn’t reflect the reality of the job market.  Reading a little further into the article,

The unemployment rate would have moved even higher if not for the exodus of 422,000 people from the work force. Economists thought many of those people probably abandoned their job searches out of sheer frustration. In November 2007, the jobless rate was at 4.7 percent.

So if folks aren’t actively looking for a job, they’re not counted as unemployed.  That makes absolutely no sense.  If they’re not employed, they’re unemployed … that’s what the word means.  The popularized “unemployment rate” is really a “job seeking rate” that is poorly surveyed.  Here’s what happened in the past: the unemployment rate used to count those who weren’t actively seeking work but also didn’t have a job.  As such, the reported rate was regularly higher.  That tended to have an effect on Americans’ psyche.  So in an effort to paint a pretty picture for everybody, the government changed the way the rate was calculated.

What does that mean from a policy standpoint?  It means that if you don’t think there’s a big problem, you’re not going to search for aggressive solutions to that problem.  You’re more likely to go with what Corporate America wants: leave them alone.  They’ve hired millions of overseas workers to fill jobs Americans used to have.  If Americans think the economy isn’t doing well or if they think too many of them are unemployed, or underemployed, they’re going to raise a stink.  Well, our elected officials, and the super-rich corporate interests that hold too much influence over them, can’t have that.  A frustrated populace tends to demand changes that Corporate America doesn’t want.  So things are sugarcoated.

I’ve read that if those not actively searching for jobs were counted, the unemployment rate would be quite a few percentage points higher.  If the underemployed (those working fewer hours than they want) were also counted, the unemployment rate would be more than double that which is popularly reported.  I recently found out that rate is calculated, but the corporate media doesn’t report it.  They’re only protecting us from ourselves, of course, by saying that it’s a complicated number and they’d have to spend time explaining it to Americans.  Thank goodness Americans have benefactors who can save us from our own stupidity.  Of course, it seems to me that the purpose of the press is to report the news, without alteration…

[Update 12/8/08]: I found the number I was looking for.  I also found numbers I wasn’t looking for, but are interesting nonetheless.  From the Bureau of Labor Statistics:
U-1 Persons unemployed 15 weeks or longer, as a percent of the civilian labor force…2.6%
U-2 Job losers and persons who completed temporary jobs, as a percent of the civilian labor force…3.9%
U-3 Total unemployed, as a percent of the civilian labor force (official unemployment rate)…6.7%
U-4 Total unemployed plus discouraged workers, as a percent of the civilian labor force plus discouraged workers…7.0%
U-5 Total unemployed, plus discouraged workers, plus all other marginally attached workers, as a percent of the civilian labor force plus all marginally attached workers…7.8%
U-6 Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers…12.5%

So the U-3 number is the official unemployment rate.  The U-6 number includes the under-employed and is likely the more accurate number.  The U-3 number hasn’t been the historical number reported as the official unemployment numbers.  In the past, calculations were closer to the U-6 number.  In the latter part of the 20th century, additional measurements were created (that counted fewer and fewer people) and were reported as the official number.  The value of the official number hasn’t changed much sine that process began, giving the impression that unemployment was lower than it actually was (and is).  That puts artificial pressure on workers and unfairly manipulates the labor market.