Understanding Unemployment

With unemployment at 6.7%, close to the 6.5% level at which the Fed has said it would raise short-term rates, the Fed must change its short-term interest rate guidance. The Fed is wrestling with how much slack exists in labor markets and if the swollen ranks of the long-term unemployed will keep wages down or…

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Want a Job?

Since 3/12 the unemployment rate has fallen 0.6%, and the labor-force participation rate (LFPR) has fallen by 0.5%. If by 3/14 the LFPR falls another 0.5%, it would take only 107,000 new jobs/month to get the unemployment rate down another 0.6%. But if by 3/14 the LFPR returns to where it was on 3/12, it…

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Laboring On

Last Friday’s mediocre employment report gives the Fed (meeting this week) ample reason to continue buying Treasuries and mortgage-backed securities at the rate of about $80 billion/month for the foreseeable future. As for the employment report, average hourly earnings rose only 1.7% over the past 12 months, while the CPI increased 2.2%! The workweek remained…

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Surprising Survey

Despite 114,000 jobs being created in September the unemployment rate plummeted to 7.8% from 8.1%. The unemployment rate is based on a tiny survey of 66,000 households that has a margin of error of 400,000! Moreover, the survey is especially bad when seasonal patterns change (and they are among those 20 to 24). The number…

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Retraction Subtraction

The economy added just 96,000 jobs in August. Worse, the DOL lowered the June and July estimates by 41,000! While the unemployment rate fell to 8.1%, it did so only because 368,000 Americans left the labor force, reducing the participation rate to 63.5% from 63.7%, its lowest level since 9/81. Factory employment fell by 15,000,…

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Unemployment is not the Story!

The unemployment rate is falling fast, but for the wrong reasons. In 1/12 the labor force participation rate was 63.7%, the lowest level since ’82 and way below the 66% when the recession began. Had the LFPR rate not fallen, the unemployment rate would now be 10.4%, not 8.3%. And, because the Boomers are fast…

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The Unparticipation Rate

The latest employment report was great, but a little perspective, please. The labor force participation rate is now 63.7% it lowest level since 5/83! (The all-time high was 67.3% in 3/00). Worse, since the recession ended in 6/09, rather than rising, the LFPR has continued to fall from 65.7% to its current anemic rate of…

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No Help Wanted

The labor market is suffering from sclerosis. While employers are no longer firing workers – the percentage of workers laid off or fired in 10/11 was lower than in ’07, before the recession – they also aren’t hiring. Similarly, few of the employed are quitting their jobs. Usually about 2% of all workers quit their…

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Excellent Employment!

Hallelujah! The economy gained 244K jobs in April! Payroll data for Feb and March were also revised up by a combined 46K! Hiring in the private sector posted the largest increase in 5 years and was broad based! Ignore the rise in the unemployment rate to 9%. The bad news; gov’t employment fell 24K, avg…

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Deceptive Decline

Today’s decline in the unemployment rate is deceptive. It shows is that people have stopped looking for jobs. The Civilian Labor Force Participation Rate declined to 64.3% last month and is way off its all time high of 67.3% of early 2000. Had the CLFPR remained unchanged, the unemployment rate would now be about 13.4%

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