Friday, October 02, 2009

The Unemployment Report--Something's Odd, Here

Noticed by Innocent Bystanders:

The September unemployment rate rose to 9.8%, as expected by economists, representing a modest 0.1% rise from last month

OK, but what?

...the unemployment rate would have risen by a much larger amount if the civilian labor force hadn’t lost 570,000 people since last month. As we mentioned in previous posts, the labor force normally increases by ~ 150,000/month, so that’s a huge, very unusual, decrease. In fact, had the labor force size simply remained the same, the unemployment rate would have jumped to 10.2%

570,000 'disappeared' from the labor force?


HT: Ace


J. Strupp said...

You are seeing massive structural unemployment. People have stopped looking for work which is not counted in the unemployment date as you know. Half a million seems like a lot for one month though. A guess that's why are looking more at the underemployment rate these days. It jumped to 17% which is pretty much plain aweful.

Deekaman said...

I'm sure the end is near....I'm (mostly) agreeing with Strupp.

But this is still going to get worse. Nothing has been done to stimulate the private sector. I hope we can agree that Cash for Clunkers only pulled future purchases forward. Manufacturing index is taking a beating (although it can be argued that mfg always slows down in the fall).

Hang on, it's gonna be a bumpy ride.

Dad29 said...

Half a million seems like a lot for one month though. A guess that's why are looking more at the underemployment rate these days

There are two factors which could be at play.

First is the 'underemployment,' as Struppster mentioned. Second is the exit of aliens--legal or otherwise--due to layoffs or "no work here" problems.

IIRC, 'underemployed' is U-6.

J. Strupp said...

I would say this about stimulating the private sector:

I'm not sure what can be done at this point to make the private sector kick into gear short term. This has always been a collapse in demand. There isn't anything, domestically, that's going to be able to stop consumers from repairing balance sheets. The only thing we can do is boost public demand short term to offset this collapse long enough for the private sector to take over again at some point. That could be a long while unfortunately and public debt levels will be quite elavated for years.

In hindsite, let this be the ultimate lesson in why you DON'T deficit spend in times of prosperity. It leaves in a horrible position once you need the gummint to assist.