In an quirk of accounting fate, the beginning of the Great Recession started in the last month of 2007, meaning that forever more the historians would note it as the "recession of 2007-2009" or maybe "2007-2010" or maybe ... well, let's not go there (we can hope).
Rarely recessions last longer than 12 months, and the longest in 70 years was 16 months long. That means we usually mark them as the recession of a single year (2001) or double years (1980-81). After today's jobs report, this one now looks to be a triple, maybe even a home run. To torture this analogy, the American worker is on defense. George Bush was the starting pitcher, and Barack Obama is the reliever. But by now we all know there isn't much relief.
Last month, the payroll number finally recovered from big negatives to mere stagnation. The report out today was expected - certainly hoped - to show the first job gains (+4000) in December 2009 in a long time. Instead, the report shows a resumption of decline (-85,000). Without adding 200,000 payroll jobs every month, economists anticipate the unemployment rate can't decline.
But wait a minute, the unemployment rate held steady in December 2009 at 10.0 percent. What gives? The real shock in the latest report is not the unemployment rate, rather the exodus of people even looking for work. Those Americans are not counted unless they actively sought work in the last 4 weeks, even if they want a job. Such "discouraged" workers are a normal part of the labor force, and their numbers never go to zero even in the best of times. But this month report shows a sickening acceleration in discouragement.
Look at the raw numbers and you will see the number of officially unemployed Americans actually declined from November to December by 73,000. However, the number of employed Americans declined by more than half a million, or 589,000 to be exact. Added together, the civilian workforce declined by 661,000. Over the course of the year, nearly four million citizens gave up on working in America. There are other ugly statistics to prove the point, but it is probably overkill at this point.
The lesson is that the recession of 2007-2010 is proving to be long and bitter. The scars of joblessness are becoming permanent. For those looking for a bend in the curve of unemployment, keep an eye on jobless claims. I looked at the latest weekly report out yesterday morning, and the new jobless are still rolling in at a pace in excess of 400,000 a week, or 450,000 moving average to be exact. Until that fever line of 400k breaks, there will be no health in the aggregate figures. If I had to forecast from the hip, I'd hazard the unemployment rate will hold steady over 10 percent all year long. The reason is that even if job creation picks up, it will likely just draw back millions of unofficially unemployed people into the official counts. We may even see the U-3 unemployment rate rise as things get better.
I wouldn't be surprised if the recession is declared officially over in January 2011. The 7-11 recession?
The battle of ideas is not won or lost in Congress, or even in elections, but in the long assessment of history. Just ask Qeng Ho.
Posted by: louis vuitton | April 08, 2010 at 08:44 PM