Jobs Data Optimism Obscures Harsh Reality

This Is Progress? Jobs Data Optimism Obscures Harsh Reality

Posted Dec 04, 2009 02:02pm EST by Chris Nichols in Newsmakers, Recession, Housing
Related: DIA, SPY, QQQQ, ^GSPC, ^DJI, GLD

If you still have a job, maybe Friday's numbers from the Labor Department will give you a chance to exhale.

Since the recession began in December 2007, the employment market, for the most part, has been one negative headline after another. Now, we've learned that the U.S. lost only 11,000 jobs in November, that the unemployment rate surprisingly ticked down from 10.2% the previous month to only 10%, and that for the prior two months the total of jobs lost actually wasn't as bad as initially thought.

The last time the data were so bright, if they can be called that, was in December 2007, when the economy added 120,000 jobs. Yet despite pockets of optimism on Wall Street following the latest reading, the truth is that for many workers in America, these are dark days.

As of now, more than 15 million people around the country remain out of luck. Beyond the 10% headline number in joblessness, the situation is actually worse. Factoring in people who have stopped looking for work and those in part-time positions who want a full-time job, the "underemployment" rate is 17.2%. In fairness, that was down from 17.5% in October, but it remains a daunting swath of the U.S. workforce struggling to make ends meet.

Consider that the jobless rate in the El Centro, Calif., metro area is at 30%, the worst in the nation. Shockingly, it was even uglier just a couple of months ago. Though that area is used to higher-than-average joblessness, the problem has been exacerbated by the steep falloff in the region's real estate markets.

An improvement? Yes, but a mild one that still means close to one-third of eligible workers in the area continues to wait for better days. CNNMoney.com quoted one local business owner, Jim Duggins, as saying "our economy is the worst I have ever seen it and it doesn't seem to be recovering." Duggins, who owns a construction company, has already eliminated more than 80% of his workers and has 22 left. More cuts, he indicated, could be coming.

In a much-better known American town, Detroit, the jobless rate was above 17% in September as the auto industry retrenched sharply. That's nearly double the rate of the year earlier.

How bad are things in the Motor City? Foreclosures have been rampant. You could buy a home for $6,900.

The New York Times notes that the number of workers around the country dealing with what is termed long-term unemployment, that is, the inability to find work for at least 27 weeks, has been hovering at an all-time high, tallying 5.6 million people in October. One such individual is Kathy Henry, a 39-year-old Chicago resident who lost her administrative assistant position two years ago. In the time since, she has sent applications to no fewer than 500 jobs.

"It’s a constant cycle," she told the Times. "I’ve applied everywhere, from big corporations to minute corporations, and I don't even get an e-mail back. I'm worried people see me as old and out of touch and decrepit."

There's no doubt the pain has been widespread, and it's even been evidenced in one of the most sacred traditions of childhood -- the visit from the Tooth Fairy. In March, granted that was before the stock market started its rally, WebMD said that children could expect to receive an average of $1.88 for each tooth they left under their pillow, down from $2.09 in 2008. When parents are forced to cut the payouts to their kids by two dimes and a penny, that's saying something.

President Obama and other leaders in Washington say they want to brighten the landscape that's been bleak for too long. Unfortunately, this is another problem they have to solve at the same time they're dealing with the wars in Iraq and Afghanistan, the health care debate and the deficits. Perhaps on at least one level government can be part of the solution -- the Census Bureau appears poised to hire in the neighborhood of 1 million temporary workers to conduct its resident surveys in 2010.

The views on the future, naturally, are varied.

"I wouldn't say that we're totally out of the woods yet because the number of unemployed is still high," Labor Secretary Hilda Solis told Reuters Television. "It's very, very high and it's unacceptable, and we need to continue our efforts to focus in on job creation."

John Mauldin of Millennium Wave Investments is optimistic about the longer term, but for now he's planning for a "double-dip" recession. "It's going to be a slow-growth, high-unemployment environment, I think, for quite some time. It's not going to be fun," he said in an interview with Henry Blodget.

Meanwhile, First Trust's Brian Wesbury is in the upbeat camp, arguing that for Main Street, the recovery is "already on its way."

He told Tech Ticker: "It's like the flu. You know, on the third or fourth day of the flu, you are getting better. Even though you don't feel like it."