Employment Situation - January 2012

The latest Employment Situation news release has been posted on the BLS website at http://www.bls.gov/news.release/pdf/empsit.pdf and also archived at http://www.bls.gov/news.release/archives/empsit_02032012.pdf. Highlights are below.

Payroll employment rises 243,000 in January; unemployment rate decreases to 8.3%

02/03/2012

Nonfarm payroll employment rose by 243,000 in January, and the unemployment rate decreased to 8.3 percent. Job growth was widespread, with large gains in professional and business services, leisure and hospitality, and manufacturing.

How to Read the Current Job Market

The unemployment rate increased to 9.6% in August 2010, but that may be a good indicator for job prospects in the near future if you understand how the statistic is calculated. .In the September 3, 2010 U.S. News & World Report article "5 Key Lessons in August's Jobs Report," Liz Wolgemuth provides some insight into why an increase in the unemployment rate might be a good signal for economic recovery.

August's jobs report is shining a little light on the ploddingly dreary labor market. Private employers added more jobs than economists expected last month, and the Labor Department revised the data to show bigger private sector gains for June and July. In July, private employers added 107,000 jobs, rather than the 71,000 initially reported. The unemployment rate last month ticked up to 9.6 percent from 9.5 percent in July, reflecting an increase in the size of the labor force.

This report offers some important lessons to help understand the current job market and how it's measured. Here are some things to keep in mind:

The headline number often doesn't mean much. The number of jobs lost or gained for the month will always be the first thing reported, but the truth is that it's often a very misleading figure. Let's look at August. Non-farm payroll employment fell by 54,000 jobs--that's the headline figure, and it's negative. More job losses are certainly the last thing anyone wishes to see at this point in the recovery. But if you look deeper, you'll see that the government cut 114,000 temporary census jobs last month. At the same time, total private sector employment increased by 67,000 jobs. Private-sector employment is the real barometer, not the sum of short-term government jobs.

Job numbers are just differences. Often, job data is reported in a way that can be confusing. Let's say a news report says "private sector employers added 67,000 jobs last month." That can sound a bit like all the private businesses in the country made just 67,000 hires altogether last month. In truth, American businesses hired millions of people last month. Consider that in June alone (the most recent month for which there is data) U.S. public and private employers made nearly 4.3 million hires. Retailers alone made 593,000 hires in June. The problem is that people lose or leave jobs in similar volumes. Economists call this "churn," and there's a lot of it--every month.

The long-term unemployed are missing out on the churn. Last month, there were 6.2 million people who had been out of work for six months or more. You might ask, given the millions of hires employers make each month, why some people have been unemployed for a year or two--or more: Wouldn't they eventually get caught up in the churn? This is one of the most troubling aspects of this recession. There could be several reasons. Many of the people struggling with long-term unemployment have found that their skills aren't matching up with what employers are looking for. Also, in general, the longer people are unemployed, the harder it is for them to find work, whether it's because they become stigmatized or because they are gradually become less aggressive job seekers. One possible policy response would be a tax credit for employers that hire a person who has been out of work for six or months or more.

A higher unemployment rate can actually be a good thing. Yes, this sounds ridiculous. Last month, the unemployment rate ticked up 0.1 percentage point to 9.6 percent. "It's worth noting that this was entirely attributable to a spike in the labor force--the household survey actually showed employment up 290,000 in August," Morgan Stanley economists Ted Wieseman and David Greenlaw said in morning note.

Consider an economy that's really in the dumps, with employers unwilling to hire. Hopeless job seekers run out of benefits and give up their job search instead relying on the income of a spouse or family member or another form of support. The people quitting their job search drive down the number of officially unemployed and shrink the labor force--and that can drive down the unemployment rate. Consider the opposite: Previously hopeless job seekers begin to see a better local job market, the headlines sound more promising, and their friends are beginning to find jobs, so they head back into the labor market. They pick up the phone and call a contact about an opening they spotted, or they fire off their resume online. They officially move back into the job market, but they aren't employed just yet--they're looking. This can drive the unemployment rate up, but it's a very positive thing for the economy that people are participating in the labor market again.

Back to August: "The labor force increased by 500,000 indicating that people are more encouraged about the labor market and decided to look for work boosting the jobless rate to 9.6 percent from 9.5 percent," says Sung Won Sohn, an economist at California State University-Channel Islands.

Slow growth will have Washington seeking stimulus. This may be a better-than-expected jobs report, but the job growth is still very small. The economy needs to be adding hundreds of thousands of jobs every month to absorb new people entering the job market and put the unemployed back to work. So lawmakers may be looking for more stimulus. "There is a good chance that the Obama Administration will introduce a set of targeted economic stimulus programs," Sohn says. "Payroll tax relief to encourage new hiring for small businesses is a good possibility. State and local governments are laying off employees as revenue falls. Some assistance from Washington could stem job losses here." Shortly after the release of the August jobs report Friday, President Obama encouraged lawmakers to pass a $55 billion bill that would provide additional loans to small businesses. Housing stimulus may also be coming--along with more unemployment benefit extensions, Sohn says.

Job market not growing fast enough for big rebound

In the July 2, 2010 article "Job market not growing fast enough for big rebound," Associated Press economics writers Jeannine Aversa and Christopher S. Rugaber report:

WASHINGTON – A second straight month of lackluster hiring by American businesses is sapping strength from the economic rebound.

The jobless rate fell to 9.5 percent in June, still far too high to signal a healthy economy. It came in slightly lower than the month before only because more than a half-million people gave up looking for work and were no longer counted as unemployed.

The private sector added just 83,000 jobs for the month. Looked at from that angle or almost any other, from a teetering housing market to falling factory orders, the recovery is limping along as it enters the year's second half. And that is when the benefits of most of the government's stimulus spending will begin to wear off.

The fate of the economy will hinge on whether it can stand on its own. President Barack Obama acknowledged the slow pace of the recovery and used the new jobs figures to argue for more stimulus spending and extended unemployment benefits.

"We're not headed there fast enough for a lot of Americans," the president said. "We're not headed there fast enough for me, either."

Overall, the nation's total payroll actually shrank last month by 125,000, the first decline in six months, the Labor Department said Friday. The loss reflected the end of 225,000 temporary jobs helping the U.S. Census Bureau complete its 10-year head count.

The 83,000 jobs added by the private sector was a better performance than in May, when private job creation nearly stalled. But it fell far short of what the economy needs — at least 200,000 jobs a month — to bring down the unemployment rate.

Nobody, from Obama to Federal Reserve Chairman Ben Bernanke to private economists, expects that anytime soon. And the government has mostly exhausted its realistic options for nudging the economy along faster.

Benchmark interest rates, which at low levels can encourage borrowing to spur economic growth, are already near zero. Republicans in Congress object to additional stimulus spending.

Unemployment is expected to stay above 9 percent through the midterm elections in November. And the Fed predicts joblessness could still be as high as 7.5 percent two years from now. Normal is considered closer to 6 percent, and economists say it will probably take until the middle of this decade to achieve that.

The jobless rate did come down in June from 9.7 percent the month before. But that was mainly because 652,000 people abandoned their job searches.

Even among Americans with secure jobs, confidence is fading. One gauge of consumer confidence fell in June to about 53, down nearly 10 points in a single month. And it's well below the reading of 90 typically seen in a healthy economy.

Add to that jitters over Europe's debts, an edgy stock market and cautious consumer spending, and the result is an economy essentially moving sideways. It's no surprise that businesses are reviewing their orders and seeing no reason to add to payrolls.

Few big companies say they plan to step up hiring in the second half of the year. Most auto, airline and railroad companies, for example, say they expect little or no job growth, blaming weak demand.

One that does plan to hire, Chrysler Group LLC, expects to add engineers and other workers as it updates its aging line of cars and trucks. The company has announced 1,000 factory jobs in Detroit to meet demand for the new Jeep Grand Cherokee SUV.

But other companies, like American Airlines, have no plans to significantly boost hiring this year. And major railroads, which have furloughed thousands since the recession, say they have no plans to add employees in the coming months.

In June, manufacturers, the leisure and hospitality industries, temporary staffing agencies, and education and health services providers all added jobs. Retailers, construction firms and financial service providers cut payrolls. So did state and local governments, which are wrestling with budget shortfalls.

On Wall Street, stocks sagged yet again on the news. The Dow Jones industrial average finished down 46 points, its seventh consecutive losing session. The Dow lost more than 10 percent of its value in the second quarter.

Trying to put a positive outlook on the report, Obama said it showed that "we are headed in the right direction." At the same time, he acknowledged there is a "great deal of work to do to repair the economy and get the American people back to work."

His options are limited. Senate Republicans concerned about record budget deficits this week blocked his efforts to extend unemployment benefits for millions of out-of-work Americans.

"The two things that are growing fastest in this Democrat economy are the size of the federal government and the crushing burden of the national debt," said Senate Republican leader Mitch McConnell of Kentucky, who led opposition to the extension.

All told, 14.6 million people were unemployed in June. An additional 11.2 million have given up their job searches or are working part-time but would prefer full-time work. That adds up to nearly 26 million Americans, and an "underemployment" rate of 16.5 percent.

Among the 225,000 census workers who lost their temporary jobs in June are people who had been unemployed before and now are again. One of them is Michael Stein, who worked for the census in Phoenix on and off since April 2009, after losing his job with an architectural firm.

It all ended for good two weeks ago.

Jobless again, Stein, 49, at least feels better off with the census experience on his resume.

"I was told the State of Arizona is hiring again," he said. "Because of the people I met at the census, there's a possibility if they could find the right position, they'll put in a good word for me."

Eric Model, co-owner of Seal & Co., a shop in Summit, N.J., that sells accessories and toys, said he has not replaced the two back-office workers he let go two years ago. Not including a summer hire, Model has four employees, plus himself.

"It would be nice to get some support," Model said. "But I don't want to go out on a limb and hire somebody, anticipating things will improve. I would rather run with low expenses."

Those Americans who still have jobs drew smaller paychecks last month. Average hourly wages fell 2 cents to $22.53. Workers' hours were cut, too. Those factors could dampen consumer spending in the months ahead and further weaken the recovery.

It all threatens to perpetuate a vicious cycle for the economy.

"It is a Catch-22 situation," said Sung Won Sohn, professor at California State University, Channel Islands. "Businesses are reluctant to hire for fear of a 'double-dip' recession. Without jobs, people are watchful of their spending, a danger to the recovery."

Employment Situation News Release

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The latest Employment Situation news release (http://www.bls.gov/news.release/pdf/empsit.pdf) was issued today by the Bureau of Labor Statistics. Highlights are below.
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Nonfarm payroll employment rose by 290,000 in April, the unemployment rate edged up to 9.9 percent, and the labor force increased sharply. Job gains occurred in manufacturing, professional and business services, health care, and leisure and
hospitality. Federal government employment also rose, reflecting continued hiring of temporary workers for Census 2010.
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News releases archives:
http://www.bls.gov/schedule/archives/all_nr.htm
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True Unemployment Figure Reveals Recession Far From Over

In the February 19, 2010 article "True Unemployment Figure Reveals Recession Far From Over," Simon Maierhofer reports one of the lesser-used measures of labor market activity suggests conditions are worse that the more popular metrics suggest.

Surprising as it is, for nearly a year, investors have shrugged off mounting jobless claims and rising unemployment as an ingredient that is not really required for an economic recovery. They have begun to believe in a non-existent phenomenon; a 'jobless recovery.'

The Dow Jones, S&P 500, and Nasdaq after losing about 3% each, are now in a state of flux marking the first time in months that concerns over unemployment were raising suspicions.

Does that mean that the trend of the 'new bull market' in stocks has changed? Or are we in for further declines?

The real numbers

Today's headline reports reveal that the unemployment numbers, surprisingly, seem to be improving.

In reality, unemployment spiked to an all-time high of 18%. Yes, 18%! This is the official number reported by the Bureau of Labor Statistics (BLS).

The BLS publishes different sets of data on a regular basis. The main focus tends to be on the U-3 unemployment rate (currently 9.7%, seasonally adjusted).

U-3 is the 'official' unemployment rate and illustrates total unemployed persons as a percentage of the civilian labor force. U-4 is another category that includes unemployed workers plus discouraged workers. A discouraged worker is someone who's available to work but has stopped actively seeking for work.

U-5 unemployment includes the number of unemployed workers, plus discouraged workers, plus marginally attached workers. A marginally attached worker is someone who is able and willing to work but is not actively seeking work.

U-6 is as close to the real unemployment figure as government reporting gets. This number includes unemployed workers, plus discouraged workers, plus marginally attached workers, plus workers that are forced to work part-time because they are not able to find a full-time job. Put another way, it's the most realistic picture of today's job market as any.

According to the Bureau of Labor Statistics, the number of U-6 unemployed workers is 18% (not seasonally adjusted - 16.5%). This is the highest number of record.



Keep in mind that neither of the above categories encompasses another important element of the labor force; 'unemployed self-employed' workers. If you're a handyman or contractor next door, or a small business owner who can't secure work, you are not included! Adding these folks to the mix would put the real unemployment number above 20%!

No one is spared

Unfortunately, job cuts have affected every industry sector. Job cuts in the technology sector (NYSEArca: XLK - News) have reached the highest level in four years.

Even WalMart, a low-price leader and a virtually recession proof outfit, continues to cut jobs. This trend has spilled over and continues in the entire consumer staples (NYSEArca: XLP - News) and consumer discretionary sector (NYSEArca: XLY - News). Ericsson and Pfizer are just a few companies eliminating employees at a record pace.

According to a report by global outplacement firm Challenger, Gray & Christmas, U.S. employers began the year 2010 by announcing 71,482 planned job cuts, the highest tally in five months. The report, however, said that the increase in layoffs should not be seen as a sign of 'recession relapse.'

Recession relapse?

How do you define a recession relapse? How do you even figure a recession is over?

There has been a huge disconnect between what's happening on Wall Street and on Main Street. Since March 2009, the U.S. stock market (NYSEArca: TMW - News) has been steadily rising, as has unemployment. You'd expect stock prices to go up and unemployment claims to go down, but that hasn't been the case.

When putting the pieces together, it helps to understand why stocks have been able to stage a relentless ten-month rally.

From October 2007 to March 2009, the Dow Jones (NYSEArca: DIA - News), S&P 500 (NYSEArca: SPY - News) and secondary indexes like the MidCap SPDRs (NYSEArca: MDY - News) and small caps (NYSEArca: IWM - News) have lost more than half their value. Financials (NYSEArca: XLF - News) lost over three quarters of the market capitalization.

In March, investor pessimism has reached an extreme of historic proportions. In fact, on March 9th, the Wall Street Journal made a case for Dow 5,000 and Goldman Sachs slashed earnings growth by over 37%.

Exactly at that time, the ETF Profit Strategy Newsletter send out a Trend Change Alert (on March 2, 2009) predicting the biggest rally since the October 2007 all-time highs with a upper target range of Dow 10,000. For 18 months (10-2007 - 3-2009) investors had resisted their urge to buy. This was about to change.

I want it now

It was this pent-up urge to buy that sent stocks higher. No bad news could prevent the market from rising. Investors simply wanted to own stocks again and recapture some of their hefty losses.

Just as extreme pessimism marked the bottom of the down-turn, the ETF Profit Strategy Newsletter predicted that extreme optimism would make a top. In fact, the late stages of this rally could be identified by a 'the worst is over' sentiment.

No progress but much change
Throughout the fourth quarter of 2009 stocks moved higher. Even though the major indexes gained only a few percentage points from October - January, the resilience against any bad news had transformed a record number of investors into long-term bulls.

By early January, investor optimism had reached extremes not seen since 1987, 2000 and 2007 (depending on the data used). For the first time investors had more money invested in stocks than at the height of the technology boom in early 2000.

For contrarian investors, this was a huge red flag. On January 15, 2010, the ETF Profit Strategy Newsletter's Market Meter stated the following: 'Dow 10,710 and S&P 1,148 might very well mark the high water mark for 2010. A major trend reversal at current prices would be consistent with all our indicators.'

The market staged one more minor high two trading days later and has fallen precipitously since. Recommended ETFs like the Direxion Daily Financial Bear 3x Shares (NYSEArca: FAZ - News), UltraShort QQQ ProShares (NYSEArca: QID - News), and UltraShort Financial ProShares (NYSEArca: SKF - News) have gained 10%, 15% and more.

The one constant

On a daily basis, economic news comes and goes. Some will influence the market, others won't. If you've been following news reports and corresponding stock prices, you will have noticed that the correlation between good news and higher prices or bad news and lower prices is less than obvious.

What remains constant, however, is the pattern of behavior investors have established for hundreds of years. Extremes in sentiment which invariably result in extreme reactions. This is called the herding effect and is rather predictable.

Crowd behavior of investors is largely driven by perception. The perception that stocks will continue to rise is starting to change, if it hasn't already. Soon investors will refocus on valuations to see if a stock is worth its price tag. It was the return to due diligence that pummeled stock prices throughout 2008.

Interestingly, the 2008 declines were also preceded by extreme optimism and a feeling that stocks have nowhere to go but up.

Historically, stocks are grossly overvalued and due for another major correction. How major?

The ETF Profit Strategy Newsletter includes a detailed short, mid and long-term forecast along with a target-range for the ultimate market bottom based on historically indisputable evidence.

U.S. economy loses 85,000 jobs in December; unemployment rate remains at 10%

In the January 8, 2010 article "Economy loses 85K jobs, unemployment rate steady," Associated Press economics writer Christopher Rugaber summarizes the U.S. Bureau of Labor Statistic's employment situation report for December 2009. The BLS publishes its Employment Situation Summary on the first Friday of each month. It also provides other extensive U.S. labor market data.

WASHINGTON – Lack of confidence in the economic recovery led employers to shed a more-than-expected 85,000 jobs in December even as the unemployment rate held at 10 percent. The rate would have been higher if more people had been looking for work instead of leaving the labor force because they can't find jobs.

The sharp drop in the work force — 661,000 fewer people — showed that more of the jobless are giving up on their search for work. Once people stop looking for jobs, they are no longer counted among the unemployed.

When discouraged workers and part-time workers who would prefer full-time jobs are included, the so-called "underemployment" rate in December rose to 17.3 percent, from 17.2 percent in November. That's just below a revised figure of 17.4 percent in October, the highest on records dating from 1994.

Many analysts had hoped Friday's report would show the economy gained jobs for the first time in two years. While the revised figures found an increase in November, it was tiny. Job openings remain far too few.

"One word sums it up: Disappointment," said Jonathan Basile, an economist at Credit Suisse.

Referring to the drop in the labor force, Basile said, "that tells me that Main Street doesn't believe there's a recovery yet, because they're not out looking for jobs yet."

Revisions to the previous two months' data showed the economy actually generated 4,000 jobs in November, the first gain in nearly two years. But the revisions showed it also lost 16,000 more jobs than previously estimated in October.

The report caps a disastrous year for U.S. workers. Employers cut 4.2 million jobs in 2009. And the unemployment rate averaged 9.3 percent. That compares with an average of 5.8 percent in 2008 and 4.6 percent in 2007. Nearly 15.3 million people are unemployed, an increase of 3.9 million during 2009.

"The economy is in a rough situation," Labor Secretary Hilda Solis acknowledged in an interview with The Associated Press. She said she thinks companies are reluctant to ramp up hiring because they're waiting to see what new stimulative steps the government might take to provide relief.

The economy has lost more than 8 million jobs since the recession began in December 2007. And while layoffs have slowed, they haven't ended. UPS said Friday it will cut 1,800 jobs. And defense contractor Lockheed Martin Corp. said this week it is cutting 1,200 workers.

Most economists worry that 2010 won't be much better. Federal Reserve officials, in a meeting last month, expressed concern that unemployment will decline "only gradually," according to minutes of the meeting released earlier this week.

If jobs remain scarce, consumer confidence and spending could flag, potentially slowing the economic recovery. Many analysts estimate the economy grew by 4 percent or more at an annual rate in the October-December quarter, after 2.2 percent growth in the third quarter.

But the economy will need to grow faster than that to bring down the unemployment rate. And economists worry that much of the recovery stems from temporary factors, such as government stimulus efforts and businesses rebuilding inventories.

Debra Winchell has been seeking work since last January, when she lost her job as an administrative assistant at the health insurance company. Winchell, 50, of Latham, N.Y., said she's seen an uptick in online job postings, giving her some hope. But they're for jobs paying as little as $10. And she's still not getting any callbacks when she does apply.

With her unemployment benefits set to run out this spring, Winchell, who is single, said she will reluctantly sign up for temporary work.

"I'll be lucky if it pays the bills," she said.

Still, some economists said a recent trend of improvement remains in place. The economy lost an average of nearly 700,000 jobs in the first three months of last year, a figure that dropped to 69,000 in the fourth quarter.

And the private service sector added jobs for the second straight month, said Nigel Gault, chief U.S. economist at Global Insight, though the gains have been concentrated in temporary workers.

"Firms are still being very cautious, so the first thing they are turning to aren't full-time employees, but temps," he said. Companies have added about 166,000 temp workers since July.

The average work week remained unchanged at 33.2 hours, near October's record low of 33. Most economists hoped that would increase, as employers are likely to add hours for their current employees before hiring new workers.

Job losses remained widespread: manufacturing lost 27,000 jobs and construction shed 53,000, while retailers, the leisure and hospitality industries and government also cut workers.

The Real Jobless Rate

In the December 21, 2009 TIME magazine article "The Real Jobless Rate," Justin Fox explains why the unemployment rate may not be the best measure of labor market conditions.

At 8:30 on the morning of the first Friday in December, the Bureau of Labor Statistics (BLS) reported that the unemployment rate had fallen to 10% in November from 10.2% the month before. Hooray! Headlines heralded the unexpected drop. Stock prices surged. Enthused White House press secretary Robert Gibbs: "We're moving in the right direction."

By late morning, though, stocks were slumping. Commentators began to focus on concerns with the numbers. By the following Monday, Federal Reserve Chairman Ben Bernanke was warning that "we still have some way to go before we can be assured that the recovery will be self-sustaining."

So much for that fall in unemployment, huh? It was a telling reaction, indicative of the still gloomy national mood, the perceived fickleness of monthly economic indicators — and the diminished status of the unemployment rate as a statistic. Once the indispensable, largely unquestioned measure of the state of the job market, it is now treated with suspicion and disdain. With good reason, because the unemployment rate fails to accurately reflect just how bad things are out there.

Each month, interviewers contact 60,000 households — most by phone, some in person — and ask about the employment status of household members age 16 and over. Those who don't have jobs but have looked in the past four weeks are classified as unemployed. After some statistical adjustments to extrapolate the data from those 60,000 households to the total U.S. population, the number of unemployed is divided by the size of the labor force (employed plus unemployed), and there's your rate. Measured that way, unemployment still isn't as bad as it was at the lowest point of the 1981-82 recession, when it hit 10.8%. And it's nowhere near what it was in 1933, when the rate peaked somewhere around 25%.

This method of calculating unemployment was pioneered by the head of the Massachusetts Bureau of Statistics of Labor in 1878, and it has its merits. It's simple. It's straightforward. And it provides a pretty accurate count of those who really, really want jobs. But it also misses millions of people who may not be actively looking for a job but would happily take one if offered. Those ranks surely swell in a deep recession or during a time of economic turmoil that destroys entire job categories (like autoworker). The government's statisticians are aware of this, and since the 1970s the BLS has published broader measures of unemployment that include at least some of these people. In 1994 the broadest measure — which counts as unemployed those who have looked for work in the past year but not the past four weeks, plus part-time workers who would rather be working full time — was dubbed U-6 unemployment. During this recession, it has gotten far more attention than ever before. U-6 unemployment was at 17.2% in November, down from 17.5% the month before and up from 8.4% two years ago. These figures aren't strictly comparable with those from before 1994, but the New York Times has taken a stab at recalculating the earlier numbers — with help from the BLS — and estimates that U-6 unemployment peaked in December 1982 at 17.1%. Meaning this recession is worse.

Even these figures leave out people who say they want a job but haven't looked in the past year. Economist and gadfly John Williams, whose online newsletter Shadow Government Statistics has gained a big following lately, adds them in, makes a few tweaks and gets to 21.8% unemployment in November, down from 22.1% in October.

Such measures still rely on people's own assessment of whether they want to work. A BLS study a decade ago found that these self-assessments aren't all that reliable. So how about the simplest possible job-market measure, the employment-to-population ratio? Among Americans ages 25 to 54, it was at 75.1% in November, down from 80.3% in early 2007 and — with the exception of October's 75% — the lowest it's been since 1984. Because of the entry of women into the workforce, the ratio trended upward from the 1960s through the 1990s. If you look just at men ages 25 to 54, the picture is much more dire. Their employment-to-population ratio of 80.6% in November is the lowest since the BLS began keeping track in 1948. It's 4 percentage points lower than it was in the depths of the early-1980s downturn.

There are certainly other factors at play here besides just a tough job market — more stay-at-home dads, more rich loafers, more prison inmates. But it also may be a sign that these are in fact the worst times for American workers since the 1930s. Which helps explain why there was so little excitement about that drop in the unemployment rate to 10%.

Drop in Unemployment Rate May Reflect More Discouraged Workers Rather than Increased Employment

Photo by Scott Olson/Getty Images.

In the December 18, 2009 article "Fewer States Add Jobs As Recovery Sputters Along," Associated Press business writer Daniel Wagner reports that recent declines in the unemployment rate may reflect an increase in discouraged workers who have stopped looking for jobs rather than a significant increase in employment.

WASHINGTON -- In a reversal of earlier gains, more states lost jobs than added them in November, signaling that hiring is occurring only sporadically around the country.

Unemployment rates dropped in 36 states and the District of Columbia, but that trend appeared to reflect more people leaving the work force. Unemployed people who stop looking for jobs out of frustration aren't counted in the labor force.

Friday's Labor Department report underscored that employers have yet to ramp up hiring, and many Americans can't find work. The number of people jobless for at least six months rose last month to 5.9 million, according to a separate report released earlier this month. And the average length of unemployment exceeds 28 weeks, the longest on records dating to 1948.

It was the first time since April that more states' unemployment rates fell than rose. But two states, South Carolina and Florida, saw joblessness reach its highest point in 25 years. And economists say most states' unemployment rates will rise as the stimulus programs wind down and seasonal jobs taper off.

"Even though things are getting better, they're not getting better fast enough to keep unemployment from rising in the next six to nine months," said Mark Vitner, senior economist at Wells Fargo & Co.

Vitner said he expects unemployment nationally and in most states to continue inching up before cresting in about nine months. He predicts it will be six more months before there are any consistent job gains.

In all, 19 states added jobs in November, down from 28 in October. Thirty-one states and the District of Columbia suffered a net loss of jobs.

Labor said there were statistically important employment changes in four states. All four showed job losses. They are Michigan, Nevada, Mississippi and Hawaii.

The states that reported the largest jobs gains were Texas, Ohio, Georgia, Arizona and Iowa. Those shifts were not considered statistically important as a proportion of those states' large work forces.

Signs emerged in some states of people rejoining the work force to seek jobs as the economy slowly improves. Of the eight states where unemployment rose, five added jobs. All but one saw their work forces grow, indicating more people were looking for work.

The states that saw their labor forces grow faster than they could add jobs were Ohio, South Carolina, Georgia and Idaho.

"Now that the economy is stabilizing, we're seeing more people come back into the work force and looking for jobs," Vitner said. "The net effect of that is to push unemployment up."

The figures for jobs and unemployment don't always match because they come from separate reports. The unemployment rate is calculated from a survey of households. The jobs count reflects a survey of businesses.

Similarly, unemployment rates can drop when people give up looking for jobs. Of the seven states with statistically important drops in unemployment rates, five saw their labor forces shrink. They were Connecticut, Kansas, Kentucky, New York and Pennsylvania.

In Nebraska and Texas, unemployment fell even while people entered the labor force, a sign of relatively robust job markets.

In Texas, hiring was even across many sectors, including finance, professional and business services, education and health, hospitality and government. The only areas to lose jobs were construction; manufacturing; and trade, transportation and utilities.

Nebraska saw job growth in every sector except finance and hospitality, which declined slightly.

Florida was the only state whose unemployment rate rose significantly, to 11.5 percent from 11.3 percent. Vitner said the state's construction industry experienced a short-term boost over the summer due to a tax credit for first-time homebuyers that was set to expire in November. Congress extended the program, but people who had feared it would expire closed on their houses before November. Many related jobs have since dried up.

Since November 2008, all 50 states have seen a net loss of jobs and a rise in their unemployment rates.

November's jobs picture is bleaker than October's, in part because last month's gains were driven by a rise in temporary employment, economists said. Temporary hiring often is a sign that employers are gearing up to add full-time jobs.

But economists cautioned that October's gains might not be sustainable. They were driven by temporary demand in the auto sector to replace inventories depleted by the Cash for Clunkers rebate program.

November's falling unemployment rates are due in part to the Thanksgiving holiday. Because Thanksgiving came early this year, Vitner said, more holiday hiring than usual took place in November.

Still, the U.S. unemployment rate dropped to 10 percent November from 10.2 percent in October. It was the first unemployment decline since July. Economists called it a hopeful sign that the economy is on the mend, however slowly.

Unexpected drop in jobless rate sparks optimism

In the December 4, 2009 article "Unexpected drop in jobless rate sparks optimism," Associated Press economics writers Jeannine Aversa and Christopher S. Rugaber suggest the lower than expected unemployment rate for November may be a sign that the economy is improving.

WASHINGTON – Two years of steep job cuts all but ended last month, unexpectedly pulling down the unemployment rate and raising hopes for a lasting economic recovery.

Federal figures released Friday showed that the rate fell from 10.2 percent in October to 10 percent as employers shed the fewest number of jobs since the recession began two years ago. The government also said far fewer jobs were lost in September and October than first reported.

And the so-called underemployment rate, counting part-time workers who want full-time jobs and laid-off workers who have given up their job hunt, also fell, from 17.5 percent in October to 17.2 percent.

The better-than-expected figures provided a rare dose of good news for the economy, but the respite may be temporary. Job creation is still so weak that more than 15 million out-of-work Americans face fierce competition for few openings.

"We will need very substantial job growth to get unemployment lower, especially when the labor force ... starts growing again," said Lawrence Mishel, president of the Economic Policy Institute, a liberal think tank.

Even counting last month's decline, the unemployment rate has more than doubled from 4.9 percent when the recession began.

The report showed how hard it remains to find work. The number of people jobless for at least six months rose last month to 5.9 million. And the average length of unemployment has risen to more than 28 weeks, the longest on record dating to 1948.

Carolyn Malone of Milwaukee had not looked for work in decades — until she was laid off from her customer-service job in May.

Malone, 62, laughed when asked Friday how many jobs she had applied for. She can't remember. But she does recall how many landed her an interview: One. It didn't lead to a job.

"I just want to get my toe in the door," she said, scrolling through her e-mail at a hiring center.

Still, economists and investors drew hope from Friday's Labor Department report. Employers sliced just 11,000 jobs in November, compared with a loss of 111,000 jobs in October. It was the best reading since December 2007 — the last time the economy added jobs and the start of the worst recession since the 1930s.

The unemployment rate had not fallen since July, when it declined from 9.5 percent to 9.4 percent.

Factories, retailers, construction companies — hardest hit by the recession — all slowed the pace of layoffs in November. So did transportation companies and those in leisure and hospitality.

Job gains were produced in education, health care and professional and business services, which mostly reflected temporary hiring. The government added workers, too. Those included states and localities, mainly reflecting the hiring of teachers.

President Barack Obama welcomed the news but lamented that too many Americans "have felt the gut punch of a pink slip."

Facing the prospect of high unemployment well into the 2012 presidential election year, Obama is drafting a proposal to try to stimulate hiring.

"We need to grow jobs and get America back to work as quickly as we can," he said.

Just a month ago, an unexpected spike in the unemployment rate caused some economists to predict it could climb as high as 11 percent. But Friday's report lessened that pessimism, and economists doubted the rate would reach that point.

Still, the jobless rate is expected to resume moving higher, perhaps to 10.5 percent or more by the middle of next year, before drifting down. That's because the recovery is likely to be too weak to spur the job creation needed to quickly drive down the unemployment rate.

The Federal Reserve has estimated that the rate could remain as high as 7.6 percent in 2012.

"The economic storm destroyed more than 7 million jobs over the last two years, and it will take more than two years to get them back," said Bill Cheney, chief economist at John Hancock. "The economy is still weak."

Competition for jobs is so intense that Marla Goldman of Spring Hill, Tenn., has heard back from only six prospective employers out of 100 she's applied to since losing her job with an electronics systems company in October.

She made it to a fifth interview with a company, which booked her a plane ticket to Florida and even sent her an itinerary. But two days later, the company decided to wait on the job until after Jan. 1.

"There are just far more candidates for every job than there are jobs," said Goldman, 50.

To rev up hiring, Obama plans to send Congress a list of ideas, including new tax breaks for small businesses that hire, some new spending on roads, bridges and other construction and grants to state and local governments to avoid layoffs, according to an official who spoke on condition of anonymity because the package was still being crafted.

Congress is not likely to take up a job-creation package until after New Year's.

The administration credits its $787 billion package of tax cuts and increased government spending with improving employment, though Republicans argue it did not help much. The Fed's record-low interest rates, along with other moves to drive down loan rates and stimulate borrowing, have supported the economic rebound.

Most economists said they did not think the better-than-expected jobs news would cause the Fed to raise rates sooner. That's because they predict the jobless rate will remain high and job creation too sluggish. Most analysts do not expect the economy to add jobs consistently each month until spring.

Until employers gain confidence in the recovery, they will be reluctant to ramp up hiring. The few industries creating jobs will probably include health care, education, legal services, data processing, transportation, high-tech manufacturing, electrical power generation and jobs involved in making homes and buildings more energy-efficient, according to Labor Secretary Hilda Solis and private economists.

But November's report suggested that the worst of the job losses are past. And figures out Friday showed that job losses in September and October were not nearly as deep as previously estimated.

The government said 159,000 few jobs were cut in those two months combined. Such revisions are based on more complete information the government gets from companies it surveys. From January through March, the economy lost at least 600,000 jobs each month.

Employment has improved more in some other countries. Canada, for instance, said Friday that its economy added 79,000 jobs last month, reducing its jobless rate to 8.5 percent from 8.6 percent. Canada did not suffer the type of housing meltdown and financial crisis that slammed the U.S. economy last year.

U.S. Unemployment Rate Drops to 10.0% in November 2009.

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The latest Employment Situation news release
(http://www.bls.gov/news.release/pdf/empsit.pdf)
was issued today by the Bureau of Labor Statistics. Highlights are below.
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The unemployment rate edged down to 10.0 percent in November, and
nonfarm payroll employment was essentially unchanged (-11,000). In
the prior 3 months, payroll job losses had averaged 135,000 a month.
In November, employment fell in construction, manufacturing, and
information, while temporary help services and health care added jobs.


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23 states report higher unemployment in September

In the October 21, 2009 article "23 states report higher unemployment in September," Associated Press economics writer Christopher S. Rugaber reports:

WASHINGTON – Unemployment rose in 23 states last month as the economy struggled to create jobs in the early stages of the recovery.

While layoffs have slowed, companies remain reluctant to hire. Forty-three states reported job losses in September, while only seven gained jobs, the Labor Department said Wednesday.

Wednesday's report underscores the uneven nature of the recovery. The unemployment rate dropped in some Midwestern states as the manufacturing sector improved. But Florida and Nevada, two of the states hit hardest by the housing slump, reported record-high jobless rates.

Some of the states that lost jobs still saw their unemployment rates improve, as discouraged workers gave up looking for work. People who are out of work but no longer looking for jobs aren't counted as officially unemployed.

That trend was evident nationwide in September, as nearly 600,000 people dropped out of the work force, the department reported earlier this month.

The U.S. jobless rate rose to 9.8 percent in September, a 26-year high, from 9.7 percent. Some economists estimate it would have topped 10 percent if there had been no change in the labor force.

There were some bright spots in Wednesday's report. The Midwest region, hit hard during the recession by job losses in manufacturing, saw its unemployment rate drop for the second straight month, to 9.8 percent from 10 percent in August. It was the only region where the unemployment rate declined.

The Midwest benefited from sharp drops in unemployment in Indiana and Ohio. Indiana's jobless rate fell to 9.6 percent, from 9.9 percent in August and 10.7 percent in June.

Indiana added 4,400 jobs, the most of any state, due to gains in manufacturing, services and government.

The state's jobless rate has dropped for two straight months, said Robert Guell, an economics professor at Indiana State University in Terre Haute, easing his skepticism that the improvement might have been a fluke.

"It does look green shoot-like," he said.

The state has benefited from a rebound in the auto sector and a healthy medical device industry, he said. Indiana is home to many auto parts and assembly plants, which are ramping up production as General Motors and Chrysler seek to replenish inventories depleted by the popular Cash for Clunkers program.

Honda Motor Co. also manufactures the Civic at a plant in the state, Guell said. The Civic was a major beneficiary of the clunkers program, which provided rebates to consumers who traded in old cars for newer, more fuel-efficient models.

Ohio, meanwhile, saw its jobless rate drop to 10.1 percent, from 10.8 percent in August and 11.2 percent in July.

Lucia Dunn, an economics professor at Ohio State University in Columbus, said the state has benefited in recent years from growth in financial services and technology companies. Recruiters from a JPMorgan Chase & Co. regional office frequently contact her seeking candidates for economist and statistician jobs.

"Most people here feel that the worst is over," Dunn said.

Still, Ohio lost about 6,000 jobs in September, and much of the improvement in its unemployment rate came from discouraged workers leaving the work force.

Nevada, Rhode Island and Florida last month posted their highest jobless rates on records dating to 1976, the department said. Fifteen states and Washington, D.C., reported unemployment rates of 10 percent or more.

Michigan reported the nation's highest unemployment rate at 15.3 percent. It was followed by Nevada at 13.3 percent, Rhode Island at 13 percent, California at 12.2 percent and South Carolina at 11.6 percent.

Real estate continues to bedevil states that enjoyed a housing boom. Florida's jobless rate rose to 11 percent from 10.8 percent in August, as the state lost nearly 13,000 construction jobs. California lost 39,300 jobs, including more than 14,000 in construction. Nevada lost 3,500 construction jobs, though it boosted employment in services.

In Florida, the housing boom at one point reduced the state's jobless rate to 3.3 percent, said Sean Snaith, an economics professor at the University of Central Florida in Orlando.

But now, "the trough is as deep as the peak was high," he said.

Florida also lost population for the first time in 60 years in 2008, he said, leaving even more empty homes and condominiums.

The state's unemployment rate won't drop below 10 percent until 2012, Snaith predicts.

Higher jobless rates could be new normal

Higher jobless rates could be new normal

By TOM RAUM, Associated Press Writer
Mon Oct 19, 2:29 pm ET

WASHINGTON – Even with an economic revival, many U.S. jobs lost during the recession may be gone forever and a weak employment market could linger for years.

That could add up to a "new normal" of higher joblessness and lower standards of living for many Americans, some economists are suggesting.

The words "it's different this time" are always suspect. But economists and policy makers say the job-creating dynamics of previous recoveries can't be counted on now.

Here's why:

• The auto and construction industries helped lead the nation out of past recessions. But the carnage among Detroit's automakers and the surplus of new and foreclosed homes and empty commercial properties make it unlikely these two industries will be engines of growth anytime soon.

• The job market is caught in a vicious circle: Without more jobs, U.S. consumers will have a hard time increasing their spending; but without that spending, businesses might see little reason to start hiring.

• Many small and midsize businesses are still struggling to obtain bank loans, impeding their expansion plans and constraining overall economic growth.

• Higher-income households are spending less because of big losses on their homes, retirement plans and other investments. Lower-income households are cutting back because they can't borrow like they once did.

That the recovery in jobs will be long and drawn out is something on which economists and policy makers can basically agree, even as their proposals for remedies vary widely.

Retrenching businesses will be slow in hiring back or replacing workers they laid off. Many of the 7.2 million jobs the economy has shed since the recession began in December 2007 may never come back.

"This Great Recession is an inflection point for the economy in many respects. I think the unemployment rate will be permanently higher, or at least higher for the foreseeable future," said Mark Zandi, chief economist and co-founder of Moody's Economy.com.

"The collective psyche has changed as a result of what we've been through. And we're going to be different as a result," said Zandi, who formerly advised Sen. John McCain, R-Ariz., and now is consulted by Democrats in the administration and in Congress,

Even before the recession, many jobs had vanished or been shipped overseas amid a general decline of U.S. manufacturing. The severest downturn since the Great Depression has accelerated the process.

Many economists believe the recession reversed course in the recently ended third quarter and they predict modest growth in the nation's gross domestic product over the next few years. Yet the unemployment rate is currently at a 26-year high of 9.8 percent — and likely to top 10 percent soon and stay there a while.

"Many factors are pushing against a quick recovery," said Heidi Shierholz, an economist at the labor-oriented Economic Policy Institute. "Things will come back. But it's going to take a long time. I think we will likely see elevated unemployment at least until 2014."

At best, many economists see an economic recovery without a return to moderate unemployment. At worst, they suggest the fragile recovery could lose steam and drag the economy back under for a double-dip recession.

"We will need to grind out this recovery step by step," President Barack Obama said earlier this month.

Obama and congressional Democrats are having a hard time agreeing on how to keep the recovery going and help millions of unemployed workers — short of another round of stimulus spending amid rising voter alarm over soaring federal deficits.

So far, they've been unable to win even a simple three-month extension of unemployment insurance for people in states with jobless rates above 8.5 percent.

The extension easily passed the House earlier this month but is bogged down in the Senate over disputes over which states would get the funds. Hundreds of thousands of people have already lost their benefits or are about to lose them.

The White House credits the president's $787 billion stimulus plan passed in February for keeping job losses from becoming even worse. Since Obama took office in January, the economy has lost 3.4 million jobs.

Republicans argue that the stimulus program has not worked as a job producer and is a waste of tax money. And last week, the U.S. Chamber of Commerce launched a multimillion advertising campaign to celebrate small business entrepreneurs — and to argue that further government intervention will not spur permanent job growth.

Chamber leaders called for creation of more than 20 million new private-sector jobs over the next decade, saying it's needed to replace jobs lost in the recession and to keep pace with population growth.

"The government can support a few jobs in the short-run" while free enterprise is the only system that can create 20 million of them, said Thomas Donohue, the chamber president.

To many economists, such a goal seems unreachable given today's altered economic landscape.

"It's a new normal that U.S. growth is going to be anemic on average for years. Right now, the prospect is bleak for anything other than a particularly high unemployment rate and a weak jobs-creating machine," said Allen Sinai, president of Decision Economics Inc. He says he doubts that unemployment will dip below 7 percent anytime soon.

Many economists consider a jobless rate of 4 to 5 percent as reflecting a "full employment" economy, one in which nearly everyone who wants a job has one. After the 2001 recession the rate climbed to 5.8 percent in 2002 and peaked at 6.3 percent in 2003 before easing back to 4.6 percent for 2006 and 2007.

Will unemployment ever get back to such levels?

"I wouldn't say never. But I do think it's going to be a long time," said Bruce Bartlett, a former Treasury Department economist and the author of the book "The New American Economy: The Failure of Reaganomics and a New Way Forward."

"The linkage between growth in the economy and growth in jobs is not what it was. I don't know if it's permanently broken or temporarily broken. But clearly we are not seeing the sort of increase in employment that one would normally expect," said Bartlett.

The Effective Unemployment Rate is 17%.

In the October 12, 2009 article "Job losses mar recovery, create woes for Dems," Associated Press writer Tom Raum says "The recession may be over, yet job losses endanger recovery, create woes for Democrats." The article also includes an explanation of the effective unemployment rate. It includes discouraged workers (those that have stopped looking for work) and the underemployed (those who are not working as much as they want or need to work, such as part-time workers who want to work full-time). The current effective unemployment rate (17%) far exceeds the official unemployment rate (just under 10%).

WASHINGTON (AP) -- A distressed economy is widely blamed for President George H.W. Bush's re-election defeat in 1992, and a decade earlier, for the loss of 26 House seats in midterm elections by Ronald Reagan's Republicans. Yet in both instances recession had already ended or was winding down.

It's a point not lost on President Barack Obama's White House or Democrats headed into next year's midterm elections. The stock market may be up, U.S. service industries may be recovering, banks may be lending again and housing prices holding. But one major piece of the recovery puzzle is still missing: a brighter employment picture.

And that's bad news for the party in power, whether the recession is officially over or not.

Job losses are expected to continue at least into the middle of next year, likely driving the unemployment rate above 10 percent from 9.8 percent last month. It could take three or four more years for it to fall to normal levels.

The longest and deepest downturn since the Great Depression has claimed 7.2 million jobs since it began in December 2007. Analysts figure 750,000 more jobs could disappear over the next six months.

If you add in people who have stopped looking for work, or who are working part time when they want a full-time job, the unemployment rate is a whopping 17 percent, according to the Labor Department.

"If you've got an effective unemployment rate of 17 percent and if this goes on for any length of time, a year or more, then everyone's cushion will run out," said Republican consultant Rich Galen. "There are going to be serious implications, culturally and politically."

Galen said it's understandable that Republicans would use the state of the economy to pound Obama and Democrats who control Congress. Still, "it's not something we should either make fun of, be amused by or play politics with," he said.

Republicans already see a "jobless recovery." In a letter to Obama and House Speaker Nancy Pelosi, House GOP leaders asked, "Where are the jobs?"

Firing back, White House chief economic adviser Lawrence Summers defended the administration's efforts on the jobs front and wrote to the Republican leaders that Obama was "committed to not repeating the fiscal mistakes of the last eight years." House Minority Leader John Boehner, R-Ohio, said Monday said stimulus spending and other Democratic initiatives "are the wrong approach."

Another sign of continuing distress: Applications for Social Security retirement benefits are up 23 percent from last year, a much larger jump than in other recessions.

The surge is due to a rush of baby boomers filing for early retirement. Signing up for Social Security benefits as early as age 62 can be an immediate source of income for laid-off older workers, but it's also a troubling sign of the scarcity of jobs.

Despite some signs of recovery, the economy remains fragile. Consumer spending -- which powers two-thirds of economic output -- remains weak. Yet the widespread view among economists is that the recession has ended and that the economy grew in the just-ended third quarter.

So how can it be over if things are still so bad?

A recession is most simply defined as a period when the gross domestic product falls for at least two quarters. It had been doing that since the July-September quarter of 2008, although most economists believe the GDP has now reversed course and rose in the past few months.

The Business Cycle Dating Committee of the National Bureau of Economic Research is generally seen as the authoritative arbiter for dating U.S. recessions. It takes other things into account besides GDP, including employment levels, real personal income, industrial production, and wholesale and retail sales.

It dated the beginning of the current recession as December 2007 -- and hasn't yet called an end.

Economists agree that unemployment is a lagging indicator and can remain high long after a recession is pronounced over, continuing to inflict pain on those still out of work or worried about their jobs. That why it's hard for such workers to understand how the recession can be deemed over.

It's an important political dynamic as 2010 midterm elections approach.

At some point, continued job losses could easily push the economy back into negative territory, for a "double-dip" recession.

Hedge fund manager Doug Kass, founder and president of Seabreeze Partners Management, questions the ability of the economy to mount a self-sustaining recovery under continued elevated joblessness and wage deflation. "The consumer remains the Achilles' heel of the economy," he wrote recently.

Republicans claim continuing job losses signal a failure of the $787 billion Obama-driven stimulus legislation. "That is not what the American people were promised," said House Republican leader John Boehner of Ohio.

White House aides concede they missed the mark with their January estimate that the stimulus package would keep unemployment from rising above 8 percent. But they insist things would be far worse had the stimulus not passed.

White House Budget Director Peter Orszag suggested the stimulus package added 2 to 3 percentage points, on an annualized basis, to U.S. economic activity from April through September. "If the economy remains fragile, additional options will be considered," he said in a recent interview with The Associated Press.

Among measures being studied by the White House and congressional Democrats: extending and expanding a $8,000 tax credit for first-time home buyers due to expire at the end of next month; and tax breaks for companies that add jobs.

Rob Shapiro, an economist who was a top official in President Bill Clinton's Commerce Department, sees "substantial, continued job losses" for some time if the government doesn't take more aggressive steps to foster job growth.

In the meantime, the Obama administration should "prepare the American people to wait a while for real results," said Shapiro, now with a Democratic think tank called NDN.

AP analysis: Signs of recovery in some US areas

In the October 5, 2009 article "AP analysis: Signs of recovery in some US areas," Associated Press writers Christopher Rugaber and Mike Schneider report that "signs of fitful recovery emerge in some areas, ... but gains may be fleeting."

WASHINGTON (AP) -- Signs of a slow and fitful recovery emerged in August in some communities across the country where unemployment dropped and foreclosures stabilized, according to The Associated Press' monthly analysis of economic stress in more than 3,100 U.S. counties.

The average county stress score fell slightly, and fewer counties qualified as economically distressed.

But those glimmers of hope are providing scant benefit for most people suffering from the recession. Some of the statistical improvements in employment were inflated by seasonal jobs, workers who quit the labor force and temporary federal stimulus money.

"It's pretty clear that even though the recession likely has ended, not too many people are likely going to be humming that Bobby McFerrin tune, 'Don't Worry, Be Happy,'" said Sean Snaith, an economist at the University of Central Florida.

The latest results of the AP's Economic Stress Index showed the pain easing in some of the nation's hardest hit areas, such as Elkhart, Ind., and pockets of the Carolinas. But foreclosure hotbeds in metro Las Vegas and South Florida continued to suffer.

The AP calculates a score from 1 to 100 based on a county's unemployment, foreclosure and bankruptcy rates. Under a rough rule of thumb, a county is considered stressed when its score exceeds 11. The average county's Stress score dipped to 10.3 in August, from 10.54 in July, the first drop in three months. In August 2008, it was 6.94.

About 39 percent of counties had a score of 11 or higher in August, compared with 41 percent in both June and July. That's still up substantially from a year ago, when only 6.6 percent of counties had scores above 11.

As in previous months, Nevada (21.32), Michigan (17.59) and California (16.31) topped the list of the most economically stressed states. North Dakota (4.67), South Dakota (5.3) and Nebraska (5.79) were at the bottom.

The most stressed counties were Imperial County, Calif. (31.83); Yuma County, Ariz. (27.58); Merced County, Calif. (24.28); Lyon County, Nev. (24.02); and Lauderdale, Tenn. (23.56). Imperial and Yuma are agricultural areas with high seasonal unemployment.

The states that showed the most improvement in their stress scores were Colorado, South Carolina, North Carolina and Virginia. All four saw their jobless rates fall.

The states with the biggest year-to-year increases in economic stress in August were Nevada, Oregon and Michigan.

Prince William County, Va., was among the five counties with most improved foreclosure rates over the past year. And Caroline County, Va., was among the five with the best improvement in the past month.

Colorado's stress score fell to 9.96 in August, from 10.47 in July, as its unemployment rate dropped to 7.3 percent from 7.8 percent. But the decline in its unemployment rate was due mainly to a drop in the state's labor force, not to the creation of new jobs, said Tucker Hart Adams of the Adams Group, an economic consulting firm based in Colorado Springs, Co.

When unemployed people give up on their job searches, they are no longer counted in the unemployment rate.

Overall, Colorado's economy is still struggling, Adams said.

"You can go to the mall and fire a cannon and not disturb anyone," she said.

In Cherry Creek, a high-end shopping strip in Denver, there is "lots of empty space" among the storefronts, Adams added.

A trend of frustrated people giving up on job hunting is also evident in North and South Carolina and Virginia, analysts said. The pattern surfaced in national data Friday, when the Labor Department reported that nearly 600,000 people stopped looking for jobs last month.

Some positive signs emerged in the mid-Atlantic, though. A survey by the Federal Reserve Bank of Richmond last month found that the region's manufacturers hired more workers in September, for the first time since December 2007. That was up from no change in August and a decline in July.

During the late spring and summer from May to August, pain eased slightly for some of the nation's most stressed areas. Deschutes County, home to Bend, Ore., had been among the 40 most stressed counties in May. But in August, it saw its unemployment dip and its foreclosure rate hold steady.

Much of that relief came from seasonal jobs in landscaping and manufacturing of wood products. And it was limited mainly to blue-collar seasonal workers -- not the engineers, planners, architects or designers who lost their jobs when Bend's once-thriving housing market cooled off.

"We didn't add enough full-time jobs for us to turn that corner," said Carolyn Eagan, a regional economist for the state of Oregon. "That's what we need right now."

The unemployment rate in the Elkhart, Ind., area, meanwhile, fell to 16 percent from 16.8 percent. Elkhart, hit hard by layoffs in the RV industry, had suffered some of the largest jumps in unemployment earlier this year. The city has been visited twice by President Barack Obama.

Though a drop in the labor force played a role in lowering the rate, better news arrived last month: Two companies announced they would create about 200 manufacturing jobs in the area.

"They are no longer falling off a cliff," said Jimmy Jean, a regional economist at Moody's Economist.com.

Greenspan says unemployment will top 10 percent

In the October 4, 2009 article "Greenspan says unemployment will top 10 percent," Associated Press writer Douglass K. Daniel reports that the former chairman of the Federal Reserve System's Board of Governors thinks unemployment is headed higher:

WASHINGTON – Former Federal Reserve Chairman Alan Greenspan predicted on Sunday that the jobless rate will pass 10 percent and stay there for a while, and a second stimulus plan is not needed now.

He spoke favorably of extending unemployment benefits and tax credits for health insurance, options the Obama administration is considering for helping people laid off during the recession. With more than 15 million people out of work, unemployment reached 9.8 percent in September, the highest rate in 26 years.

"This is an extraordinary period and temporary actions must be taken, especially to assuage the angst of a very substantial part of our population," Greenspan said on ABC's "This Week."

"I don't actually consider those types of actions stimulus programs. I think that they are essentially programs which support people — essentially their living standards in part. I grant you it has a stimulus effect, but that would be my primary focus," he said.

Calling the jobs report released Friday "pretty awful," Greenspan said he is particularly concerned with statistics showing the number of people out of work for six months or more has reached 5 million after going up sharply last month.

"People who are out of work for very protracted periods of time lose their skills eventually," he said. "What makes an economy great is a combination of the capital assets of the economy and the people who run it. And if you erode the human skills that are involved there, there is a real and, in one sense, an irretrievable loss."

Looking ahead on the unemployment picture, he said his "own suspicion is that we're going to penetrate the 10 percent barrier and stay there for a while before we start down."

The former Fed chief said he would recommend that President Barack Obama focus on trying to get the economy going but without doing so much that the government's action are counterproductive. With growth for the third quarter appearing to reach or surpass 3 percent, Greenspan said he would not propose a second stimulus package.

"In my judgment it's far better to wait and see how this momentum that has already begun to develop in the economy carries forward," he said.

Greenspan against expressed his concern over the growing size of the federal deficit and the federal debt.

Sen. Evan Bayh, who's on the Senate Banking, Housing and Urban Affairs Committee, said he, too, is waiting for the remainder of the job-related stimulus initiatives to take effect.

"If I'd been drafting the package, I would have tried to have it go into effect sooner and have more of it directly related to jobs," Bayh, D-Ind., said on "Fox News Sunday." "But it is what it is at this point. It continues to go into the economic bloodstream and to keep things, which, as unsatisfying as they are, from being a whole lot worse."

Sen. Barbara Boxer, D-Calif., said an energy bill promoted by Democrats could serve as a jobs stimulus because it focuses on using venture capital to fund "clean energy" jobs.

But Sen. Jon Kyl, R-Ariz., said Democrats would best help the economy by supporting targeted tax relief and dropping "job killers" such as the proposed cap-and-trade approach to climate change and a health care bill that he said would raise taxes on small businesses.

Boxer and Kyl appeared on CNN's "State of the Union."

The truth about jobs that no one wants to tell

In the October 3, 2009 Salon editorial "The truth about jobs that no one wants to tell," Robert Reich says "If the feds don't spend money to put people back to work, the economy won't recover and politics will get uglier."

Unemployment will almost certainly be in double-digits next year -- and may remain there for some time. And for every person who shows up as unemployed in the Bureau of Labor Statistics' household survey, you can bet there's another either too discouraged to look for work or working part-time who'd rather have a full-time job or else taking home less pay than before (I'm in the last category, now that the University of California has instituted pay cuts). And there's yet another person who's more fearful that he or she will be next to lose a job.

In other words, 10 percent unemployment really means 20 percent underemployment or anxious employment. All of which translates directly into late payments on mortgages, credit cards, auto and student loans, and loss of health insurance. It also means sleeplessness for tens of millions of Americans. And, of course, fewer purchases (more on this in a moment).

Unemployment of this magnitude and duration also translates into ugly politics, because fear and anxiety are fertile grounds for demagogues wielding the politics of resentment against immigrants, blacks, the poor, government leaders, business leaders, Jews and other easy targets. It's already started. Next year is a midterm election. Be prepared for worse.

So why is unemployment and underemployment so high, and why is it likely to remain high for some time? Because, as noted, people who are worried about their jobs or have no jobs, and who are also trying to get out from under a pile of debt, are not going to do a lot of shopping. And businesses that don't have customers aren't going to do a lot of new investing. And foreign nations also suffering high unemployment aren't going to buy a lot of our goods and services.

And without customers, companies won't hire. They'll cut payrolls instead.

Which brings us to the obvious question: Who's going to buy the stuff we make or the services we provide, and therefore bring jobs back? There's only one buyer left: the government.

Let me say this as clearly and forcefully as I can: The federal government should be spending even more than it already is on roads and bridges and schools and parks and everything else we need. It should make up for cutbacks at the state level, and then some. This is the only way to put Americans back to work. We did it during the Depression. It was called the WPA.

Yes, I know. Our government is already deep in debt. But let me tell you something: When one out of six Americans is unemployed or underemployed, this is no time to worry about the debt.

When I was a small boy my father told me that I and my kids and my grandkids would be paying down the debt created by Franklin D. Roosevelt during the Depression and World War II. I didn't even know what a debt was, but it kept me up at night.

My father was right about a lot of things, but he was wrong about this. America paid down FDR's debt in the 1950s, when Americans went back to work, when the economy was growing again, and when our incomes grew, too. We paid taxes, and in a few years that FDR debt had shrunk to almost nothing.

You see? The most important thing right now is getting the jobs back, and getting the economy growing again.

People who now obsess about government debt have it backward. The problem isn't the debt. The problem is just the opposite. It's that at a time like this, when consumers and businesses and exports can't do it, government has to spend more to get Americans back to work and recharge the economy. Then -- after people are working and the economy is growing -- we can pay down that debt.

But if government doesn't spend more right now and get Americans back to work, we could be out of work for years. And the debt will be with us even longer. And politics could get much uglier.

Update: This morning's job numbers are bad enough -- 263,000 more jobs lost in September, and unemployment now at 9.8 percent -- but look behind them and the news is even grimmer. The only reason the numbers don't look worse is that 571,000 workers dropped out of the labor force. Remember, too, that the economy needs about 125,000 new jobs every month just to keep up with a growing population. So we're even further behind.

The numbers would be even worse but for the stimulus package. According to an analysis by the Economic Policy Institute, the stimulus is saving or creating between 200,000 and 250,000 jobs a month. Without it, job losses in September would have been nearly twice what they actually were.

State governments, meanwhile, continue to shed employees. Here's one of the most depressing statistics I've seen (if you need any additional ones): Some 15,600 teachers didn't return to work in September. They were laid off. So our classrooms are bigger, we have fewer teachers, and our students are presumably learning less -- at the very time when they need to be learning more than ever.

Why the September Jobs Report Is So Brutal

In the October 2, 2009 U.S. News & World Report article "Why the September Jobs Report Is So Brutal," Liz Wolgemuth reports:

Employers in the United States continue to be more interested in cutting their payrolls than in keeping their existing employees, let alone adding new ones. Employers slashed another 263,000 jobs last month, the Labor Department reported today. That brings nonfarm employment down to the level of 2004, when there were about 7 million fewer U.S. workers.

Workers are dropping out: The unemployment rate edged up only slightly, to 9.8 percent, but the number of workers in the labor force fell by 571,000, suggesting the unemployment rate could have been much worse. The ranks of the marginally attached--workers who have dropped out of the workforce because they believe they won't find jobs or because they have other responsibilities, such as school--have grown by 615,000 over the year.

There are not enough jobs: A bill that would provide another 13 weeks of federally funded unemployment benefits to hard-hit states sailed through the House last week but may be complicated by some senators' efforts to get benefit extensions for all states. In some states, eligible workers have already received as many as 79 weeks of benefits. Historically, spells of unemployment that lasted a year or more were very rare, says Harvard economist Lawrence Katz, a Harvard economist. These trends are the sorts that haven't been seen since the Great Depression.

Indeed, the number of workers who have been unemployed for 27 weeks or more--called "long-term unemployed"--rose by 450,000, to 5.4 million. Last month, 36 percent of the unemployed had been out of work for at least six months. The unemployed face a market in which job seekers outnumber job openings by a ratio of 6 to 1.

Governments are now feeling the heat: While most other industries slashed jobs throughout the recession, the government sector held up pretty well, helping cushion capital cities from the roughest economic patches. Last month, however, strains on local governments started to show. Government employment fell by 53,000, with the largest drop--24,000 jobs--in the noneducation component of local governments.

Progress has slowed: September job losses were much worse than most economists expected--the median estimate was a loss of 175,000. The government also revised the prior data to show 201,000 jobs were lost in August, rather than the 216,000 originally reported, meaning the trend of narrowing job losses really shifted last month. "Today's report suggests that the progress toward a recovery in labor market conditions has stalled," Ted Weiseman and David Greenlaw, economists at Morgan Stanley, said in a morning note. "We continue to expect to see some eventual follow through on the hiring side, given the recent improvement in production and demand, but the September data reinforce the fact that some important headwinds remain."

Hours fell back down: Along with payroll cuts, many employers have slashed their workers' hours to help lower expenses, and there are now 9.2 million "involuntary" part-time workers (those who would prefer full-time work). The average workweek edged up in August, but September erased the gain, and the workweek is again at a record low 33.0 hours.

Construction and manufacturing are still hurting: Since the start of the recession, 1.5 million jobs have been erased in the construction industry. Employers in construction slashed 64,000 jobs last month, which, at least, was fewer than they were cutting late last year and earlier this year. The pain was greatest in nonresidential components, where 39,000 jobs were cut. Manufacturing lost 51,000 jobs. That's also fewer than were being cut earlier in the recession, but manufacturing payrolls have shrunk by 2.1 million since the start of the downturn.

The future is unclear: One of the most difficult things to understand about September's jobs report is how far the job market reality was from the government's stimulus forecast. The White House estimated that with the stimulus, the unemployment rate would peak at 8 percent. Without a clear plan to stimulate future job growth, it's unclear how long it will take for the 15.1 million unemployed to gain re-employment in any significant volume. Employers tend to shy away from the risk of new hires until they are confident of the state of the economy. Even for the long-term unemployed, "when the economy is chugging along, firms are willing to take a chance" on hiring and training, says Katz.

Still, the market is improving, as job losses are much less than they were last winter. "What is still very much open to question is how fast the move will be to stabilization of payrolls and eventually to job growth," says Joshua Shapiro, chief U.S. economist at MFR. "We continue to believe that the process will be a slow one and that households will be contending with weak income growth and balance sheet issues for some time."

Jobless rate reaches 9.8 percent in September

In the October 2, 2009 article "Jobless rate reaches 9.8 percent in September," Associated Press economic writer Christopher S. Rugaber reports the U.S. unemployment rate inched higher last month:

WASHINGTON – The unemployment rate rose to 9.8 percent in September, the highest since June 1983, as employers cut far more jobs than expected.

The report is evidence that the worst recession since the 1930s is still inflicting widespread pain and underscores one of the biggest threats to the nascent economic recovery: that consumers, worried about job losses and stagnant wages, will restrain spending. Consumer spending accounts for about 70 percent of the nation's economy.

The Labor Department said Friday that the economy lost a net total of 263,000 jobs last month, from a downwardly revised 201,000 in August. That's worse than Wall Street economists' expectations of 180,000 job losses, according to a survey by Thomson Reuters.

The unemployment rate rose from 9.7 percent in August, matching expectations.

"The labor market is still going backwards," economist Joel Naroff, president of Naroff Economic Advisors, wrote in a note to clients.

The report also points to an uneven economic rebound, analysts said.

"We remain convinced that we are in the early stages of an economic recovery," said Michelle Meyer, an economist at Barclays Capital. But today's report "suggests the recovery will be bumpy in the beginning."

If laid-off workers who have settled for part-time work or have given up looking for new jobs are included, the unemployment rate rose to 17 percent, the highest on records dating from 1994.

According to a separate report Friday, U.S. factory orders fell in August by the largest amount in five months.

The Commerce Department said demand for manufactured goods dropped 0.8 percent, much worse than the 0.7 percent gain that economists had expected. The August decline reflected plunging demand for commercial aircraft, a category that surged in July.

The weak reports sent the stock market down in morning trading. The Dow Jones Industrial average fell 49 points, while broader indexes also declined.

More than a half-million unemployed people gave up looking for work last month. Had they continued searching, the official jobless rate would have been higher.

The number of people out of work for six months or longer jumped to a record 5.4 million, and they now make up almost 36 percent of the unemployed — also a record.

All told, 15.1 million Americans are now out of work, the department said. And more than 7.2 million jobs have been eliminated since the recession began in December 2007.

Many analysts expect the economy grew at a healthy clip in the July-September quarter, technically ending the recession, but few think the recovery will be strong enough to lower the jobless rate. Most economists expect the rate to top 10 percent and keep climbing.

The economy has received a boost from the Cash for Clunkers auto rebate program and other government stimulus efforts, but many economists believe that growth will slow in the current quarter and early next year as the impact of those programs fade.

Federal Reserve Chairman Ben Bernanke said Thursday that even if the economy were to grow at a 3 percent pace in the coming quarters, it would not be enough to quickly drive down the unemployment rate. Bernanke said the rate is likely to remain above 9 percent through the end of 2010.

Besides the sagging jobs market, other potential obstacles to a smooth recovery include wary consumers, the troubled commercial real estate market, and a tight lending environment for individuals and businesses, said Eric Rosengren, president of the Federal Reserve Bank of Boston.

"These challenges will likely make the recovery rather restrained by historical standards, with subdued levels of spending and lending continuing to hold back a more rapid recovery," Rosengren said in a speech in Boston on Friday.

Against that backdrop, key monetary and fiscal policy supports will need to be keep in place to help foster a recovery, Rosengren said.

Hourly earnings rose by a penny last month, while weekly wages fell $1.54 to $616.11, according to the government data.

The average hourly work week fell back to a record low of 33 in September. That figure is important because economists are looking for companies to add more hours for current workers before they hire new ones.

The uncertainty that surrounds the recovery has made employers reluctant to hire. The Business Roundtable, a group of CEOs from large corporations, said earlier this week that only 13 percent of its members expect to increase hiring over the next six months.

While job losses have slowed since the first quarter of this year when they averaged 691,000 a month, the cuts actually worsened last month in many sectors compared with August.

Construction jobs fell by 64,000, more than the 60,000 eliminated in August. And service sector companies cut 147,000 jobs, more than double the 69,000 in the previous month. Retailers lost 38,500 jobs, compared to less than 9,000 in August.

Government jobs fell 53,000, the report said, with local governments cutting the most.

Temporary help agencies eliminated 1,700 jobs, down from the previous month, but still a sign of labor market weakness. Economists see temporary jobs as a leading indicator, as employers are likely to hire temp workers before permanent ones.

President Barack Obama said in a speech earlier this week that his $787 billion stimulus package and other efforts have "broken our economic freefall," though he acknowledged the labor market hasn't improved.

Republicans charge that continued job losses are evidence that the stimulus was an expensive failure.

Jobs and manufacturing data suggest slow recovery

In the October 1, 2009 article "Jobs and manufacturing data suggest slow recovery," Associated Press economics writer Martin Crutsinger reports that the "US economic recovery looks weak as data on jobs, incomes and manufacturing miss expectations."

WASHINGTON (AP) -- The U.S. economy is having growing pains.

Discouraging new reports on unemployment and manufacturing Thursday reinforced worries that job losses and meager factory output will make for a weak recovery as the nation climbs out of the worst recession in decades.

Stocks tumbled in response. The Dow Jones industrial average had its worst day since early summer, falling 203 points to 9,509. Just last week, it was within shouting distance of 10,000.

"The economy is not moving quickly from recession to expansion. It is moving in a very halting way," said Mark Zandi, chief economist at Moody's Economy.com. "Given the severity of the downturn, we are not going to come roaring back."

First-time jobless claims rose more than expected last week to a seasonally adjusted 551,000, the Labor Department said. Economists viewed it as a sign that employers remain reluctant to hire.

Economists think the economy lost 180,000 more jobs in September. The unemployment rate is expected to climb from 9.7 percent to 9.8 when the government releases its monthly jobs report Friday.

And factories are struggling to mount a rebound. A gauge of manufacturing activity came in at 52.6 for September, the Institute for Supply Management said -- enough to signal growth for the second straight month but still down from August.

The gloom on Wall Street to start the fourth quarter came despite encouraging signals on consumer spending and construction.

Construction spending rose 0.8 percent in August, including the biggest increase in housing activity in nearly 16 years. But spending for office buildings, hotels, shopping centers and government projects all declined.

Consumer spending rose a bigger-than-expected 1.3 percent in August, the best gain since October 2001, when the country was recovering from the Sept. 11 terrorist attacks. But about a third of that increase came from the government's Cash for Clunkers program.

Once the trade-in program ended, car sales fell back. General Motors and Chrysler said Thursday that their sales fell more than 40 percent in September. Ford reported a 5.1 percent drop.

The August spending report showed personal incomes continue to lag: They edged up 0.2 percent, helped by an increase in the minimum wage that took effect in July.

Economists fear weak income growth means that the jump in consumer spending won't last. Consumer spending is vital for a sustained recovery because it accounts for about 70 percent of all economic activity.

The jump in spending and the much smaller gain in income sent the personal savings rate down to 3 percent in August, from 4 percent in July. Analysts think Americans will keep saving more in the months ahead, trying to rebuild their nest eggs.

Many economists believe the economy is growing again after the longest recession since World War II -- perhaps at a rate of 3 percent or more in the just-ended third quarter.

But David Wyss, chief economist for Standard & Poor's in New York, said he expects growth to slip to an anemic 0.8 percent in the final three months of this year, and perform only a little better next year.

"The good news is that it will be positive, but it will not be a barnburner," he said.

Weak growth like that would not be strong enough to bring down the unemployment rate. Wyss predicts it will peak at 10.4 percent around the middle of next year. The recession has already eliminated almost 7 million jobs.

Those losses are weighing on Americans as they struggle to pare debt and build up savings accounts decimated by the stock market slide. And tighter lending has made spending difficult even for people who want to shop.

"With all that is going on, this is going to be a subdued rebound -- two steps forward and one step backward," said Sal Guatieri, an economist with BMO Capital Markets.

The rise in jobless claims last week came after three weeks of declines. The four-week average, which smooths out fluctuations, dropped to 548,000. That's well below the peak, in early April, but signals a weak labor market.

Unemployed workers are having a hard time finding new jobs. The number of people continuing to collect unemployment benefits fell by 70,000 last week to the lowest level since April, but there were 6.1 million still on the jobless rolls.

When federal emergency programs are included, almost 9 million people were getting jobless benefits in the week that ended Sept. 12. That's little changed from the previous week.

Congress has already added as much as a year of extra benefits on top of the roughly six months provided by most states. Congress is considering extending benefits even further, but the Senate plan was being slowed Thursday by some lawmakers upset that their states would be left out.