Okay, we’ve heard that the jobless rate increased in December, but what do the employment statistics really mean? Friday’s employment report indicated that nonfarm payrolls fell by 85,000 workers, with total job losses for 2009 standing at more than 4 million. Additionally, the report indicated that the November number had been revised to show a gain of 4,000 jobs. Some reports seem to place a positive spin on the numbers, pointing out that the overall unemployment rate failed to climb above 10%, and that December was the fifth consecutive month that hiring at temporary help services has increased.
So, what is the news and what does it mean? Have we reached the bottom and are we slowly creeping upwards from the worst recession in decades? The short answer is No—No way, no how. While we’d all love to be convinced that the economy is really mending, there’s no good news in this report. Sure, the unemployment rate failed to climb above 10%, but it did so because more than 600,000 workers became so discouraged by their inability to find jobs that they stopped looking. Had they remained in the job market, the rate would have grown to 10.4%.
Another telling number is the U-6 unemployment rate which includes discouraged workers as well involuntary part time workers. In December, that number rose from 17.2% to 17.3%.
In a reasonably good economy, the U.S. will normally create at least 15 million jobs during a ten year period. However, in the decade just ended the country experienced a net loss of private sector jobs that was only slightly boosted by the creation of a couple of million government jobs, the combination of which led to a net gain of zero, an appallingly negative statistic. And the number of discouraged workers who dropped out of the labor force this past year exceeded 1 million, the first time the U. S. has experienced a decline in almost sixty years.
What this means is that hundreds of thousands are delaying their entry into the workforce, aware that few jobs are available, while others have become so discouraged that they’ve simply given up. Take away the recent hiring for temporary positions and the job situation looks bleak indeed.
The administration and most politicians don’t want to admit to the disturbing truth of this recession; and that is: “Unemployment will not return to pre-recession levels for at least a decade.” In a previous post, A Perfect Storm Of Foreclosures May Be On The Way, I explained why even a reasonable annual growth in GDP will leave us with high unemployment for many years. Ultimately, that is very bad news for the housing market and for the overall economy.
The decade we’re entering will not be one of robust housing sales, but will instead be one in which the housing market will re-define itself. Much of that new market is yet to be determined, for it is wholly dependent upon yet to be defined government programs and the peoples’ ultimate reaction and participation.
For more detailed information about what I think the New Year holds, see my post, Housing Predictions For 2010 And Beyond.
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