Unemployment up to 9.7%:
Employers eliminated 216,000 jobs in August even as the larger economy showed signs of turning around, suggesting that while the pace of job losses continues to slow, American workers will still be among the last to benefit from a recovery.
The unemployment rate, which dipped in July as Americans left the work force and stopped looking for jobs, resumed its climb last month, rising to 9.7 percent from 9.4 percent, the Labor Department reported on Friday in its monthly snapshot of the job market.
“We’re still losing jobs, but at a slower pace,” said Nigel Gault, chief United States economist at IHS Global Insight. “The trend is telling us that the further we get into the year, the smaller job losses are going to get.”
This is going to take a while.
Tim H
Sheesh. The larger economy = consumer spending = jobs + borrowing , neither of which is going up. These guys idea of an economy begins and ends with Wall Street.
D-Chance.
Business columnist Al Lewis is predicting that this economy will continue to drag bottom for the better part of the next decade. Consumers have/had no savings, they’ve maxed out their credit, they’ve refinanced and blown all their home equity. They have nothing left to contribute, and the government cannot possibly bail out or spend enough money to make up for the shortfall from the public sector.
For those smart enough to horde, keep hording. The mattress is the 21st century security of choice for the wise “investor”.
edmund dantes
There is gonna be a lot of noise around that number, and even if and when it starts dropping for real, the new jobs aren’t going to be high quality or high pay. The things that sustained and grew the middle class in the post war period up to about the 80s are fast disappearing.
Since 1980, we’ve done a lot of tricks and political pushes to keep the appearances up, but the reality is that we had a chance to acknowledge there was going to be a tough road ahead. We had a choice of some short term sacrifices and re-alignments of thought and attitudes that would lead to an easier transition or pretend like the problem doesn’t really exist and it’s morning in america.
We made our choice in this country, and we’re going to go through a very painful re-adjustment as we make the changes we needed to make 30+ years ago. Also the changes are going to take a lot longer to shake out now that we’ve put them off as long as we can.
You can only kick the can down the road so far before you run out of road.
General Winfield Stuck
I wish they would just shit can the dumb unemployment percentage. It is so misleading and cannot calculate those who get so discouraged they drop out of the market for pursuing a job, and likewise, when things start to improve opting back in. Which at this stage of a recovery is usually the case. Evidenced by the 216, 000 which is less than expected and represents a steady decline in jobs lost over the pst few months. But paradoxically, while the percentage of unemployed rises.
Tim H
You can only kick the can down the road so far before you run out of road.
We’ve put it off so long we’ve also run out of can.
El Cid
Hey, are we still planning to replace all those unnecessary, old fashioned medium wage manufacturing jobs with jobs in the tech sector and financial innovation? When is that gonna kick in?
Kirk Spencer
@D-Chance.: This economic recession is exciting from an academic point of view.
It’s different.
A lot of theories have been developed by several schools of economics about recessions in general. Each of those schools has models predicting (generally) what’s going to happen over the next couple of years (and for that matter the past eight months).
Because this is a money/credit driven recession instead of an excess inventory driven recession the “tried and true” stuff was challenged.
As of right now, the schools (the hard-core Miseans, basically) who said the stimulus would not work are having to re-evaluate their models. Bluntly, they were wrong. They have to identify why and explain it, then incorporate their new hypothesis into their general theory. But as of right now they’re wrong.
The general groups of forecasts at this time are:
1) Continued doldrums (Japan-like ‘depression’) for at least two more years. That is, Real GDP growth runs from -1% to +2% annualized.
2) Dead Cat Bounce. In other words, we had a short-term reprieve as irreplaceable resources were spent. Once those are gone the fall will resume. Timing on this ranges from 4th quarter this year to 2d quarter of next year. Generally nobody is expecting better than 2% growth between now and the fall.
3) Blowout. There are several variations in this group, but the overall concept is that the dollar becomes worthless as an international currency. Our economy may explode (artificially) or collapse short term, followed in the former case by a collapse as we restructure. Either way we see massive (even hyper) inflation, and end with a new dollar after the old is replaced (either by devaluation or by ‘fisc instead of fiat’ money) Lotsa schools from monetarists, some keynesian based schools, and then there are the ones that aren’t really any school whatsoever.
4) Gradual recovery. This group says we’ll see pretty flat (-1% to +2%) growth for a bit followed by a fair (+3-5%) growth recovery. The periods run from this quarter through second quarter of next year. As far as I’ve been able to tell this whole group is made up of keynesians.
There are a couple of predicted collapse triggers – a dumping of the foreclosures, CRE collapse, the next round of ARM resets, and some major bank closings forming the majority. Some of the models expect them as part of their predictions, others don’t expect them or haven’t planned for them.
Regardless, by Christmas of next year we’re going to have the interesting result of seeing a small handful of economic models with a display of being generally right with a large number of others having to explain why they weren’t. It won’t stop adherent’s of the schools that got it wrong from pushing their school, but for those who pay attention it’ll be wonderful to finally have seen competing theories put to a test.
For what it is worth, I’m in group 4.
Oh – one more point. ALL the schools say unemployment will continue to grow for a bit. How much and for how long may vary, but nobody is saying “it’s over”.
tc125231
@El Cid:It’s where you would expect such an arrant fantasy to be….
Sue
My feeling is that we are entering the “race to the bottom” stage, wherein employers have figured out that they can use the fear and unease to their benefit. Most of the worst job hacking has already been done, now we’re dealing with employers who are willing to use the “how bad do you want your job” hammer to cut jobs and wages and eliminate benefits. Not all, of course; there are still employers out there who are barely making it and making hard decisions. But count on it – employees are going to keep getting hit way past the time we begin to recover.
bedtimeforbonzo
Sue: I don’t discount your theory entirely. But speaking strictly for the car dealership I work for — the owner has three large stores — there is nothing left to pick from the bone.
For example, we used to have a title clerk for all three stores. Now two people do the job three used to do, which is probably a common theme in all industries.
The sales force has been reduced by a third, and we’re all still having trouble making ends meet.
Trying to stay sane — and solvent — in this Great Recession in a commission-based business has been a nightmare.
Sue
bfb, I think things are still pretty hard across the board and the ‘get lean’ stage is past and well past; you’re right that a lot of businesses are still wavering on the edge. I base my opinion on a combination of an understanding of basic human nature and observations on what is going on around me, for instance the friend whose hours are being cut as her boss purchases a lake cottage.
Ruckus
Around here we are seeing most businesses cutting staff, some a much as 50%. I have seen many close their doors for good. And everyone I know (except the landlords) is talking about rent reductions or moving to lower rent facilities if they can. And my business is in an affluent area. I can’t imagine what it’s like in a lot of places. I have lost several customers when they have lost their jobs. And only one has gotten another.
If this economy keeps going at the pace it is now for 1-2 years it will get a lot worse. Lots of people are running out of reserve, not just workers but business owners as well. We may have bottomed out but the bottom is not a great place to stay.
If the stimulus money starts flowing to the general economy soon it may actually help us at the small fry end of the stick. But this all takes time and I don’t see a lot of people having that much time.
ThatLeftTurnInABQ
@Kirk Spencer:
Thanks for putting together a really good summary of the competing models and their predictions. Put me down as predicting we get option # 1 (the Japanese style Lost Decade). I hope you are right on picking the 4th and best one.