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Tilting at Windmills

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June 5, 2009

UNEMPLOYMENT RATE CLIMBS, BUT RATE SLOWS.... There was a point, not too terribly long ago, that 345,000 losses in a single month would be seen as awful. But in the context of this recession, it's seen as something of an improvement.

The United States economy lost 345,000 jobs in May, the government reported on Friday, a sharp slowing in the pace of job losses that fueled hopes that the economy was on its way toward a recovery.

The recession continued to take a toll as the unemployment rate climbed to 9.4 percent, its highest point in a quarter-century. Economists said the job losses were likely to pile up through the rest of the year as the country's labor market bottomed out. But they saw the latest figures as solid evidence the job market was no longer in a free fall.

In normal times, the loss of so many jobs in a single month would have been interpreted as a calamity. But 18 months into the longest recession since the 1930s, economists said the milder pace of job losses indicated that the economy was gradually leveling off as government stimulus money trickled out and businesses reined in their budgets and payrolls. "Things are still getting worse, but the pace of decline has slowed down," said David Wyss, chief economist at Standard & Poor's. "Overall, it's not quite as dire as it looked in the first quarter."

The 345,000 job losses amounted to the best month for the U.S. economy since September 2008.

Some reports indicated this morning, before the May numbers were released, that forecasts expected 520,000 job losses in May, and that would have been a sign of slight progress. With that in mind, 345,000 losses in May is obviously more encouraging.

But that's cold comfort to those who continue to struggle with a bleak job market. With the new numbers in mind, 6 million Americans have lost their jobs since the start of the recession in December 2007.

What's more, the 9.4% unemployment rate climbs to 16.4% if we include those who are working part-time but want full-time employment, or those who've simply given up. This number, often referred to as the U6 measure, continues to be at its highest point since the government began keeping track in 1994.

Steve Benen 8:50 AM Permalink | Trackbacks | Comments (12)

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Of course, the hopeful 345,00 number may be a mirage. Wait until the "revised" May number is buried in the June report!

Posted by: John Wilheim on June 5, 2009 at 9:04 AM | PERMALINK

Both March and April were revised, but this time those numbers went down! March from 699,000 to 652,000 and April from 539,000 to 504,000. So that may be another sign of hope.

Posted by: Danp on June 5, 2009 at 9:36 AM | PERMALINK

I remember when this happened two months ago.

I remember when this happened last month.

It didn't last then. I'll believe it when I see it this time.

Posted by: soullite on June 5, 2009 at 9:47 AM | PERMALINK

DeLong has pointed out that it is very difficult to reconcile the job loss numbers with the GDP (negative) growth number: the GDP should be falling more than it is being reported to have done. Something is amiss.

Personally I still think the economy is in far worse shape than any of the big names want to admit. The question that troubles me is, does Obama know this? Or is he being bubbled by his Wall Street and ex-Wall Street advisers?

Posted by: Not Really on June 5, 2009 at 10:02 AM | PERMALINK

The number looks worse than the Recovery Plan (or without it)

Posted by: Neo on June 5, 2009 at 10:14 AM | PERMALINK

Oh, I'm sure all of this will improve when manufacturing kicks in, such as building autos in China and other off shore sites. This will help free up more help for Wendy's and Burger King.

Posted by: berttheclock on June 5, 2009 at 10:30 AM | PERMALINK

LA Times puts a nice spin on things. They call it "funemployment."

Posted by: Jayson on June 5, 2009 at 10:42 AM | PERMALINK

14% unemployment for Non HS grads
8% for HS grads
4.5% for College grads.

That's a lot of unemployed conservatives.

Posted by: EulerPhiFunction on June 5, 2009 at 12:03 PM | PERMALINK

Unemployment ROSE by 787,000 in May to 14.5 million

Posted by: Joe Friday on June 5, 2009 at 1:09 PM | PERMALINK

I'd like too see the Obama administration take a good hard look at making much broader use of the U6 number in government reports of unemployment. It seems to me that it would fit well in their "truth in economic advertising" push and that once we are clearly working our way out of the current recession that would be the perfect time to make the switch.

Posted by: doretta on June 5, 2009 at 2:41 PM | PERMALINK

What's more, the 9.4% unemployment rate climbs to 16.4% if we include those who are working part-time but want full-time employment, or those who've simply given up. This number, often referred to as the U6 measure, continues to be at its highest point since the government began keeping track in 1994. [emphasis added]

That's not strictly true. People who have given up completely are not counted as part of the U6 number -- in fact they are not counted as part of the (employed or unemployed) labor force at all. What *is* included as part of the U6 number are people who haven't *actively* looked for work the last 4 weeks, but who have looked for work in the last 12 months.

If you add all the people who haven't tried looking for work for more than 12 months, you'll get a much higher figure.

Also, a methodology limitation should be noted -- the survey is accomplished via phone calls. If people have had their line disconnected, which is for obvious reasons more likely to happen to someone without a job, they will not be included in the survey.

The secret to understanding the bizarre defs is that so-called "unemployment" figures are not really meant to measure unemployment -- they are meant to measure the demand for jobs. The purpose of the "unemployment" figures are to there to allow policy makers know how many people are without work -- it's to help capitalists determine whether they are going to need to raise wages to attract people into the labor force, or whether they can force wage cuts.

Posted by: Disputo on June 5, 2009 at 11:52 PM | PERMALINK

yikes, that last sentence should have read (in part):

"The purpose of the "unemployment" figures are not to allow policy makers know how many people are without work..."

Posted by: Disputo on June 5, 2009 at 11:54 PM | PERMALINK




 

 

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