Employment Notes Before Friday’s NFP
Dan Greenhaus is at the Equity Strategy Group at Miller Tabak + Co. where he covers markets and portfolio theory. He has contributed several chapters to Investing From the Top Down: A Macro Approach to Capital Markets (by Anthony Crescenzi).
This is his most recent commentary:
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This morning’s ADP employment report spurred on some discussion of Friday’s employment report, so I thought Id pass along some quick observations regarding the payroll report. Expectations are now for job losses of 325K which would be the most since October 2001 when the economy also lost 325K. If the data comes in worse than 325K, then it would be the worst reading since July 1982 when the economy shed 343K jobs in the middle of an awful period for the labor market.
Dating back to February 1939 (837 months), the first date for which Bloomberg has monthly data:
-We have had 58 months of job losses of more than 200K (6.92%), 25 months of more than 300K (2.99%), 10 months of more than 400K (1.20%) and 6 months of more than 500K (.72%)
-The highest reading was a 1,114K gain of jobs in September 1983 (Anthony Crescenzi notes that there was an AT&T strike at this time which distorted the numbers)
-The biggest drop of jobs was September 1945 when we lost 1,966K jobs (I cannot add anything as to why this number is so large other than obviously there was some kind of war or something going on at the time)
-Since 1950, the largest addition of jobs was 778K in August 1952
-Since 1950, the largest reduction of jobs was 629K in July 1956
-The most consecutive months with losses of any amount is 17 when the economy shed 2,838K jobs between August 1981 and December 1982. There were 15 consecutive months of job losses from March 2001 until May 2002 which was part of a larger period in which the economy shed jobs 26 out of 32 months or 81.25% of the time. And lastly, the economy shed 1,711K jobs from August 1953 until August 1954, a period of 13 months that had only one month of job additions in April 1954
-The highest rate of unemployment according to Bloomberg data occurred in November 1982 when the unemployment rate hit 10.8%
-The lowest rate of unemployment according to Bloomberg data occurred in May of 1953 when the unemployment rate hit 2.5%
December 3rd, 2008 at 7:04 pm
This comparison across different time periods without correcting for the size of the population or the size of the labor force seems a bit weak. Is a loss of 325k jobs now a more or less painful experience for the economy as a whole than a loss of 325k jobs in October 2001? The comparisons break down even further when you stretch the time period as far back as the Great Depression, when the US working population had a very different composition and size.
Interesting numbers, but not very useful without context.
December 3rd, 2008 at 9:29 pm
-The highest rate of unemployment according to Bloomberg data occurred in November 1982 when the unemployment rate hit 10.8%
ah ha! That’s just when I was getting out of school. I knew it was all a conspiracy against my generation. To add to the problem we were also competing against a horde of boomers who already had 10+ years of work experience under their belts. And I thought it was me. Oh man were those rotten times
December 4th, 2008 at 8:57 am
which ‘unemployment’ rate is that?
b/c, IIRC, U-6, as we speak, is bumping up on 10%..
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DavidB,
if Gens X&Y don’t wake up and get together, we’re going to play the role of the Ant, to the ‘BBoomers’-Grasshopper..only, in that version, they turn into Locusts and eat our Future, those will be good times..
December 4th, 2008 at 11:07 am
“which ‘unemployment’ rate is that?”
Cmon, its the same unemployment rate that you know full well the post is referring to.
December 4th, 2008 at 11:07 am
Oops
December 4th, 2008 at 11:18 am
In 1945, the government passed the unemployment act of 1945. This made it possible for members of the armed forces to apply for unemployment benefits as they came home from the war. This would explain the spikes in August and September of ‘45.