Interesting jobs data point for the weekend
With yesterday’s labor report showing a decline of 11,000 in nonfarm payrolls and with upward revisions of more than 150,000 to the payrolls data from prior months, some people are, understandably, thinking that the unemployment rate might soon be going down.
A natural question that some might be asking this weekend is, “Based on the experience of the last two ‘jobless recoveries’, when might the jobless rate be expected to fall”?
Well, if past is precedent, the news isn’t good.
After the last recession in 2001, nonfarm payrolls first produced a positive number in June of 2002 but, from that time on, the unemployment rate rose for a full 12 months, from 5.8 percent to a peak of 6.3 percent in 2003.
The peak in the jobless rate came at around the same time that nonfarm payrolls posted their last decline for the cycle, a loss of 42,000 in July of 2003.
Contrary to what some might believe, once nonfarm payrolls produce a positive number, they don’t just keep climbing. In fact, back in 2002 and 2003, from the time of that first plus sign in front of the payrolls number until the last minus sign one year later, there was a net decline of 506,000 jobs.
The jobs picture wasn’t much better after the 1990-1991 recession.
After the first post-recession payrolls increase in June of 1991, job growth was much steadier than after the 2001 recession but, here too, the unemployment rate continued to rise for an entire year, in this case, by almost a full percentage point from 6.9 percent to 7.8 percent.
Based on the last two recessions, we’re still more than a year away from a sustained decline in the jobless rate.
ooo
Tim Iacono is a retired software engineer and writes the financial blog “The Mess That Greenspan Made” which chronicles the many and varied after-effects of the Greenspan term at the Federal Reserve. Tim is also the founder of the investment website “Iacono Research” that provides weekly updates to subscribers on the economy, natural resources, and financial markets.
December 5th, 2009 at 5:43 pm
And yet, Floyd Norris says this time is different and that it probably only gets better from here…
============
December 5, 2009
Off the Charts
The Jobless Rate May Have Hit Its Peak
By FLOYD NORRIS
The peak in unemployment in the United States has probably passed, according to one economic indicator that has proved reliable in all 10 previous recessions since World War II.
If it is correct, it indicates that the recovery from the 2007-9 recession will be very different from the “jobless” recoveries after the last two recessions, when the unemployment rate continued to rise for many months after the recession officially ended.
That indicator is part of the monthly survey done by the Institute for Supply Management, in which manufacturing companies are asked if their business is getting better or worse.
…
http://www.nytimes.com/2009/12/05/business/economy/05charts.html
December 5th, 2009 at 6:00 pm
This guy did a PhD and three post-docs and only has 6 papers published? No wonder he’s on the street. That’s like bragging it took you 8 years to finish college.
December 5th, 2009 at 7:24 pm
That picture must be a joke. Graduate school, 3 postdocs and only 6 publications (were any even first authored? Know when to quit, publish or perish.
December 5th, 2009 at 8:21 pm
PhD in what? 6 pubs might be worse than none.
Norris is ecstatic over his stat “find”. Will agony follow?
December 5th, 2009 at 9:24 pm
Re absinthe
“That’s like bragging it took you 8 years to finish college”
Actually took me 15 years for an undergrad (bs in ops mgmt & finance) as I did not know I had ADD
and multiple LD’s (learning disabilities). Oh, I also taught flying and flew air freight at all hours of the night while also working as a machinst in fab shops part time. Not much of a life. Would have just as soon been in a war zone for the frustration I experienced.
Btw That was in my mid 30’s as the secondary edu journey included learning from the ‘ground up’ what primary edu did not teach me.
Does that make me stupid (something primary edu of the 1960’s did its best to instill) and you (and others on this board) feel esteemed?
Happy Holidays……
December 5th, 2009 at 10:12 pm
I am a very good friend of the guy in the picture. He does have a Ph. D. and an MBA. He is very successful. I have just sent him the link so that he can explain the story behind the picture.
December 6th, 2009 at 3:31 am
I think the most applicable history to consider is 1982-1983, the last time the unemployment rate was above 10%. It came after a rapid uptick in oil prices and a crash in real estate activity thanks to high interest rates.
It took 10 months (from September 1982 until June 1983) for the rate to drop below 10%. And it was not until January 1986 that the rate dropped below 7%.
My sense is that the next six months will be frustrating. It will seem like nothing is happening, and we will be whipsawed emotionally by the volatility created by the revisions to each month’s data.
Given the severity of the 2007-2009 market crash, however, one should not be surprised. And, yes, it will be hard to be patient.
December 6th, 2009 at 8:50 am
my first job was 81 after college, what came was massive military spending, the golden age of tech, rebound in real estate and lower oil prices, thus, the jobs were real………………now, I just don’t see where future growth comes from
December 6th, 2009 at 10:17 am
It’s called a Green Jobs program
1) Draws upon all levels of labor (skilled, semi-skilled, and un-skilled).
2) Is good for the environment.
3) Gives the decimated manufacturing base something to build upon besides warfare.
4) Can eliminate our dependency on oil imports.
December 6th, 2009 at 10:49 am
“It took 10 months (from September 1982 until June 1983) for the rate to drop below 10%. And it was not until January 1986 that the rate dropped below 7%.” –cgb22, above
and, previously, “I think the most applicable history to consider is 1982-1983″, ibid.
cgb22,
you mean, back then, when We were a Net Creditor, is relevant to our situation, now, when We are the World’s, foremost, Net Debtor?
could you explain how that works?
December 6th, 2009 at 11:49 am
“Based on the last two recessions, we’re still more than a year away from a sustained decline in the jobless rate.”
I have a slightly different view.
The improvement from 10% down to 8-9% will be relatively fast (job cuts were greatly overdone [driven by emotional fear of the Great Depression II]; therefore, we should get a relatively brisk uptick in re-hiring).
The hardest part will be pushing it below 8% — could take 18-24 months.