Friday, November 6, 2009

Double-Digits, Yikes!

I had hoped we wouldn't get here...

Not a nice headline number from the BLS today - the unemployment rate hit 10.2% in October. Payroll employment also fell by 190,000. The apparent discrepancy between the relatively modest decline in payrolls and the big jump in the unemployment rate is explained by the fact that the numbers come from two different sources. The unemployment rate is measured using a survey of households, while the payroll figure comes from a survey of firms. In this case, the divergence between the two was wide - according to the household survey, 589,000 jobs were lost. And there is no consolation from labor force participation, which ticked downward slightly.

Nonetheless, I see the folks at FRED have moved us out of the shaded area... presumably on the strength of the recent preliminary estimate of 3.5% GDP growth in the third quarter. Of course if output is growing, and employment is falling, productivity is rising. The BLS indeed reported a stunning 9.5% rate of increase in labor productivity for the third quarter. The accompanying decline in labor costs ought to be a pretty big inducement to hire more workers, but it is not clear that firms are confident that the demand will be there if they increase output.

Meanwhile, Paul Krugman reports the President is pinned down on the beachhead...

Update (11/9): Floyd Norris points out that the non-seasonally adjusted unemployment rate is 9.5%, unchanged from last month (and down from a peak of 9.7% in June-July).
Unemployment Rate, Not Seasonally Adjusted
Now that looks better! Hmm...

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