Friday, December 3, 2010

Its Hard to Hold a Candle

in the cold November rain....

The BLS November employment report is a bummer, especially in the wake of mostly improving economic reports (e.g., consumer confidence, unemployment insurance claims, regional manufacturing surveys, etc).

According to the BLS, employment increased by a mere 39,000 and the unemployment rate rose from 9.6 to 9.8%.

The rise in the unemployment rate was not, alas, due to people re-entering the labor force - the participation rate was unchanged at a (depressed) 64.5%.  According to the household survey, 173,000 fewer people were employed in November (recall that the headline employment number comes from the separate survey of businesses, while the unemployment rate is calculated using the household survey).

If the other, positive, economic reports are ultimately reflected in strong fourth quarter GDP, the employment numbers would be an indication of rising productivity (for the third quarter, the BLS reported 2.3% labor productivity growth).

Out of the 15.1 million unemployed (!!!!), 6.3 million have been unemployed for more than 27 weeks.  There was a good article yesterday in the Times on how long-term employment can have persistent effects, as people who have been unemployed for a long time become less employable (a form of what is sometimes called "hysteresis" in the economics literature).

Hopefully the report will concentrate some minds in Washington (but don't hold your breath).  It should strengthen the President's attempt to salvage an extension of unemployment benefits from the negotiations with the Republicans on extending the Bush tax cuts.

November is one of the months when the seasonal adjustment makes things look worse - on an unadjusted basis, the unemployment rate was 9.3% (up from 9% in October), and payroll employment increased by 217,000.

For more on the employment report, see Calculated Risk, David Leonhardt, Free Exchange, and Real Time Economics' roundup.

Update: Mark Thoma is critical of the White House response.  Floyd Norris has a reason to hope for an upward revision.

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