Posts Tagged ‘Unemployment’

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Employment-Population Ratio – Chart And Comments

Wednesday, August 11th, 2010

Yesterday, The Wall Street Journal had an Op-ed titled “Unemployment: What Would Reagan Do?”

I found the article interesting as it provides a good explanation of the Civilian Employment-Population Ratio and its history.  An excerpt:

“Since America has about 238 million noninstitutionalized civilian adults of working age, this decrease means that we have nearly 12 million fewer jobs today than we would have if the employment-population rate were still at its 2007 level of 63%.

No other recession in the past 60 years saw such rapid job destruction in either absolute or percentage terms. In the 1979-82 recession, unemployment topped out at a higher rate, 10.8%, but the employment-population ratio declined by only three percentage points, to 57% from 60%.”

Below is the long-term chart of this ratio, as found on the St. Louis Federal Reserve site:

(click on chart to enlarge image)

Although this Civilian Employment-Population Ratio is not a statistic that gets a lot of mention, it is nonetheless an important statistic and concept.

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3 Critical Unemployment Charts – August 2010

Monday, August 9th, 2010

As I have commented previously, as in the October 30 post, in my opinion the official methodologies used to measure the various job loss and unemployment statistics do not provide an accurate depiction.

However, even if one chooses to look at the official statistics, the following charts provide an interesting (and disconcerting) long-term perspective of certain aspects of the officially-stated  employment situation.

The first two charts are from the St. Louis Fed site.  Here is the Median Duration of Unemployment:

(click on charts to enlarge images)

Here is the chart for Unemployed 27 Weeks and Over:

Lastly, a chart from the Minneapolis Federal Reserve site.  This shows the employment situation vs. that of previous recessions (as characterized by severity):

As depicted by these charts, our unemployment problem is severe.  Unfortunately, there do not appear to be any “easy” solutions.

In July 2009 I wrote a series of five blog posts titled “Why Aren’t Companies Hiring?”, which discusses various aspects of the topic, many of which lack recognition.

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“Chronic Joblessness”

Friday, June 4th, 2010

The Wall Street Journal of June 2 had an article titled “Chronic Joblessness Takes Toll.”

I have written extensively about the unemployment  situation for a number of reasons.  Perhaps chief among these reasons is that I believe the situation is far worse than generally acknowledged.

While it is easy to dismiss the unemployment problem with glib statements or convoluted reasoning, I believe the issue is very complex and threatening.  As seen in the aforementioned Wall Street Journal article, as well as various charts shown on this blog, there is little doubt that from a long-term historical perspective our unemployment problems are outsized.  Additionally, there are many facets of our unemployment situation that go unrecognized yet are exceedingly important.

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Last year I wrote a series of blog posts titled “Why Aren’t Companies Hiring?” which contains many of my thoughts on the issue.

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Four Erroneous Phrases

Friday, May 21st, 2010

Over the last few months, four phrases have been used frequently in describing our economic condition.  I find these phrases to be inaccurate and misleading.

Here are the four phrases (in italics) and some brief commentary:

“the Great Recession”

Many people have labeled the economic weakness (ended by the subsequent purported economic recovery) as “the Great Recession.”  This appears to be in recognition of a deep recession that in many ways seemed to be second only to The Great Depression as far as severity.

I believe the phrase to be inaccurate as my analysis indicates we have yet to experience the full extent of the economic weakness -  and as such categorizing weakness to date is premature.  Also, I find the term “Great Recession” to be rather glib and flippant, as it minimizes the extent of our economic difficulties.

“employment is a lagging indicator”

This phrase is heard constantly.  It seems as if the more it is said, the more accepted it becomes.  I believe that although employment may have been a “lagging indicator” in the past, during our current period of economic weakness it is either a coincident or leading indicator, depending upon the time horizon and other guidelines used.

“saddling our children / grandchildren with debt”

This phrase, and variants, is often heard in relation to the expansion of deficits and national debt.  While I don’t believe it is wholly inaccurate, I think it embodies various mistaken beliefs.  Among these mistaken beliefs are that we as a country will not face near-term repercussions from our amassing of debts; and that the worst consequence (and only one worthy of mention) of our current economic actions with regard to future generations’ prosperity is our amassing of debt.

The broader, and more important question -  which is seemingly never mentioned – is whether we are acting as “good stewards” in relation to the economic condition that will be faced by future generations.  In essence, is the current generation promoting an economic environment that will bode well for future generations?  I will likely discuss this topic in the future.

the “Flash Crash”

This phrase has been frequently used to describe the sudden, deep decline of the stock market on May 6.  I don’t think the phrase is accurate for a number of reasons.  Again, the phrase sounds glib and implies that the decline lacked (lasting) significance or happened without significant reason or provocation.

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There are many other erroneous phrases used frequently to discuss our economic condition.  In the future I will highlight others that I believe have outsized significance.

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The Loss Of Manufacturing In The United States

Wednesday, May 12th, 2010

The following excerpt is from the Global Economics section of Bloomberg BusinessWeek, May 10-May 16 2010:

“Industrial America’s plight can be encapsulated in a few incredible numbers.  According to the Bureau of Labor Statistics, U.S. employment in manufacturing over the past six months has been the lowest since March 1941, before the U.S. entered World War II.  The March total was a little under 11.6 million workers, down 19 percent in just the past five years.  Productivity advances account for some job reductions, but that’s not the whole story:  Manufacturing’s share of GDP shrank from 25 percent in the 1960s to 15 percent in 2000 and just 11 percent in 2008, according to data from the Commerce Dept.’s Bureau of Economic Analysis.”

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I believe that our loss of manufacturing, and manufacturing jobs, represents one of the largest errors in our economic strategy.

Perhaps most disconcerting has been our national attitude toward the loss of this manufacturing.  It perhaps can best be summarized in the commonly heard phrase “we don’t need manufacturing in order to be successful.”

While the underlying reasons for this manufacturing loss are complex, and some would argue unavoidable, it nonetheless has created many substantial, enduring problems.

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Three Unemployment Charts

Sunday, April 18th, 2010

This post provides updated charts to the “Three Unemployment Charts” post of January 12.

As I have commented previously, most notably in an October 6 post, in my opinion the official methodologies used to measure the various job loss and unemployment statistics do not provide an accurate depiction.  However, I believe that the following charts provide an interesting perspective of the officially-stated  employment situation from a long-term historical perspective.

The first two charts are from the St. Louis Fed site.  Here is the Median Duration of Unemployment:

Here is the chart for Unemployed 27 Weeks and Over:

Lastly, a chart from the Minneapolis Federal Reserve site.  This shows the employment situation vs. that of previous recessions (as characterized by severity):

As depicted by these charts, our unemployment problem is severe.  Unfortunately, there do not appear to be any “easy” solutions.

Back in July 2009 I wrote a series of blog posts titled “Why Aren’t Companies Hiring?”

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Comments On The HIRE Act

Sunday, March 21st, 2010

On Thursday President Obama signed the HIRE Act, a jobs stimulus.  The summary of the signing can be found here.

There is also a transcript of his remarks found here.

I could make many comments about this jobs stimulus.  However, as an intervention measure, it has many of the same characteristics of other interventions.  As such, my previous extensive comments about interventions are highly relevant.  Those posts can be found listed under the “Intervention” Category.

However, I will make two comments specific to this legislation:

First, the ARRA was supposed to be a “jobs creation” legislation.  On various levels it has not performed as intended with regard to job creation.  As I’ve pointed out before, we should be very cognizant of how previous stimulus bills have fared before enacting new ones.

Second, in President Obama’s comments he said, “I’m signing it mindful that, as I’ve said before, the solution to our economic problems will not come from government alone.  Government can’t create all the jobs we need or can it repair all the damage that’s been done by this recession.”  This entire idea of “creating” jobs or “stimulating” job creation needs to be intensely scrutinized.  Should government be attempting to “create” jobs – as seems to be the current widely accepted theory – or should job creation and job growth be an inherent feature of a strong economy?

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Here is a link to a blog series I have previously written titled “Why Aren’t Companies Hiring?” :

http://www.economicgreenfield.com/2009/07/24/why-arent-companies-hiring/

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Historical Perspective – Employment And Output

Monday, February 8th, 2010

Here are two charts from the Minneapolis Fed site:

http://www.minneapolisfed.org/publications_papers/studies/recession_perspective/index.cfm

They show, from a historical context, how declines in employment and output during this period of economic weakness (which FRB Minneapolis refers to as a recession) compare to those of previous recessions.

First, the employment chart.  Here are two notes regarding this chart:

1. Employment is nonfarm payroll employment calculated by the Bureau of Labor Statistics.
2. Postwar recessions include the 10 recessions as defined by the NBER that started between 1946 and 2006.

Second, the output chart.  A couple of notes regarding this chart:

1. Output is gross domestic product adjusted for inflation as calculated by the Bureau of Economic Analysis.
2. Postwar recessions include the 10 recessions as defined by the NBER that started between 1946 and 2006.

There are other pertinent notes on the FRB Minneapolis page, as seen below:

Background on Recession/Recovery in Perspective

This page places the current economic downturn and recovery into historical (post-WWII) perspective. It compares output and employment changes from the 2007-2009 recession and subsequent recovery with the same data for the 10 previous recessions and recoveries that have occurred since 1946.

This page provides a current assessment of ‘how bad’ the 2007-2009 recession was relative to past recessions, and of how quickly the economy is recovering relative to past recoveries. It will continue to be updated as new data are released. This page does not provide forecasts, and the information should not be interpreted as such.

The charts provide information about the length and depth of recessions, and the robustness of recoveries.

Post-WWII Recessions

The Business Cycle Dating Committee of the National Bureau of Economic Research determines the beginning and ending dates of U.S. recessions. http://www.nber.org/cycles.html
It has determined that the U.S. economy experienced 10 recessions from 1946 through 2006. The committee determined that the 2007-2009 recession began in December 2007. The ending date has not yet been determined. Ending dates are typically announced several months after the recession officially ends.
http://www.nber.org/cycles/dec2008.html

Length of Recessions

The 10 previous postwar recessions ranged in length from 6 months to 16 months, averaging about 10 1/2 months. The 2007-09 recession was almost certainly the longest recession in the postwar period. But the total length of the recession will only be known when the Business Cycle Dating Committee retrospectively determines the final month of the recession.

Depth of Recessions

The severity of a recession is determined in part by its length; perhaps even more important is the magnitude of the decline in economic activity. That is, how much do employment and output fall?

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The State of the Union Address – A Few Comments

Thursday, January 28th, 2010

I found plenty of noteworthy comments in last night’s State of the Union Address.   Here is the link to the transcript:

http://www.whitehouse.gov/the-press-office/remarks-president-state-union-address

Here are a couple of my thoughts:

First, many stimulus initiatives were mentioned.  Some of these were new ideas.  That stimulus ideas are proliferating should not be a surprise, as many in our country believe they represent a sensible solution to our many economic difficulties.   I will comment on many of these initiatives when more details are available and/or they are enacted.  For now, I will say that before we, as a nation, enact more stimulus bills, we need to analyze the results of the many stimulus efforts previously and currently enacted.  Then, we need to assess the unintended consequences and risks these stimulus efforts hold, of which I have previously mentioned on this blog.

Second, the employment situation was mentioned.  This, of course, is not a surprise and is a very popular topic among all politicians – and for very good reason.

President Obama during the speech last night made the following comment:

“But the truth is, these steps won’t make up for the seven million jobs that we’ve lost over the last two years.”

I believe that our unemployment problems, both current and ongoing, encompass a population many multiples of seven million.   Our unemployment problems will most likely not be solved by any easily enacted solution, unfortunately.

For those unaware, I previously wrote a series of blog posts on unemployment, can be found here:

http://www.economicgreenfield.com/2009/07/24/why-arent-companies-hiring/

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Three Unemployment Charts

Tuesday, January 12th, 2010

Occasionally, I have posted charts concerning unemployment.  With Friday’s unemployment release, here are three charts that I find noteworthy:

First, from the St. Louis Fed site, the Median Duration of Unemployment. 

Second, from the CalculatedRisk blog of 1/8/10, Unemployed Over 26 Weeks:

http://www.calculatedriskblog.com/

Third, again from the CalculatedRisk blog of 1/8/10 – I like this chart as it presents a relative depiction of Post WWII recession job losses.  As one can see, our current period of economic weakness’s job losses are outsized both in duration and severity:

As depicted by these charts, our unemployment problem is severe.  Unfortunately, there does not appear to be any “easy” solutions.

A few months ago I wrote a series of blog posts titled “Why Aren’t Companies Hiring?” which can be found at this link:

http://www.economicgreenfield.com/2009/07/24/why-arent-companies-hiring/

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