Unemployment Rate Falls From 10% to 9.7%!

fyi- the unemployment rate going down because people have stopped looking for work is not exactly bullish. hee hee

yeah...we're still reeling from the mind blowing bonus money

the unemployment rate went down because there were only 20,000 job losses, which is far less than the 750,000 job losses in January 2009.

You know, it's better to fall off the Chrysler building rather than the Empire State Building because it's shorter thus increasing your chance of survival.

alpie, i don't quite know what's going on with these numbers, because the truly good news in this employment report is it shows the number of discouraged workers declining (and hours increasing, if only slightly).

on the other hand, the establishment survey shows 20,000 jobs lost. it generally takes 100,000 jobs being created to keep the unemployment rate steady (unless there are lots of people leaving the workforce).

january is a tough month, seasonal adjustments are huge. i wouldn't read too much into this report in either direction. remember, also, that the numbers will be slightly distorted for the next few months due to federal temporary hiring for the census.

the good news was that temp work and hours went up..those definitely precede hiring. the bad news is that headline number is still negative

temp work generally does. there are some fears that due to high benefit costs, future demand uncertainty and the costs of severance some employers may go forward using temps and not convert them to permanent, at least in the near term.

"also, that the numbers will be slightly distorted for the next few months due to federal temporary hiring for the census."

That's what people said 2 months ago in regards to seasonal hiring by retail stores.

I don't see the benefit of any company hiring a temp through a temp agency. Don't these agencies charge employers like $10,000 for an employee and a large chunk of their hourly wage?

Wow, alpo, every day you can closer and closer to perfitz.

Few people on earth have this much trouble comprehending data.

alpie, no. do some homework and get back to us.

the terms depend on the arrangements between the temp agency and the company. typically the temp agency charges the company a flat hourly fee for the employee, and then pays the employee a portion of that. as there are few to no benefits involved, temps tend to be cost-effective. the company is usually obligated to pay an agency fee if they hire the employee full-time.

temps are less expensive than full time employees...manufacturers hire temps until they see steady demand then they get full time employees.

"More bad news for the bears!"

Funny, it sent the the stock market DOWN. Alpo, as usualy, doesn't understand what he's reading. The WSJ headline starts with "U.S. Payrolls Slide". The economy lost another 22,000 jobs.

Stock bears are sure loving it.

alpo, how does that foot taste?

"This chart from Calculated Risk shows the decline in jobs as a percentage of the work force at the peak.

To date in this recession, we've lost 8.4 million jobs. The decline as a percentage of the workforce is the worst since the Great Depression, matching the sharp but short drop in 1948, as the war machine wound down.

Equally important, the duration of these job losses, as well as the lack of a sharp recovery (at least so far), suggests that the problem will be with us for a long while. We're now 24 months into this decline, and we're still at the bottom. By this point in most previous recessions, we had already recovered all of the lost jobs."

http://2.bp.blogspot.com/_pMscxxELHEg/S2wfr6jIdyI/AAAAAAAAHcM/dfZbflHVHYg/s1600-h/PercentJobLossesJan2010.jpg

Have a great weekend, enjoy the Super Bowl, everybody.

Interesting Meltzer memo on Job Statistics.

http://gopleader.gov/UploadedFiles/10-30-09_Meltzer_memo.pdf

Memorandum
TO: House Republican Leader John Boehner
FROM: Allan Meltzer, Professor of Political Economy, Carnegie Mellon University
DATE: Friday, October 30, 2009
RE: Administration Stimulus Job Claims – Putting Fiction Before Fact
The Obama Administration’s latest report on jobs allegedly saved or created by the stimulus
package should be viewed with more than just a healthy dose of skepticism, and below is an
explanation of why.
Jobs Saved?
There is no greater recognition of the failure of the stimulus program to create jobs than the
efforts to mislead the public into believing the program had saved thousands, or millions, of jobs.
One can search economic textbooks forever without finding a concept called “jobs saved.” It
doesn’t exist for good reason: how can anyone know that his or her job has been saved?
The Administration can make up any number it pleases. The number has no meaning. The
Council of Economic Advisers gets a number for jobs saved using the same model that Dr.
Christina Romer and Jared Bernstein used when they forecast that the $787 stimulus program
would keep the worst unemployment rate in this recession at about eight percent. But as we all
know, since that bill became law, our economy has shed some three million jobs and the
unemployment rate is nearing double digits.
Did the Stimulus Bring Recovery?
It is a mistake to credit the stimulus with some of the positive economic signs we are seeing.
Many other changes have been at work. Monetary policy has remained highly expansive. The
“clunker” program paid buyers to shift future purchasers into the present. The $8,000 tax credit
increased housing purchases in the third quarter because the credit expired. Any first time buyer
planning to purchase a home had to use the credit or take the chance it would not be renewed.
Neither the clunker program nor monetary policy is part of the stimulus program.
Much of the stimulus spending has not been made. Further the stimulus offered a temporary tax
cut. Economic theory and past experience warn that temporary tax cuts have very little effect.
Permanent tax cuts – the Kennedy-Johnson and Reagan tax cuts – had big effects because they
were permanent and because they lowered marginal tax rates.
Much of the stimulus went to reduce state and local government deficits. That simply transferred
the deficit from the states to the federal government. Not much stimulus there.

"Since the recession began in December 2007, the economy has lost 1.4 million more jobs than previously believed."

"The revision came about because the government had been dramatically underestimating the number of businesses that were closing due to the recession."

"Though the unemployment rate fell to 9.7% from 10%, economists were skeptical that a month of job loss could muster such a large decline in the jobless rate.

Many experts chalked up the decline to the recent round of revisions impacting the estimated number of people in the workforce."

"Economists estimate that the country needs to create at least 125,000 jobs per month just to keep up with the nation's expanding job force. That translates into 11 million jobs just to get back to the 5% unemployment rate from before the recession."

http://money.cnn.com/2010/02/05/news/economy/jobs_january/index.htm?postversion=2010020514

HELLO??? The government is telling us their previous estimates were off by 1.4 million, the net job number for the month is a negative number, and the unemployment rate went from 10% to 9.7%. We are going to concentrate on the meaningless -0.3% and celebrate???

it is impossible to prove that money spent "saved" jobs. but anyone who spends a couple of seconds thinking about it would realize that the money given to the states last year prevented a fair amount of carnage (including in our own fair state, we received disproportionately generous aid). i suspect the administration in its current jobs initiative would like to expand it to send the states some more money, preventing wide-spread layoffs in the public sector (education, police and fire departments). cutting in those areas can make the voters restless. but they don't want to admit that they are simply footing the bill for those salaries. they want to create the sense that progress is occurring, rather than just maintenance. so they cheer these silly numbers.

Meltzer is right in his analysis on the jobs argument. What essentially occured was a huge transfer of State Debt to the Federal level. Politicians are if nothing very good at obfuscating the discussion.

be careful of what you wish for. deflation is a bitch.

the average american can't understand the discussion, or doesn't want to hear anything beyond how is this good for my personal bottom line today. i don't like politicians myself, but i can't imagine trying to actually get something done in this country, obfuscation or not.

i'm getting very tired of people pointing fingers and saying this or that doesn't work, hasn't worked, can't work. who is offering any real solutions? i see some real suggestions on how to control the financial industry, but that horse is already out of the barn, and yes it would be nice to prevent abuse from recurring, we have some huge macroeconomic fish to fry here.

guess what, the fed probably won't time everything perfectly. the propping of the real estate market will likely unravel. but we'll never know what would have happened if measures hadn't been taken. that's why it's so easy to attack whatever is done. it's simple, because no matter what is done this is a disaster, and will continue to be one. simply put, for 10 or so years some overgrown children were allowed to play in the sandbox unsupervised. and now we have to live with it, as best we can. and the best will likely be quite unpleasant. we need to grow up and realize that there are consequences to prior actions. nobody could do a decent job in this environment with this political system and these circumstances. we need to quit the blame game and try to think of some possible solutions.

the average american can't understand the discussion

This essentially calls the American people a bunch of dolts. Obama himself used this very argument when he say he takes responsibility for health care not passing because , "he didn't explain it more clearly".

no, not at all. the average american doesn't understand, and shouldn't have to understand, the intricacies of economic theory. or the minutiae involved in health care policies, particularly those that are being constantly misrepresented (death panels, anyone?). they do, however, recognize when things are broken.

keep being disingenuous.

Ignoring the catty end, I'll respond to the first paragraph. The Average American did understand. They knew that increasing coverage of Americans meant an increase in debt and taxes. They also saw a lack of steps to cut costs, such as higher deductibles and tort reform.

" it's simple, because no matter what is done this is a disaster, and will continue to be one."

Not unless we do the one thing that WILL work: ABOLISH THE FED.

Stimulus was a failure.

http://johnbtaylorsblog.blogspot.com/2010/02/one-year-later-and-more-evidence-that.html
Tuesday, February 2, 2010
One Year Later and More Evidence that the Stimulus is Not Working
Friday’s data release from the Bureau of Economic Analysis (BEA) shows that real GDP growth rebounded to 5.7 percent in the fourth quarter from 2.2 percent in the third quarter of last year. The rebound was sharper when compared with the -6.4 percent decline in the first quarter and -0.7 percent decline in the second quarter.

How much of the rebound was due to the “stimulus package" passed in February of last year? I have shown in a previous post that the increased transfer payments to individuals and temporary tax rebates had virtually no impact in jump-starting consumption. But what about the increase in government purchases in the stimulus package? A look at the details in the GDP report of Friday shows that changes in government purchases have had virtually no effect. The turn-around in growth has been mainly due to private investment. Four simple graphs illustrate this.

Recall that GDP is the sum of Consumption plus Investment plus Net Exports plus Government Purchases. Thus the growth of GDP can be decomposed into contributions due to each of these four components. Table 2 of the BEA data release reports these contributions, and I summarize them in the four charts. In each chart the blue line shows the growth rate of real GDP from the start of the recession. You can clearly see the decline in growth in the recession and then the start of the rebound. In the first chart the red line shows the contribution from investment. It explains most of the recession and the rebound.

In other words during the entire first year of the stimulus package, the contribution of government purchases to change in real GDP growth is virtually nil. There is no evidence here that the stimulus has worked either to raise GDP growth or to create jobs.