All Blog Posts from Econwatch

This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.

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I love this chart (see here) from this morning's Wall Street Journal article. It's a quick comparison between today and 1983, which was the last time the unemployment rate was 10.2% (and the last time I was considered a formidable power forward on the basketball court).

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This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.

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10.2% — that's the most important number from the October Employment Report. For the first time since 1983, the over 1 out of every 10 American is out of work. How's that for starting your Friday with some sobering news?


The 190,000 jobs lost in October means that since the start of the recession in December, 2007, 8.2 million people have lost their jobs and the unemployment rate has grown by 5.3%. The numbers in and of themselves would by bad enough, but they don't accurately reflect just how hard it is to find a job. For that, you need to drill down to the U-6 measure of employment, or as my friend the economist likes to say, "the true pain threshold." U-6 starts with the total number of unemployed and adds part time employees and those who are "marginally attached," which means all of those folks people who took crappy jobs that are beneath their skill levels. The U-6 was 17.5% last month.

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Climbing the career ladder in today's economy is difficult enough. But young people, from recent college graduates and MBAs to high school dropouts, are finding it harder than ever to even get onto the first rung.

Peter Coy writes in Business Week of "The Lost Generation" — 16- to 24-year-olds for whom unemployment in the U.S. is now more than 18%, up from 13% a year ago. Including fulltime students, less than half of people age 16-24 had jobs in September, the lowest rate since post-WWII,

College graduates and advanced degree holders are suffering as well. Dan Schmitz, 25, a University of Wisconsin graduate with a bachelor's degree in English, told Business Week, "Every morning I wake up thinking today's going to be the day I get a job. I've not had a job for months, and it's getting really frustrating."

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By Nancy F. Smith of CBS MoneyWatch.com

Among the most pervasive and long-lasting effects of the Lehman Brothers failure — and the economic collapse it exemplified — has been the pain felt by the American labor force. When the firm failed on September 15, 2008, and the credit markets slammed shut, a wave of sheer panic swept across businesses big and small as they scrambled to shore up lines of credit and gird for what most believed would be a significant economic downturn. The result: What had been a relatively predictable and gradual rise in unemployment since the beginning of the recession in December 2007 became a hemorrhage as the unemployment rate jumped from 6.2 percent that September to 9.7 percent a year later. Over the past year, about 6 million Americans have lost their jobs. Another 9 million find themselves in the category of involuntary part-time workers, a jump of 3.7 million in just over 12 months. The economy must create 125,000 jobs a month just to stay even with population growth, according to the U.S. Bureau of Labor Statistics (BLS), and clearly, it’s not.



But it’s not the sheer numbers of jobs shed that will be a lasting legacy of the death of Lehman Brothers. Already, job loss is slowing, and the recession may have ended. Rather it’s the way those numbers will shake out to reshape the contours of the labor force. Here, the winners and losers in the post-Lehman world.

Women Will Bring Home the Bacon

One key factor shaping the new reality facing America’s workforce is the relative ascendance of women. Since May 2007, the number of jobs held by men aged 25 to 64 has fallen by 4.7 percent a year; for women in the same age group, the loss is 1.7 percent. Women aged 55 to 64 actually have gained jobs, while every other group in the prime working years lost jobs. The gap in jobless rates between men and women has been increasing. According to BLS data, the August unemployment rate for men was more than 10 percent; for women, 7.6 percent. That 2.4 percent gap is an all-time high.

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This post by Richard Conniff originally appeared on CBS MoneyWatch.com.

There are plenty of good phrases to sum up the American consumer spirit of the past few decades — such as "Were you completely insane?" But what sticks in my mind is a bumper sticker I once saw displayed on a late-model Hummer hauling a trailer loaded with matching sparkle-painted $15,000 jet skis: "The one who dies with the most toys wins." I couldn't figure out why dying was key to the deal. But now I get it: There was no way that bozo could pay for so much crap in one lifetime — and his kids can't handle the bills either.

American consumers have awakened, bolt upright, with belated sticker shock ("I bought what!? I spent how much!?"), from a shopping spree that's arguably lasted since the early 1970s. That's when spending started to outpace economic growth, according to the federal Bureau of Economic Analysis. Credit cards proliferated. Easy credit based on rising real-estate and stock prices fed the delusion that we could go on consuming more than we produce forever. And it just got giddier after 1997, when consumer spending bubbled up from 67 percent to more than 70 percent of gross domestic product (versus 55 to 65 percent in more sober economies). "People are using their homes almost as a third income," an executive for a major lender told me in 2005, and she thought that was just fine.

Then real estate — and every other market — went bust and American household wealth dropped $14 trillion overnight. One year after the collapse of Lehman Bros., the investment bank that exemplified Wall Street's infatuation with borrowing, we're all learning to pay our accumulated bills with what we can earn from our first and second incomes, both of which seem likely to vanish at any moment. (Full disclosure: I'm a journalist and my wife is a real-estate agent. At least we didn't invest in buggy whips.) When consumer confidence came creeping back in August, the stock market fluttered upward. But the rebound took confidence only to midrecession levels. "Instead of being suicidal, it's just depressed," says Conference Board economist Ken Goldstein.

So the big question now is whether the American consumer, regarded as key to any recovery, is only temporarily missing in action. Or are we seeing a permanent shift in attitudes toward what we used to call "retail therapy"? Making it permanent could be a good thing for many badly strapped households — financially first of all, but also culturally, as people rediscover life beyond the shopping mall. But in an economy so dependent on consumer spending, that would be bad news for the recovery.

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The Labor Department’s Weekly Jobless Claims show that new job loss is tapering off…that’s what I’ll report for my radio brief later today. Still, while the employment trend is improving, it’s worth noting that a slew of jobs have vanished and will not return any time soon.<

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A Labor Department report out this morning found that employees cut 247,000 jobs in July. While this was relatively good news – it represented the fewest lost jobs in a year – it still meant nearly 250,000 jobs lost for the month. Yet the unemployment rate actually fell, from 9.5 to 9.4 percent.

Which may leave one asking: Why did the unemployment rate fall even as more jobs were lost?

The short answer is that the labor force shrunk. David Wyss, chief economist for Standard & Poor's, suggested that students who had been looking for summer jobs essentially gave up, moving them out of the category of unemployed. (They were no longer looking for work, after all.)

"If they haven't found something by the Fourth of July, they spend the rest of the summer at the beach," he said.

The Wall Street Journal's Sudeep Reddy offered the longer answer to this question in a blog post:

The payroll figures — jobs lost — comes from a Labor Department survey of employers. The unemployment rate is measured through a separate survey of households — asking people whether they have a job, whether they want a job and whether they searched for a job (among other things). If people drop out of the labor force, the unemployment rate can decline because fewer people would be considered jobless.

The July household survey showed the civilian labor force shrinking by 422,000 and employment falling 155,000. That translated into 267,000 fewer people listed as unemployed. The labor-force participation rate fell 0.2 percentage point in July to 65.5%

As Reddy notes, the decline in the unemployment rate doesn't mean unemployment won't hit 10 percent – in part because signs of improvement in the economy may result in more people entering the workforce, expanding its size overall and effectively pushing the unemployment rate up.

Scene: Corporate elevator

Employee #1: "Monday morning-ugh!"

Employee #2: "I'm so happy to still have my job that I can't even complain about Mondays!"

As economists focus on signs of economic recovery and investors rejoice in stock market gains, there's a nagging sense among many that until we start to hate Mondays again, this recession will not end.

The unemployment statistics are simply staggering. You heard the headline that the June unemployment rate was 9.5%, the highest since 1982, when the rate peaked at 10.8%. But inside that report, were some disturbing facts and figures.

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American workers probably shouldn't bank on a significant pay raise next year, according to two private surveys released Tuesday.

Consultancies Watson Wyatt Worldwide Inc. and Hay Group found that median pay raises for 2009 fell between 2 percent and 3 percent, with early predictions for 2010 not much better, according to a Wall Street Journal report Tuesday.

Salaries in 2010 are expected to climb a little more than 3 percent – the smallest forecasted increase in the 29 years Hay Group has tracked pay data. Watson Wyatt said its prediction is among the lowest ever.

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Don't get so excited about an end to the U.S. recession resulting in the restoration of lost jobs, the Wall Street Journal warned Monday.

A recent survey suggests that 52 percent of companies that cut jobs plan to employ fewer people in the next three-to-five years than they did prior to the recession's start, the Journal reports.

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