August 01, 2003

Still More Bad Unemployment News

Bad unemployment news for July. *Sigh*:

Employment Report: The Labor Department's report Friday painted a picture of a job market that remains stubbornly sluggish and continues to frustrate people looking for work. The economy lost 44,000 jobs in July.... the exodus of 470,000 discouraged people [from the labor force] who abandoned job searches because they believed no jobs were available.... In July, there were 2 million out-of-work people [who had been] looking for a job for 27 weeks or longer....

Posted by DeLong at August 1, 2003 06:53 AM | TrackBack

Comments

Not to torture a dead horse, but:

Factory jobs -71,000

Temporary jobs +42,000

This pattern has persisted for some time. Temp hiring is usually taken as a leading indicator of permanent job growth, but recently it looks like a way of lower costs during a period of steady job loss.

The headline factory ISM index, on the other hand, finally cracked above 50 in July, to 51.8. The headline ISM index did a good job in signaling that GDP growth in Q2 was closer to trend than most estimates suggested. Today's results point to further acceleration in Q3. No telling whether that acceleration will be enough to overcome the pace of productivity growth (which looks near 4% in Q2) and allow job growth.

Posted by: K Harris on August 1, 2003 07:33 AM

So is Krugman happy or sad today? So many have opined as to his mental state vis a vis the economy...I would think he's actually really confused. As are we all.

How much do those temp jobs pay versus those factory jobs? Just curious, as that will ultimately affect consumption.

Heard a good quote last night on Bloomberg...guy was optimistic to hold stocks through the end of this year, but then when someone asked him about 2004, he said "Look, I just don't know how long the American consumer can continue to make $100 but spend $120."

Chuy

Posted by: Chuy on August 1, 2003 08:44 AM

Why is the unemployment rate the important number? It seems a poor indicator when it doesn't count those who have just given up looking because they got discouraged by a dismal job market. Nearly a half-million gave up and the number got better??!!

Wouldn't it make more sense to pay attention to the size of the employed labor force?

Posted by: Dennis Doubleday on August 1, 2003 08:55 AM

Dennis,

There is every reason to ignore the jobless rate in the short term, except that the press likes to use it as a headline, and consumer confidence (for what it's worth) seems to respond pretty directly to changes in the jobless rate. If you try to put the jobless rate to use in the short term, you find that Okun's Law (which notes the link between changes in the jobless rate and deviation of GDP from trend), for instance, pretty much falls apart. In June, the jobless rate rose even as households reported a 251,000 rise in employment. In July, the rate fell even as households reported a 260,000 decline in employment. Just backwards from what ought to happen. The measurement of the size of the workforce is just too jumpy to allow the jobless rate to be of much use in short-term economic assessments.

Posted by: K Harris on August 1, 2003 09:20 AM

http://www.nytimes.com/2003/08/01/opinion/01KRUG.html

State of Decline
By PAUL KRUGMAN

From smog to silicon, from the sexual revolution to the tax revolt, the future has usually arrived in California first. Now the Golden State is degenerating into a banana republic. Can the nation be far behind? ...

Posted by: jd on August 1, 2003 10:18 AM

The employment report was simply awful! With 44,000 jobs lost in July, there were 72,000 jobs lost in June. The recession ended 20 months ago and we are still shedding jobs. This is not "lagging indicator" but indicative of a significant labor market problem. Where are the 3 million jobs that were supposed to be saved or created, but were instead lost after the 2001 tax cut?

We are shedding jobs, but productivity is growing fast enough that a more rapidly growing corporate sector shows little or no need for job creation. Actually corporations are shedding jobs, with manufacturing leading the way.

Posted by: anne on August 1, 2003 10:25 AM

http://www.wws.princeton.edu/~pkrugman/hyperbol.html

ECONOMIC HYPERBOLE (8/1/03)
Paul Krugman

Is there a memo I didn't get? Over the last couple of weeks there have been breathless headlines all over the news. Durable goods orders, said several papers, "soared" in June; GDP, according to today's USA Today, "rocketed" in the second quarter.

Here's a picture of those "soaring" durable goods orders: ----

Posted by: anne on August 1, 2003 10:30 AM

Productivity is growing at 4%, though we keep thinking it will slow. With 4% productivity growth and 2.5% GDP growth there is no need for corporations to create jobs. Unless productivity growth slows, GDP growth of 3.5% will not result in job creation. Wage increases are hard to come by, private savings is stratlingly low, interest rates have risen from 3.1 to 4.4 on the 10 year treasury. Where is the demand coming from to get us to 4.5% GDP growth. The tax cut? We will see.

Posted by: anne on August 1, 2003 10:46 AM

To put a positive spin on things, I believe the unemployment survey is done mid month. That means that the period where initial weekly unemployment claims fell below 400,000 is not covered in this month's survey. For what it's worth, the number of job openings I come across when I do searches on Monster has been ticking up recently. As to 4% productivity growth, that growth rate does not sound sustainable to me, perhaps it is a sign of a stretched work force. Not trying to be Polyannaish, but some of the recent economic data has been positive and I figure it's worth considering the bright side of them.

Posted by: Joe Blog on August 1, 2003 11:16 AM

Always worth considering a bright side. But, I see much much gray.

http://epinet.org/content.cfm/webfeatures_econindicators_jobspict

June’s job losses were revised down from 30,000 to 72,000, and outside of a few sectors, employers continued to cut jobs in July.

Since the recession began in March 2001, payrolls are down by 2.7 million overall and 3.2 million in the private sector. Since the business cycle expansion began in November 2001, payrolls have contracted by one million (1.2 million in the private sector), making this the weakest recovery in terms of employment since the BLS began tracking monthly data in 1939....

Posted by: anne on August 1, 2003 11:43 AM

K Harris writes:
"Factory jobs -71,000
Temporary jobs +42,000

This pattern has persisted for some time. Temp hiring is usually taken as a leading indicator of permanent job growth, but recently it looks like a way of lower costs during a period of steady job loss. "

It seems to me it might also be a way of bridging the gap until offshore operations come up to speed and the kinks are worked out.

Posted by: Jon H on August 1, 2003 11:52 AM

I call your Polyanna and raise you a Dr. Pangloss. I noticed that my girlfriend is getting more phone interviews than she used to. I don't think she's produced a printed resume in 8 years of engineering and she's completely mobile with her cell phone. Could be a lot worse.

Of course, before this year she never spent more than a week looking for a job...

K Harris-

My pet belief is that Americans, in their gut, only really understand the unemployment rate and high inflation. Rational ignorance precludes searching through CEA reports or reading the entirety of Greenspan's comments. It boils down to: "Can I get a job?" and "Is the money good?"

I find this to be a very good reason to NOT ignore unemployment, even month to month.

Posted by: Saam Barrager on August 1, 2003 12:04 PM

What do the unemployed think?

http://jobforjohn.com/

Posted by: bakho on August 1, 2003 03:09 PM

Are there statistics on the reasons why so many people 'drop out of the job market', by the definition of the BLS? Is it a top-down thing -- expiration of unemployment benefits, for instance -- or do people just say 'sod it' and stop applying for jobs?

Posted by: nick sweeney on August 1, 2003 07:30 PM

If the recession ended 20 months ago, then this is the new reality. Those jobs are never coming back. The joblessness is what none dare call productivity.
Is there any way for the unemployed who must walk off the end of the accountability plank to remain acknowledged? To be truly measured as among the unemployed? Even as a personal action; what happens to a person who applies for unemployment insurance compensation after using and expending the full 26+13 weeks? Is an ineligible account an account? Wouldn't it be worth it to each person in those dire straights to be known? Perhaps to influence realistic legislation? To stimulate thought on further extensions?
To not measure these people will cause an unnatural unemployed decrease 9 months after every spike up, unless the sh*t really hits the fan. Bad data.

Posted by: Richard W. Crews on August 1, 2003 10:59 PM
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