We’re still losing jobs, but unemployment declined?
Posted by nithi.vivatrat on December 4, 2009
Economists and other talking heads were almost giddy today about November’s unexpected dip in the unemployment rate to 10%. It was not unusual to see quotes like these being tossed around:
- WSJ: “…a sign the labor market is finally healing as the economy recovers…”
- Chris Rupkey, chief financial economist at Bank of Tokyo/Mistubishi UFJ in New York, quoted by CNBC: “We’re almost back to normal… The economy is lifting at a much greater rate than expected.”
- Tom Sowanick, chief investment officer at the OmniVest Group in Princeton, New Jersey, also quoted by CNBC: “These numbers are almost too good to be true.”
I think it is.
For anyone who has been paying attention the past few months, let’s not forget that we’ve lost a lot of jobs (I count 360,000) just this year. Here’s a handy chart of 2009 monthly non-farm employment, courtesy of Wolfram-Alpha:
Monthly non-farm seasonally-adjusted employment in 2009 by Wolfram-Alpha
So that represents a lot of people out of work — things are not “back to normal” or “too good to be true” for them.
But the question I was asking myself was: how could we lose 11,000 jobs in November but unemployment improve that month?
Fortunately, the good folks at CalculatedRisk had the answer for that exact question. Awesomely detailed answer.
I’m not going to copy their entire answer (and you should read the whole thing), so click through to the answer via the above link. I did, however, want to highlight this ominous concluding sentence:
If the economy adds about 2 million payroll jobs next year, we’d expect the unemployment rate to still be at about 10% at the end of the year.
Yikes. Don’t forget to read the comments at CalculatedRisk for additional commentary.
