Unemployment in the eurozone breached the 10 per cent mark for the first time since the introduction of the single currency over a decade ago.
As of November, there were 15.7m jobless in the bloc, the highest since the data series was first compiled in 1994.
Seeing the US unemployment numbers came in worse than expected (85K) and that included seasonally adjusted hiring, and is beginning to account for census workers, one can see just how far off the labor market is here.
With the EU facing high unemployment, the US with the same factors, the nation – if not multiple economies – are simply sitting on the edge.
Unemployment hit and blew through the 10% barrier; the U.S. is now “officially” at 10.2%. If one uses the broadest government indicator of unemployment the number comes in at roughly 17.8% but if one removes the government birth/death numbers (and other assumptions) unemployment actually is reported around 22.1%.
The reason for the roughly jump from 9.8% to 10.2% is being pinned non-farm payroll decline of roughly 190,000 individuals. The forecasted loss was 175,000.
In December of last year I stated my belief that unemployment would be at 10% by the end of 2009. That said, the fact that the U.S. hit 10.2% in October – not November or December – is a bit of a surprise for me.
With the dollar decline/gold rise, Capmark/CIT bankruptcies, and earnings events now in recent memory, I can sit down and write why I believe the U.S. is facing potential hard economic times in 2010. Expect that post this weekend…
UN’s ElBaradei say Inspectors found nothing to worry about in Iran
I have serious doubts about this comment:
The International Atomic Energy Agency (IAEA) chief says that UN inspectors have found “nothing to be worried about” in Iran’s latest nuclear facility.
There are three reasons as to why I hold a bit of skepticism:
ElBaradei has been shown to alter information that would favor Iran. It is very clear that he can no longer be considered a neutral party.
Because the UN states this location is not a concern does not clear other Iranian facilities
I truly want to know how ElBaradei has the audacity to comment to the world that Iran is not pursuing nuclear weapons when his own organization possesses evidence Iranian scientists are moving in that direction.
There is no clear status indicator for the Iranian Nuclear program but it does not take an individual with a Ph D to see what the true intent of Iran is, does it?
For a quick moment gold touched $1,101.90 per ounce. What does this mean? How does this impact the world? What is the driving force for such a movement? I’ll give my thoughts this weekend.
Because unemployment insurance records relate only to persons who have applied for such benefits, and because it is impractical to actually count every unemployed person each month, the Government conducts a monthly sample survey called the Current Population Survey (CPS) to measure the extent of unemployment in the country. The CPS has been conducted in the United States every month since 1940 when it began as a Work Projects Administration program. It has been expanded and modified several times since then.
Note the “ it is impractical to actually count every unemployed person each month.” Why? While it is impossible to count each person, this is important due to the fact that the government sample pool does not include people who are no longer eligible for unemployment benefits.
When the unemployment rate drops when companies are NOT hiring it is due to situations like this:
Another day, another 7,000 people run out of unemployment benefits.
As the Senate debates whether to extend unemployment benefits, more than 200,000 jobless Americans are set to see their checks stop in October.
Remember this if the reported unemployment numbers seem ‘off’ to you in the next several months.
Because unemployment insurance records relate only to persons who have applied for such benefits, and because it is impractical to actually count every unemployed person each month, the Government conducts a monthly sample survey called the Current Population Survey (CPS) to measure the extent of unemployment in the country. The CPS has been conducted in the United States every month since 1940 when it began as a Work Projects Administration program. It has been expanded and modified several times since then.
Note the “ it is impractical to actually count every unemployed person each month.”
Why?
While it is impossible to count each person, this is important due to the fact that the government sample pool does not include people who are no longer eligible for unemployment benefits.
More Americans than forecast filed claims for unemployment benefits last week, a reminder that the labor market will be slow to recover.
Initial jobless applications rose by 11,000 to 531,000 in the week ended Oct. 17, from a revised 520,000 the prior week that were the fewest in nine months, the Labor Department said today in Washington. The number of people collecting benefits fell, while those receiving extended benefits increased.
Economists project the unemployment rate will reach 10 percent by the first quarter of 2010, underscoring the risk to consumer spending, the biggest part of the economy. Companies cutting costs remain reluctant to hire, even as they’ve eased dismissals from levels seen earlier this year.
Things to remember:
1) There is the “initial” number for jobless claims and the “continuing”
2) Continuing may show drops as the government stops counting people after benefits run out
3) I believe we will hit 10% on the reported unemployment this year, unless the records are complied to show the drop in benefits
Employers throttled back on layoffs in May and cut the fewest jobs in any month since the financial crisis erupted last fall — raising the brightest hope yet that an economic recovery will take hold later this year.
But with companies still reluctant to hire, the nation’s jobless rate rose to a quarter-century high of 9.4 percent, and it likely will keep rising into 2010, possibly within striking distance of its post-World War II peak of 10.8 percent.
“Less bad, yes,” Ian Shepherdson, chief U.S. economist at High Frequency Economics, said, summarizing the economy. “Good, no.”
The press is still in the “Less bad” mood, but this is still significant as the nation is now at 9.4% (reported). More over, people are starting to revise their end estimates. Previously economists were saying this wouldn’t go beyond 10%, now it is expected that unemployment may hit almost 11%.
Two large issues are on the horizon – taxes and energy cost.
1) The massive amounts of money spent for a stimulus that hasn’t worked will be coming back to haunt us soon. As a result, the government will need to find a way to raise money in order to continue paying benefits. There is only one way this will happen: raise taxes. If they raise business taxes, that will impact earnings. In turn, companies will look for cost savings in order to boost their profits. Where do you think that will start?
Employees.
As such, more layoffs would come back into play. While, possible, not as bad as 600K per month layoffs none the less.
2) Energy.
Oil/Energy is once again getting out of control for reasons NOT based on demand. If energy continues to move toward $90, earnings will once again be impacted. Again, here we go. Companies will slow spending, construction will diminish, the consumer will cut back which means retail will hurt… and there we go, layoffs will start once again as companies attempt to rightsize for the market conditions.
This is a bad cycle we are in and, I fear, it is going to be a prolonged cycle.
The now weekly continued unemployment claims data is out and we are now up to 6.79M – a new record. Last week we were at 6.66 Million.
In the week ending May 23, the advance figure for seasonally adjusted initial claims was 623,000, a decrease of 13,000 from the previous week’s revised figure of 636,000. The 4-week moving average was 626,750, a decrease of 3,000 from the previous week’s revised average of 629,750.
…
The advance number for seasonally adjusted insured unemployment during the week ending May 16 was 6,788,000, an increase of 110,000 from the preceding week’s revised level of 6,678,000. The 4-week moving average was 6,608,250, an increase of 123,750 from the preceding week’s revised average of 6,484,500.
Two quick points:
1) The initial claims are down from 636K to 623K. What we are now have is a situation where people will try to make good news out of bad. No matter how you spin it, this is still BAD news.
2) The Continued Unemployment Claims record of 6.79 Million is a record based on volume, not percentage. The percentage continued unemployment claims records was 5.4% in the 1970’s, right now we are at 5.1%
Not trying to be a fear monger here, I’m really trying to keep the positive of life in mind, but I do have to point out that Continued Unemployment Claims have hit a record high.
In the week ending May 16, the advance figure for seasonally adjusted initial claims was 631,000, a decrease of 12,000 from the previous week’s revised figure of 643,000. The 4-week moving average was 628,500, a decrease of 3,500 from the previous week’s revised average of 632,000.
The advance seasonally adjusted insured unemployment rate was 5.0 percent for the week ending May 9, an increase of 0.1 percentage point from the prior week’s unrevised rate of 4.9 percent.
The advance number for seasonally adjusted insured unemployme;nt during the week ending May 9 was 6,662,000, an increase of 75,000 from the preceding week’s revised level of 6,587,000. The 4-week moving average was 6,480,500, an increase of 131,000 from the preceding week’s revised average of 6,349,500.
The fiscal year-to-date average for seasonally adjusted insured unemployment for all programs is 5.071 million.
One must keep in mind that unemployment is a lagging indicator, but an initial claim of 631,000 is still significant. The record high of 6.66 million shows just how bad things have been in terms of employment in the U.S. during this recession.
Remember, as the automotive industry continues to “right size” one can reasonably expect the employment number to be negatively impacted.
In the week ending May 9, the advance figure for seasonally adjusted initial claims was 637,000, an increase of 32,000 from the previous week’s revised figure of 605,000. The 4-week moving average was 630,500, an increase of 6,000 from the previous week’s revised average of 624,500.
The advance number for seasonally adjusted insured unemployment during the week ending May 2 was 6,560,000, an increase of 202,000 from the preceding week’s revised level of 6,358,000. The 4-week moving average was 6,337,250, an increase of 128,750 from the preceding week’s revised average of 6,208,500.
A few things to note regarding this data:
The initial claims number, while high, is roughly 30K less than the peak number (for this recession) that was established a few weeks ago
The continued claims of 6.56M is a new record
If GM goes into bankruptcy, it is reasonable to expect that initial claims will remain high even if other areas of the job market improve slightly
If initial claims remain high, there will be a cascade effect to other areas of the economy – namely retail.
Bottom line: The “green shoots” of hope seen by the Federal Reserve are long since gone. While the economy may be in a bottoming process, we are far from being in a good position.
The Federal Reserve and Timothy Geithner have said, on a number of occasions, that the economy is starting to show signs of a recovery.
Remember the “Green Shoots” Bernanke observed? Remember how everyone was curious as to why THEY were not seeing said green shoots? I’m guessing you do, and I am guessing you are still not seeing them.
Speaking on C-SPAN, Christina Romer, chairwoman of the White House Council of Economic Advisers, said that she expected theG.D.P. to begin growing in the fourth quarter of this year. Ben S. Bernanke, the Federal Reserve chairman, made a similar prediction last week.
But Ms. Romer also said that she expected unemployment to rise even after the economy turns, saying that the G.D.P. has to grow at a rate of about 2.5 percent before unemployment will fall. Before that happens, she said, it is “unfortunately pretty realistic” that the unemployment rate could reach 9.5 percent. A reasonable estimate for the G.D.P.’s growth rate in 2010, she said, is three percent.
9.5% on the unemployment in 2009? To me that seems less than realistic.
I’ve said a number of times that I expect to hit 10% by the end of this year. If the nation sees a loss of another 1.1M people by 12/31, the U.S. Unemployment rate will end up at roughly 10.2%
Here is the big question, though: Will the government switch people from “unemployed” to “underemployed” (those who have given up hope and are no longer looking) in order to keep the reported unemployment rate under 10%? My guess is yes.
If one looks past the discussion of economic news and listens to the other information, Ms. Romer is giving the public a look at the next major target the administration has in mind: Health care
“When you actually look at that budget going out in time, the thing that is going to bankrupt us is government expenditures on health care,” she said.
Insurers of all kinds, take note and start to duck and cover. The heat will be rising for you very shortly.