Employment Situation Oct 2009

6 11 2009

The employment situation continues to demonstrate the frailty of the current economic climate.  In Sept the unemployment rate was 9.8%, Friday it was announced that Oct witnessed this number increase to 10.2%.  “This is the highest rate since April 1983.”  We are also at the second highest point (and growing) in the history of tracking the data – 1948.

(Here is the link to the commissioner’s report to Congress and the original report)

Employment Situation Oct 2009

If we look at a visual of the informtion, a number of things jump out at least to me:

1.  The Good, it looks like (at least to me) the higher the number, or the swifter the increase, the quicker the the unemployment rate drops.  There appears to be a natural slope (green line – A) to the decline in the the unemployment rate after a spike, which then is followed by a less gradual slope that marks a return to a healthy market (red line – B).  In roughly 1975 and again in 1983 we saw two spikes which then followed the green line’s slope – except in the case of 1983, we actually saw that trend bear out over the longer term, yet moved faster during the initial recovery period (reb box).

2. The Bad – if this follows the trend pattern of 1983 we may be looking at another 7-8 year recovery process to return the unemployment rate to around 6% which roughly appears to be natural healthy level.

3. The Ugly – We have yet to see the peak of this trend.  And even if this does turn around in the next month or two, we are so bad a shape across so many other sectors it may take far longer for us to return to a 6% unemployment rate.  If we continue to see credit tighten up at the rate it is going, we will see continued pressure on unemployment.

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