November's unemployment is down, but 15 million are still looking for work
This article first appeared in the St. Louis Beacon, Dec. 4, 2009 - In the grand scheme of the nation's two-year recession, November's 10 percent unemployment rate was at least better than October's 10.2 percent unemployment rate.
But as veteran economist Stuart Greenbaum of Washington University points out, such a modest drop is far from rosy news at this level of unemployment.
Economic facts to ponder
* November's "underemployment" rate also fell -- to 17.2 percent from 17.5 percent in October, according to the Department of Labor. The number of underemployed workers -- 11.5 million --includes workers in part-time jobs who are seeking full-time positions and laid-off workers who have given up.
* People are taking longer to find work: The average length of unemployment rose to 28 weeks in November.
* 5.9 million unemployed workers have been jobless for at least six months.
To read the entire unemployment report from the Labor Department, click here.
"While the drop from 10.2 to 10.0 has a positive ring to it, it doesn't change the basic fact that we have a large fraction of our population who are economically displaced and without the wherewithal to meet their daily needs and to protect their dignity and self-respect,'' said Greenbaum, a former dean of the university's Olin Business School and now emeritus professor of managerial leadership.
Still, the numbers brought an unexpected bit of relief, in light of Wall Street's predictions that November's job losses would reach 130,000. Instead, the U.S. Labor Department announced Friday that November's job cuts totaled 11,000 -- a stark decline from the 111,000 lost in October. And the 0.2 percent drop in unemployment was at least a movement downward from what had been the nation's highest unemployment rate in 26 years.
To put it into perspective: The U.S. economy has lost 7.2 million jobs since December 2007, which is when economists say the recession started. While November's job loss was the smallest in 23 straight months, it is tempered by the fact that 15.4 million unemployed workers are currently seeking employment.
Like most economists, Greenbaum is waiting to see what the coming months will bring before pronouncing the November jobless numbers the harbinger of an economic spring.
"If it continues to go down slowly, from 10.0 to say 9.8, and then 9.6, what it would confirm is an earlier prediction that has been widely made that we're coming out of a recession, but all too slowly,'' he said. "That's the picture it seems to paint -- that we're probably coming out of this recession but not with the bounce and vigor that we've seen in earlier recessions. This seems to be more of a protracted and gradual recovery, and it's continuing to be painful."
Jobs -- or the lack of them -- took center-stage in Washington on Thursday as President Barack Obama held a summit on job creation with more than 100 business leaders, academics and union officials. And in a speech scheduled for Tuesday, Obama will ask Congress to support his new jobs agenda.
Greenbaum said the focus on job creation recognizes not only the overarching importance of the employment situation but also its "enormous destabilizing potential."
"It's the ultimate measure of the cost of this horrific financial crisis that we've gone through and that many people seem to think we've come out of,'' he said. "But the residue -- the legacy of it -- is this unemployment problem which there is no way to understate."
Greenbaum expects Congress to focus on promoting growth in small business.
"Historically, jobs have been created more numerously in small businesses rather than large,'' he said. "Second, I think there is a lot of negative feeling about large corporations and banks right now. So there are both political and economic arguments that would lead you to believe that the initiative will be taken in the area of small business.''
Greenbaum said the proposals could take the form of both tax concessions and incentives, such as tax credits for new hires. He also predicts an increase in educational benefits to spur retraining of the unemployed and, perhaps, a boost in military pay to spur more volunteers in light of Obama's planned U.S. troop buildup in Afghanistan.
On the homefront
Here are some economic indicators from the St.Louis Federal Reserve's Eighth District, as noted in the Beige Bookreleased on Wednesday. (The Beige Book serves as a "sounding board" fora wide range of economic sectors and is based more on perceptions thanhard numbers.) The Eighth District includes eastern Missouri, southernIllinois, Arkansas and parts of Mississippi, Kentucky, Indiana andTennessee:
* According to the report, economic activity in thedistrict "remained weak but showed signs of improvement in some areas.Manufacturing activity continued to decline while services activitybegan to expand in many areas.''
* Retail sales in the Eighth District were down, onaverage, when compared to the same time period last year. About 52percent of the retailers surveyed saw decreases in sales in October andearly November; 35 percent saw increases, and 13 percent saw no change.
* About 39 percent of the car dealers surveyedreported increases in sales over last year, while 39 percent reporteddecreases and 22 percent saw no change. About 48 percent expected salesfor the rest of the year to increase over 2008 levels, but 39 percentexpected decreases.
* Home sales and residential construction continuedto fall throughout the district. Compared with the same period in 2008,home sales were down 6 percent in St. Louis. Permits for single-familyhomes fell 20 percent in St. Louis.
* A survey of senior loan officers at large banksin the district indicated a decline in lending activity in the threemonths ending in October.
* Demand for residential mortgage loans ranged from"moderately stronger" to "moderately weaker," with credit standards"unchanging."
* Demand for commercial and industrial loans was either "unchanged" or "moderately weaker."
* Credit standards for commercial real estate loans tightened, while demand was "moderately weaker."
To read the entire Fed report, click here.