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Unemployment breaks the 10% barrier.
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Due to the psychological importance of the unemployment rate breaking the 10% barrier, I am delaying part 2 of the series on Marxism for a later date.
As always on the first Thursday of a month, the Bureau of Labor Statistics published its initial numbers on the unemployment rate for the previous month. Since July the rate of increase had dropped from the .4 to .6 percent a month to a more acceptable .1 or .2, however, that decline vanished as unemployment spiked .4 percent from Septembers 9.8% and finished October at 10.2% after 190,000 jobs were lost during the month.
As the official report reads:
The unemployment rate rose from 9.8 to 10.2 percent in October, and nonfarm payroll employment continued to decline (-190,000), the U.S. Bureau of Labor Statistics reported today. The largest job losses over the month were in con-struction, manufacturing, and retail trade.
This is more significant that Reuters or the AP is going to admit in their articles. In fact Reuters attempted to make the rate of change the major factor noting that more jobs were lost in previous months:
However, the pace of layoffs has slowed sharply from early this year, when nearly three-quarters of a million jobs were lost in January.
The other major spin we will likely see is a continuing declaration that layoffs and employment always lag behind a recovery and that as the job losses have dropped, it’s a sign that the recovery has started. Some of this might be true, but I doubt its comforting to the 558,000 people who lost their jobs in October, or the 15.7 million currently unemployed by the count of the Bureau of Labor Statistics. And columnist Mark Tapscott is now questioning the wisdom that unemployment is a lagging indicator as he writes:
Unemployment has hit 10.2 percent, the highest level since the 1983 recession. Obama administration officials will no doubt try to spin this latest bad economic news by noting that unemployment is typically a "lagging indicator." That was true in the old days, but it won't cut it in the age of the global economy and Internet-driven 24/7 news cycle. Unemployment may now be something of a leading indicator because business executives make decisions about whether to invest in new jobs much more quickly and based on vastly more data.
Its an interesting argument and considering the changes to the economy he might be right although not for the reason he theorizes. In the past when the US economy was largely agricultural or industrial, it was true that businesses often delayed their decisions partly due to the fact they did not have the levels of information available today. However, the biggest change now is also what kind of people they employ. With much of the actual manufacturing occurring elsewhere businesses in the US employ largely management and developmental staffs in the US, and these are often the first affected when companies cut back on their investments. If that is true, unemployment would start declining before the full effects of a recession hits and be much slower to recover. Most likely however, it is still largely going to trail the initial fall of the economy, but the writers who make it sound like it is completely disconnected from the recovery are definitely putting far too much faith in it being a lagging indicator.
Perhaps a note from the AP article shows best the depth of the unemployment situation as it notes:
Counting those who have settled for part-time jobs or stopped looking for work, the unemployment rate would be 17.5 percent, the highest on records dating from 1994
With 17.5% of the labor force not working or working for less than they are worth, and economists admitting that consumer spending drove 70% of the US economy before the crash began, can anyone believe that any recovery will be robust?
