Jan. 8, 2010: The December 2009 Employment Report: Green Shoots Crushed (Again)
Today, the Bureau of Labor Statistics (“BLS”) released the employment report for December 2009. The consensus forecast among economists was for job losses of about 10,000, but the BLS number came in at -85,000, a serious setback after only -11,000 in November, revised to a positive 4,000. the U3 unemployment rate remained at 10.0% representing 15.3 million persons, but the more comprehensive
Hidden from the headline numbers was far worse news. The Household Survey shows the December job losses at a staggering 589,000, comparable to the worse days of the financial crisis. Unemployment actually fell by 73,000 as 843,000 persons left the labor force. Had those losing jobs remained in the labor force rather than giving up, the unemployment rate would have spiked upwards to 10.4%. Now these former workers show up in the U6 unemployment rate, which included discouraged workers who are no longer actively looking for jobs; that rate moved upwards to 17.3% (representing 26.5 million persons) from 17.2% in November.
So now it appears that the hopeful numbers from November 2009 were most likely just a statistical blip, as was the improvement back in July 2009. This bodes poorly for the economy, especially for the U.S. housing market. People without jobs can’t pay their mortgages. People who can’t pay their mortgages feed the growing shadow inventory of homes facing foreclosure. The growing shadow inventory of homes facing foreclosure continues to drag down the housing market and, with it, the U.S. economy. A “double-dip” recession during 2010 looks like all but certainty at this point.
The “green shoots” apparent in the November employment numbers apparently were just an illusion. Perhaps now the administration will heed the wisdom of James Carville, who famously advised Bill Clinton during his 1992 presidential campaign “It’s the economy, stupid!” It is long past time for the President and Congress to focus on creating jobs rather than creating trillion-dollar deficits.
Some "Happy New Year," eh?
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