Jan 24 2010

US Unemployment Worsens & Spreads

Last month, as was noted here and many other places, the national unemployment rate ‘stayed the same’ only because the workforce had shrunk due to so many people giving up on finding jobs. If a consistent workforce level had been used as the basis of the national numbers we would be closer to 11% instead of holding near 10%.

But while this statistical mirage gave a temporary appearance of a healing economy, the facts on the ground portend a worsening situation. Two other indicators on unemployment have taken a turn downward while the national mirage was fooling the left into underestimating the national mood, which came spilling out with a vengeance in Massachusetts last week.

In December the nation hit another record in terms of economic problems. 2 more states were added to the list of states now suffering greater than 10% unemployment (New Jersey and Mississippi).  That brings the total to 17 states now struggling with unbearable economic hardship – both at a personal level and at a state level (click to enlarge).

Even worse, of these 17 states 15 saw their unemployment situation worsen in December. Does anyone see any reason why this picture would have turned towards the better in January?

Another key indicator that the unemployment situation is worsening is the fact that the rolls of the Emergency Unemployment Compensation (EUC) program continued to swell in December at an alarming rate (click to enlarge).

The EUC is the last vestige of help for the chronically unemployed. The EUC rolls expanded by  a staggering 775,880 people in December. If the economy was creating jobs it would clearly be shown in a reduction in EUC rolls, not these massive increases. In the 2/21/10 report on unemployment (which showed a surprising rise in first time unemployment claims for that week) the government reported that +652,364 were added to the EUC (completely wiping out the gains made the previous week).

The fact is the EUC rolls are exploding. In November there were +604,209, up from +272,185 in October. Decembers new +775,880 was followed by the +652,364 in the first week of January (which was higher than the entire month of November!). It will be well into February before we see how bad it is right now (two week lag in EUC reporting), but right now January will easily outpace December, which outpaced November, which outpaced October, etc.

Since the stimulus bill was passed last February, 4,185,887 people have fled to the EUC rolls, an increase of 285%. This is as good a measure of the failed stimulus bill as any other out there. President Obama is going to give the State of the Union speech next week, and the week after that will come the January jobs news, which I doubt will be good and could be really, really bad.

President Obama went way out on a limb by pushing a radical agenda over the last year and focusing on health care while the liberal stimulus program crashed and burned. The stakes were huge, even though I doubt he and his young team ever understood how huge. Success would be historic, as is the now evident failure. He put all his capital in hoping the economy would turn around while he fiddled with health care.

He was wrong. How wrong we be quite evident very soon.

10 responses so far

10 Responses to “US Unemployment Worsens & Spreads”

  1. Neo says:

    The Labor Dept does their “death” adjustment in the January numbers to come out of Feb 5, which means those phantom “births” they registered all last year will be adjusted using the real numbers from small businesses. Expect bad news.

  2. kathie says:

    Axelrod and Gibbs said that the Obama Administration underestimated how bad the economy was. Maybe that was so, or maybe they had the WRONG policy to help a bad jobs situation. Then they ran to health care and cap and trade, signaling they would let the terrible taxes for the rich expire, raise revenue by taxing and regulating banks, investment income and anything else they could get their hands on. AND the smart people in the White House can’t create jobs? Really! The White House has paralyzed the job creators. What happens next year when the States budgets will not beable to keep the teachers, fire fighters, the police on when they have no more money coming in? We will be right back where we started. Too bad the White House is so ideologically opposed to what Bush did when he became president with the dot com bubble and after 911 when we lost $1 trillion dollars in a day. Will California file for bankruptcy?

    The number of public employees depending on states and the federal government for their retirement and medical care is making it impossible for governments to make many choices as they just don’t have the money they need that is not spoken for.

  3. kathie says:

    Wal-Mart cuts more than 10,000 Sam’s Club staffers, after the hope of the Christmas holiday hiring, it could be really bad.

  4. Paul from Boston says:

    Quelle surprise. Keynsian economics hasn’t ever worked but it’s tried over and over again by the left with the same results. It prolonged (caused?) the Great Depression, it didn’t work in Japan in the ’90s and again this decade. Every time a government lowers taxes and cuts spending the economy goes up, but that means nothing, it’s only greedy capitalists getting richer. Any idea in the hard sciences that was so out of whack with reality would have been dead long ago and its remaining proponents ignored. Sigh…

    The real alarm will be tax revenue on April 15. It’s already way down here in Massachusetts.

  5. ivehadit says:

    Sorry, but I have just two words for this so-called “amateur”…

    Cloward Piven.

    These are NO amateurs in the White House, imho. They know exactly what they are doing,. KILLING CAPITALISM.

    “White man’s greed runs a world in need”.

    As they see it, their problem is that many in the electorate are shaking off the con and seeing them for what they really are: radical far, far leftists with a HUGE agenda, imho.

    We have a *proven track* record in this country for what works in a deep recession/ 9.11 type crisis: CUT TAXES. Tax breaks for small businesses. Less government intrusion/spending.

    From gatewaypundit.firstthings.com:
    “During the Bush years, despite the 2000 Recession, the attacks on 9-11, the stock market scandals, Hurricane Katrina, and wars in Iraq and Afghanistan, the Bush Administration was able to reduce the budget deficit from 412 billion dollars in 2004 to 162 billion dollars in 2007, a sixty percent drop. In 2004 the federal budget deficit was 412 billion dollars. In 2005 it dropped to 318 billion dollars. In 2006 the deficit dipped to 248 billion dollars. And, in 2007 it fell below 200 billion to 162 billion dollars.

    During the Bush years the average unemployment rate was 5.2 percent, the economy saw the strongest productivity growth in four decades and there was robust GDP growth. These were amazing accomplishments considering the unexpected challenges. You certainly didn’t read much about this in the press.”

  6. WWS says:

    I disagree with you on a crucial point, Ivehadit – I don’t think that Obama and Axelrod have any idea of what they’re doing, and because of that I think this crazy train is completely out of control. No one is in charge of anything anymore. Yeah, it’s going to end the same way most runaway trains end.

    Paul – you are absolutely right, tax receipts will be far below expectations, which means the deficit will soar even without any new programs.

    with respect to stocks and other financial instruments – I cannot shake the feeling that we are at a “sell-everything” and get ready for a huge drop moment – look at what happened to the market last week.

    theory: the market and all asset prices have been pumped up the last few months not because of any recovery in economic conditions, but because massive amounts of money have been
    pumped into the system. That money did not go towards creating jobs, but instead just sloshed into asset prices, inflating both the equities market and gold prices, while the dollar got weaker because of this.

    So what just happened with Brown’s election? The chances that another trillion dollars of deficit spending would be pumped into this economy just evaporated. Also, Obama now wants to punish the banking system in a populist manner rather than pumping money into it, which we have been doing for 18 months now. All of this may be good in the long run for the country; but the effects of this in the short term are that the dollar will rise again, but gold prices will drop and stock prices will drop.

    Unemployment is still awful, residential real estate is moribund.

    Commercial real estate, with respect to this economy, is still a hand grenade in mid flight.

    California is an economic disaster, and when that government finally has to live within its means it is going to be a huge short term blow to the economy. (Getting right financially always means higher unemployment and lower economic activity in the short term. Can’t be avoided) And this is far from the only state with huge problems.

    And China, the financial bulwark behind a supposed worldwide economic recovery, has just gone wobbly this week. The Chinese Boom may be transitioning to Bust.

    So, could we be on a ride to re-test the lows of last March? (Dow 6500)

    I think that is a lot more possible than most anyone on the left or the right realizes right now.

  7. [...] employment: AJ Strata has a few nice graphs up in this post showing the explosive growth of the Emergency Unemployment Compensation rolls over the past [...]

  8. [...] This post was mentioned on Twitter by Suhr Mesa and CVRepublic, AJ Strata. AJ Strata said: new: US Unemployment Worsens & Spreads http://strata-sphere.com/blog/index.php/archives/12537 [...]

  9. Brian H says:

    That would be “capital”. “capitol” is a government thing/place.
    :)

    Notwithstanding the labelling of the Dems and pundit classes, I think the Tea Partiers are anti-populist. Populism is sucking up to the voters with anti-wealth rhetoric and bribes/benefits to the masses from their own pockets.

  10. ivehadit says:

    WWS, I think we are actually saying the same thing. Imho, these guys are ideologues who want to destroy capitalism and America’s superpower status. How they are going about it is definitely a runaway freight train because they have to pretend to be doing one thing as to not rankle the majority of Americans when, behind the scenes, they are actually just fulfilling their agenda. If you listen to what they say, the exact OPPOSITE is what they are doing.

    Did you happen to see the piece O’Reilly put together on Obama and all those around him? It was aired shortly after he became president. I wish he would run it again. It explains a lot about what you are seeing today, imho.