Still keeping an eye on unemployment numbers: watching this is like rubbernecking at a train wreck.
Sometimes, the economy defies logic, such as when the stock market appears to rejoice while the economy is on a decline. No, I’m not at all grumpy when these episodes defy logic ;), it’s just that it’s hard to prepare and plan when you’re getting mixed signals and when you’re living with the underlying threat of a double dip recession.
How has the job market fared over time? Let’s look at a few charts (current and historical) to see where things stand.
National Unemployment Statistics: When Job Losses Are At Record Highs
The Calculated Risk blog points out that the latest unemployment figures (for last September) were very dismal for many states, with the following info from the Bureau of Labor Statistics (click to enlarge):
Visit Calculated Risk for the bigger picture.
Michigan again recorded the highest unemployment rate among the states, 15.3 percent, in September. The states with the next highest rates were Nevada, 13.3 percent; Rhode Island, 13.0 percent; and California, 12.2 percent. The rates in Nevada and Rhode Island set new series highs. Florida, at 11.0 percent, also posted a series high.
Here’s another look at this through the eyes of Google. Check out the interactive graph for the whole scoop:
Let’s see: since I live here in California, how about I dwell on this a little. I’ve been following California’s unemployment rate for a while now, and it’s ugly. From what I hear and read, it’s dreadful. And from what I know, the numbers don’t tell the full story either: a local radio station here reported a state unemployment rate of around 20% if you count discouraged workers or those who’ve given up on unemployment benefits. This MSNBC article discusses just how underestimated and under-reported the job numbers are:
Counting people who are no longer collecting unemployment, never received unemployment because they didn’t qualify or people who are working part time just to have a little income – [the unemployment rate is] more like 19-22 percent.
We’ve just seen the grim employment statistics. Regardless of where the stock market stands, when the economy begins to sputter, you’ll find very little optimism about the job situation in the years that follow. When the economy is compromised, don’t expect economists to predict much of an improvement with the employment scenario. So far, the unemployment rate is hovering at double digit percentage figures and supposedly, that’s one number we should get used to seeing if the national debt picture remains the way it is.
Here’s the job picture over the last 30 years (from 1980 to 2010):
You can see that more jobs have been shed (7 million) over the last several years than during any other period in the past 3 decades. Not a pretty sight. This is why I’m still wary of the investment markets — with consumer confidence still low and people perhaps continuing to keep their purse strings tight, I don’t see any kind of robust recovery ahead. Here’s a quick list of helpful resources for those who are still looking for employment:
- Yahoo Hot Jobs
- Job.com
- Monster.com
- Beyond.com
- One Stop Career Centers
- Idealist
- Indeed
- Simply Hired
- Quintessential Careers
Are you looking for a job today? I know quite a few people who have been pounding the pavement for a while now, and who are still making do with filler part-time jobs while they seek better paying positions in their particular field.
My personal vantage point also coincides with these findings: for instance, at least one family member and one good friend are struggling with work issues right now, taking on jobs that aren’t really along their lines of work because there’s nothing else available. Call after call to headhunters aren’t yielding results, with interviews not really amounting to much at this time. I’m not participating in this job market right now, but I can feel the discouragement, frustration and pain from those around me. It’s contagious.
Oh yeah, there’s also the latest news bomb that Sun is slashing 3,000 employees from its workforce while waiting for Oracle to take on the reins (recall that Oracle is absorbing Sun). That’s 10% of Sun’s workforce, and another 3,000 more technologists, engineers and other personnel who will be competing with the unemployed, here in the Valley.
These days, I’m just urging and advising those around me to go after any job that catches their eye. Cast a wide net and take a job — any job. At this point, any kind of paid work is a good thing. Care to share your thoughts about your (and the nation’s) employment situation?
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{ 28 comments… read them below or add one }
Great Post! I am also waiting for that other shoe to drop. The market has risen because of earnings reports from companies, but those earnings are not based on more people buying their products or using their services. The earnings have been based on cost cutting and increased efficiency. There is only so much you can do by streamlining. Without an increase in employment, there is no recovery. People w/o jobs will not spend, and those with will hunker down and continue to save for fear of losing their job. Company earnings will begin to decline and the market will fall again. We will not recover until jobs recover.
Thank you so much for the kind words. The MSN article is really great. That’s crazy that someone took away the trash in the middle of the night.
And I really echo your sentiment about the market and unemployment. I didn’t know “not falling off the cliff” could give the market so much to rally about.
A lot of this bad economy started when the out of control housing market finally collapsed, but wait that was only half of the fall. There is all this bad commercial real estate we haven’t even figured in yet. Banks out there are doing everything in their power to keep from having to recognize all the losses piling up on the commercial side of the real estate market. It is only a matter of time before the music stops and the second shoe will fall.
The scariest part about the unemployment situation is that the Fed is pinned at .25% interest rates. Sure we were at 10% unemployment in the ’80’s, but that was when the Fed was RAISING interest rates to wring out inflation. With our dollar falling and commodities like corn, oil, etc starting to rise – soon we’ll have to squelch inflation also by raising the interest rate. When this happens mortgage loans, car loans, school loans, and lending to small businesses will increase. It ain’t pretty. If you have a little money, however, FAZ, the bank short fund might be promising. Just be careful, it’s a fast mover in any direction it’s moving.
By the way, I just found your site. It’s very impressive. Nice work!
Thanks for the stats but many think the situation is improving. I wonder if it is really improving. These stats are against my beliefs. Anyway i have started making profit in stocks but the government should be more cautious as these recovery stages are more dangerous. Companies are scared to recruit and i think it will take a while for them to feel safe.
I definitely DON’T think we are going to have a double dip recession. Things are recovering like crazy, and I can’t believe it, but it’s happening.
Just look at third quarter earnings by Morgan Stanley, Goldman, Intel, Yahoo, etc… all beating and reaching 2007 highs.
It is only a matter of time before corporates have to rehire like crazy again.
Hang in there, and remain OPTIMISTIC! No double dip recession. 1Q10 is going to have great things in store for many of us!
those people that were saying that the recession is over because the dow hit 10k should get their heads out of the clouds and read this disconcerting post. this recession is for individuals and not for the masses. an individual will get out of the recession when his or her financial situation starts to look up. this depends not on some magical number in the stock markets.
Thanks for the link — I must admit I returned to bankers again yesterday, or rather this time the financial structures themselves. Here in the UK our Bank of England governor Mervyn King (equivalent of your Ben Bernanke) has called for the big banks to be split up. Unprecedented, but predictably shouted down by the status quo.
Hope your friends and family find work soon. I keep saying unemployment is a lagging indicator (nearly all recoveries are ‘jobless’ at first) but I fully appreciate that doesn’t make it any easier on those suffering through it. 🙁
I can’t complain since I’m more of a long term investor and the welcome rise I’m seeing in my retirement funds makes me “relax” a little.
My view is that you should be complaining, SVB. It’s improper price rises that cause improper price drops. I am extremely concerned about the irresponsible price rise we have seen in recent months.
In the wake of earlier insane bull markets, we always feel to one-half fair value. That’s a big, big drop from where we are today, a drop so big that the odds are good that it will cause the second great depression. I had hopes earlier in the year when we got to DOW 6500 (roughly fair value) that we might be able to avoid further drops by stabilizing at that price level.
I don’t see the price rise as comforting. I see it as greatly increasing the odds that we will ultimately go well below 6500 (in inflation-adjusted terms). We have to consider the emotional effect. If we had stabilized at 6500, no one would find that price level shocking today. So looking at the paper and seeing that the DOW is at 6500 would not have caused any negative reaction. Now that we have gone back to 10,000, a drop to 6500 will cause a negative emotional reaction. That negative reaction will likely take us well below 6500.
Each justified price tick upwards increases the odds of unjustified price ticks downward in coming days. I believe that we all should be wishing for stocks to go to fair value and then stay there for a long, long time (staying at fair value permits stock investors to earn a return of 6.5 percent real each year).
Rob
Where are new jobs going to come from? Without new industry, there will just be handouts.
I believe there will be a double dip. The Fed has completely manipulated this rally through lowering interest rates to essentially zero, printing money like crazy, purchasing treasuries at auctions to keep the 10 yr bond low, and even pumping the stock market with funds. It’s criminal actually, but it’s happening because the Fed, a private bank, has never been audited – and gets away with everything. Fed owns congress and the US Treasury Department (oxymoron of the day). When all said and done, we’re no better off than we were in March, but we do have more debt. Eventually interest rates will have to go up. At that time it’s gonna start to sink in to a lot of Americans, that this is a severe depression. On that gloomy note, have a great day everybody. (I’m really not that gloomy…check out my blog for upbeat reading and humor)
The unemployment rates are out of control. Michigan is taking the lead at more than 13% and there are numerous states close behind. I wonder where rates would be had the stimulus plan not been rolled out.
After reading your post, the first thought in my mind was a surprise! I feel so sad to hear people losing job and whether it is I am a US citizen or others. Surprisingly, I am not sad on the people who lost the job but, more by thinking about their kids. They are the future citizens and parents required to take necessary measurements. Take this news as a lesson and do maximum for kids. Make their life safe.
I’m taking that tack too
The U.S. recession kind of hurt Canada’s market too, but I am noticing more jobs popping up as of late
I am optimistic that for the next year when IT budgets are in, I will be able to find something
Thanks for the link to the Carnival!
Reading all your comments confirms many vague concerns I’ve had. The reality is, the mood continues to be somber for our economy (in so many areas).
@Rob — no, I’m not relaxing much at all (as I said, I allow myself to relax “just a little”, the mood I describe is relative: at 10,000 I’m worried, at 6500, I’m fearful). And yes, once people realize what truly is going on, the elation will be replaced by an overreaction towards the negative, and potentially challenge or beat 6500 as a bottom.
@Everyone — I am curious to know what your thoughts are for long term investors. Do you suggest market timing? Abandon our carefully crafted asset allocations? I am still a steadfast investor at heart (who does a little technical analysis now and then), and so principles here dictate that I stick to my guns. While I don’t intend to act on every whim I hear over the internet, I really appreciate the input and look to all sources as a guide for what I should be doing for my financial plan.
@Sherin — other countries don’t have it this bad at all. The U.S. is paying for the missteps its made in the past. The bubble hangover is worse than anyone of us realized it could be.
More tough news for workers: loss of unemployment benefits. Some big numbers here: more than 200,000 unemployed workers will be losing their benefits this month.
I’d like to write another post about this, but just check out the cracks in the economy:
– possible inflation in the horizon (crude oil prices are rising and seemingly bucking the seasonal trend this winter)
– deficit is huge, government has tried to borrow itself out of this mess, again pointing to more inflation down the road
– no jobs / foreclosures high in many places
the only positive light (thus far) is that the stock market seems to be ignoring all this but it sure appears to be a dead cat bounce. Psychology is keeping it up and we’re all being “faked out”. JMHO.
Do you suggest market timing? Abandon our carefully crafted asset allocations?
Yes.
The way that I would say it is that there is no way to have a carefully crafted asset allocation without engaging in market timing. The long-term value proposition of stocks obviously changes with changes in price. If an allocation of X percent was right for you when stocks were priced at fair value, it cannot also be right for you when stocks are priced at three times fair value. Can it?
It was the failure of millions of investors to market time that caused the huge bull of the 1990s. Had we all lowered our stock allocations when prices reached dangerous levels in the mid-1990s, prices would never have reached the insane levels they reached in the late 1990s. All that has been going on since 2000 is that we have been slowly paying back the money we borrowed from future investors (who are now us!) to finance the insane price rises of the late 1990s.
You cannot be both a long-term investor and a non-market-timer. The two ideas contradict each other. If you want to invest successfully for the long term, you need to try to keep your risk level roughly constant. To keep your risk level roughly constant, you need to be willing to change your stock allocation in response to big price changes.
Rob
NPR also has a cool map showing how each state’s unemployment rate compares.
The Midwest is doing the best!
@SVB – on the market timing issue, knowing a little about the way you invest, it’s always a good time to rebalance when you see a market that doesn’t make a whole lot of sense. At this point, stocks are overpriced relative to the longer term earnings – i.e. beating last year by X% doesn’t mean much. Also, financials have recovered because (1) they were recapitalized by taxpayer dollars and (2) they can make money in any type of environment.
I don’ t know if you’ve published your asset allocation, but if you have a more balanced approach of let’s say at least 20% fixed income, this would be more than enough (even if your a static allocation gal) to have rebalanced in March and to rebalance again today.
I’m glad you touched on the discouraged workers figure because it is something that was not tracked during The Big One. All told, we’re getting close to those unemployment figures, yet the market rallies. This is normal market behavior, but if you would do a DJIA chart from 1929 through 1954 or 1968 through 1982, you’ll see essentially zero gains with lots of short-lived rallies (like this one).
The fact remains that we continue to slog through a long-term stagnant market and these cycles favor investment strategies like that of Rob Bennett’s. If we classify 12 to 25 year time periods in the market, we find exponential growth and zero growth. During zero growth, active asset allocation is demanded and during exponential growth periods, static allocations (aggressively weighted) are favored.
Funny thing is that when talk of the long-term stagnant market started during the tech crash, it was dismissed as ridiculous. Here we sit a decade later…not in a good place.
By the way, by the time everyone sticks a fork in static allocations in a few years, that should be just about the time the market gets into an exponential growth cycle. From what I see, it’ll be a few years yet.
The unemployment rates are out of control, especially here in California. I can’t believe they are laying off accountants like me. I thought my profession as a CPA was pretty secure regardless of the economy. Hopefully we get a huge rebound soon!
@Michael Harr – I’m going to have to disagree with stocks being overpriced, there are still a ton of amazing deals out there. Do you really think diversified heavyweights like GE are really worth just 1/3rd of what they were just a little over a year ago? No, if you look at everything two or three years out GE is a $30 stock currently trading at $16. People have been saying everything is overpriced since June and yet stock prices continue to climb, many of which are up 200%+. I’ve taken a lot of money out of CD’s and put it into the market for this reason, right now I’m personally up around 65% overall and if I listened to all of these “Financial Experts” telling me things are overpriced I would be stuck with a 2% CD right now..
Sure everything may tank in the future, but that’s why you play it safe with buy and sell rules, when and if a stock goes down any more than 8% I dump it regardless, and that has yet to fail me in the long run, and even if that happens I’m still up 57% for the year.
The military careers are looking better all the time. They are always hiring, but I read about one third of the recruits can’t pass the physical! Isn’t that awful!
John DeFlumeri Jr
The job economy isn’t looking too good right now… this is unfortunate for graduating college students who have loads of loans to pay off.
In today’s world, unemployment rate is rising and rising. Finding a job is difficult and finding a good job with a good salary is even more difficult.
The data in these statistics is really unbelievable. How can I get a job in this present time?
We have some past stats regarding specific job skills in all 50 states and major metro areas at odinjobs.com/US_job_Market_overview.html. We plan on updating very soon.
The UK Recruitment Market has been tough as well but we are seeing a recovery and i dont think all is lost. Those searching for Jobs need to be persistent and try not to take rejection personally – it’s tough i know but you will be much more effective at finding a job if you make the process of job hunting your new career!