Has the U.S. Walked Away from “Jobless Recovery”?
Published in Sohu
(China) on 16 February 2011
by (link to original)
(China) on 16 February 2011
by (link to original)
Translated from
by Paul Yuan.
Edited by Andysheh Dadsetan.
According to the U.S. Department of Labor, in February 2011, January’s unemployment rate declined from the previous 9.4 percent to the current 9.0 percent.
A 9.0 percent unemployment rate is the lowest since May 2009. Researchers believe that the most unyielding aspect of the U.S. economic recovery — the unemployment rate — is slowly improving. From this fact, it can be concluded that general recovery is on its way.
So, has the U.S. changed its course from “jobless recovery”?
In other words, the unemployment curve peaked in October 2009, at 10.1 percent, and slowly declined after that. It rebounded to a 9.8 percent high in November 2010, followed by a fast decline. In the subsequent two months, the unemployment rate has declined 0.8 percent per month, or at a rate of 0.4 percent. This rate had not been seen in the past 30 years of U.S. history.
Looking closely, the official figures provided by the Department of Labor only record the population that is currently looking for jobs or receiving unemployment benefits relative to the total working population. This ratio for calculating the unemployment rate is called U3. In the United States, U3 does not include the people who have given up looking for work. The U3 unemployment figure, based on the facts, cannot truly reflect the actual unemployment situation.
With the apparent limitations of U3, another measure for unemployment, U6, includes the population that just gave up on job hunting or is now sitting idly at home. The U6 measure is twice that of U3. Another measure, called the “SGS Alternate,” will include those people who are long-term unemployed — a group that the government has long lost focus on. If we use this broad definition of the unemployment rate, SGS Alternate is producing a surprising number, 2.2 to 2.5 times the U3 unemployment rate.
However, even with the U6 and SGS Alternate figures, the unemployment rate has peaked and is slowly trending downward. The U6 figures around October 2009 peaked at 17.5 percent and declined to 16.5 percent, forming the same pattern as the U3. The SGS Alternate figures, on the other hand, continued to climb as the U3 and U6 started to decline from their peaks. It reached a 20-year high in November 2010, about 23 percent, and declined to 22.5 percent and 22.0 percent in December 2010 and January 2011, respectively. Based on this fact, it cannot be concluded that U.S. unemployment has substantially improved, but that unemployment is not further worsening.
Rather than looking at the unemployment rate, from another angle, the U.S. employment figures have not shown drastic improvement. There are two measures of the employment situation: One is the nonfarm payroll figures; the second is number of unemployment claims for a week ago, or the average for the last four weeks.
In the February release of employment figures, January’s figure for nonfarm payrolls is 36,000 people, lower than the estimate of 145,000 and the previous figure of 121,000. At the same time, the most recent number of unemployment benefits claimed last week was 400,000 and the average for the preceding four weeks is 415,000. Although these poor unemployment numbers can be blamed on the severe weather the U.S. has had recently, stable employment numbers for nonfarm payroll figures must historically be between 100,000 to 150,000 and the number of unemployment claims must fall below 350,000. The U.S. has shown a slight improvement, but it is nowhere near stable recovery.
Therefore, it is too early for the world to cheer and be happy about the recovery of the U.S. economy.
A 9.0 percent unemployment rate is the lowest since May 2009. Researchers believe that the most unyielding aspect of the U.S. economic recovery — the unemployment rate — is slowly improving. From this fact, it can be concluded that general recovery is on its way.
So, has the U.S. changed its course from “jobless recovery”?
In other words, the unemployment curve peaked in October 2009, at 10.1 percent, and slowly declined after that. It rebounded to a 9.8 percent high in November 2010, followed by a fast decline. In the subsequent two months, the unemployment rate has declined 0.8 percent per month, or at a rate of 0.4 percent. This rate had not been seen in the past 30 years of U.S. history.
Looking closely, the official figures provided by the Department of Labor only record the population that is currently looking for jobs or receiving unemployment benefits relative to the total working population. This ratio for calculating the unemployment rate is called U3. In the United States, U3 does not include the people who have given up looking for work. The U3 unemployment figure, based on the facts, cannot truly reflect the actual unemployment situation.
With the apparent limitations of U3, another measure for unemployment, U6, includes the population that just gave up on job hunting or is now sitting idly at home. The U6 measure is twice that of U3. Another measure, called the “SGS Alternate,” will include those people who are long-term unemployed — a group that the government has long lost focus on. If we use this broad definition of the unemployment rate, SGS Alternate is producing a surprising number, 2.2 to 2.5 times the U3 unemployment rate.
However, even with the U6 and SGS Alternate figures, the unemployment rate has peaked and is slowly trending downward. The U6 figures around October 2009 peaked at 17.5 percent and declined to 16.5 percent, forming the same pattern as the U3. The SGS Alternate figures, on the other hand, continued to climb as the U3 and U6 started to decline from their peaks. It reached a 20-year high in November 2010, about 23 percent, and declined to 22.5 percent and 22.0 percent in December 2010 and January 2011, respectively. Based on this fact, it cannot be concluded that U.S. unemployment has substantially improved, but that unemployment is not further worsening.
Rather than looking at the unemployment rate, from another angle, the U.S. employment figures have not shown drastic improvement. There are two measures of the employment situation: One is the nonfarm payroll figures; the second is number of unemployment claims for a week ago, or the average for the last four weeks.
In the February release of employment figures, January’s figure for nonfarm payrolls is 36,000 people, lower than the estimate of 145,000 and the previous figure of 121,000. At the same time, the most recent number of unemployment benefits claimed last week was 400,000 and the average for the preceding four weeks is 415,000. Although these poor unemployment numbers can be blamed on the severe weather the U.S. has had recently, stable employment numbers for nonfarm payroll figures must historically be between 100,000 to 150,000 and the number of unemployment claims must fall below 350,000. The U.S. has shown a slight improvement, but it is nowhere near stable recovery.
Therefore, it is too early for the world to cheer and be happy about the recovery of the U.S. economy.