Wednesday, December 16, 2009

Has Unemployment Turned the Corner?

Monthly employment data for November, 2009, finally showed a glimmer of good news. The unemployment rate fell to 10.0 percent from 10.2 percent in October, which represented the peak rate for the current recession.

Although by many measures the current recession is the worst since the Great Depression, that may not be the case for peak unemployment. It now appears unlikely that the unemployment rate during the current business cycle with exceed the 10.8 percent rate reached in November-December 1982.

As sometimes happens, data from the BLS household survey payroll employment survey pointed in different directions. The payroll survey showed a net loss of 11,000 jobs in the month, but the household survey showed an increase of 227,000 jobs. The difference can be attributed to one of two sources. First, the household survey is much smaller--just 60,000 households vs. 400,000 business firms for the payroll survey. As a result, the household survey is more volatile and is subject to greater sampling errorl Second, the household survey counts several kinds of employment that are not included in the payroll survey. The most important of these are farm jobs, self employment, unpaid workers in family businesses, and workers who have jobs but are temporarily absent from them without pay because of weather or other factors.

Follow this link to download a free set of PowerPoint slides with highlights of the November employment data.

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