Posts Tagged ‘unemployment’

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Could The Recession Recovery Be A Fakeout?

Monday, June 14th, 2010

With all of today’s turmoil (the Gulf oil spill, Europe’s debt problem, consistently high unemployment rates) it’s no wonder economists have pondered whether or not we’re heading for Recession Part II.

  • It seems that the possibility of a “double dip” recession, in which a recession is followed by a short recovery that slips into another recession, seems to have decreased slightly since last year.
  • Several factors have influenced this positive change, namely that major U.S. companies have reported profit growth in the first quarter of 2010 and a $1 trillion bailout package has been approved been European leaders.
  • But unemployment is still high, and that GDP growth is already slowing.

Facts & Figures

  • Some believe the chance of a double dip recession is 20% now compared to 50% last year. Others says 25% now versus 30% last year.
  • Unemployment is still up at 9. 7%.
  • GDP growth in the fourth quarter of 2009 was 5.6%, the highest in 6 years.
  • Economists predict the growth rate will slow to 3% this year.

Best Quote

“One of the things to remember is conditions do not have to be perfect for the economy to grow, but there’s a limit to how much bad news this economy can take.”  - Mark Vitner, Senior Economist, Wells Fargo Securities

Show Me The Money: Labor Market’s On The Mend!

Friday, June 4th, 2010

May reports indicate the unemployment situation has stabilized for the first month in a long time.

  • More jobs were added in May 2010 than any other month since September 1983.
  • The service sector of the job market increased payrolls for the first time since the start of recession, i.e. in over two years.
  • May marks the fifth consecutive month of jobs gains in the U.S.

Facts & Figures

  • 55,000 private sector jobs and 458,000 public sector jobs were added in May, causing the employment rate to drop a tenth of a percent.
  • It’s estimated that two-thirds of the added jobs were temporary due to the 2010 U.S. Census, but regardless, May holds its record of most jobs added in 27 years.
  • Claims for unemployment benefits dropped by 10,000.

Best Quote

“Because what everyone is stating is it’s a jobless recovery, and I can’t emphasize enough the long decline we’ve had, I don’t want to minimize one month of growth, but I don’t want to get overly optimistic.” – Anthony Nieves, Chairman of the ISM Non-Manufacturing Survey Committee

Wall Street Hurt Just As Much As Everyone Else

Wednesday, March 3rd, 2010

In terms of job creation for the mid-level managing types, yes, they too are hurting.

  • While the market has somewhat recovered and stabilized in the past year or so, and big banks have begun to bounce back, former mid-level executives of banks and financial firms have had a hard time finding work.
  • Many banks and finance companies fear that the stock market boon that helped catalyze the recovery in 2009 may not last, and, to make matters worst, that pending trading regulations will inhibit profitability.
  • It may take months for banks and financial companies to start hiring mid-level executives, but there are currently a plethora of opportunities for senior-level bankers and executives.

Facts & Figures

  • Financial companies have cut nearly 80,000 securities, commodities and investment jobs in the United States since mid-2008.
  • During the recession, New York’s financial services sector shed 44,200 jobs (a 6.1 percent reduction).
  • All told, Goldman Sachs cut 4,800 jobs, Citigroup, 75,000, Bank of America, 45,500, JPMorgan Chase, 23,700, and Morgan Stanley, 8,600.

Best Quote

“The reality is that you get used to a certain level of compensation that is hard to match elsewhere.” – Matt Prendergast, Former Managing Director at Bear Stearns

How can five percent unemployment possibly be a good thing?

Thursday, November 19th, 2009

For an individual, being unemployed when you desperately need a job is never a good thing. However, a little unemployment in an economy is not necessarily a bad thing. First of all, some people don’t want to work – at least not in jobs that get listed on tax returns like stay-at-home moms and dads. That’s called voluntary unemployment, but it really shouldn’t even be counted in unemployment statistics. There are also always going to be people who are between jobs – having just left one job and waiting to start another, but not in real danger of long-term unemployment or desperate to find work. Economists call that “frictional unemployment.” Even if everybody who wanted a job had one, there would still be some “frictional” unemployment as people transitioned between jobs.

In reality, however, it’s extremely rare that every single person who wants a job is employed. Unemployment moves up and down in a cycle along with the rest of the economy and, while increased unemployment in a minor economic downturn is not a good thing, it isn’t an economic death knell. Some people will also be involuntarily unemployed because of structural unemployment – unemployment that happens because wages (the price of jobs) can’t change with demand or the right types of employees aren’t available for existing jobs.

Structural unemployment can be lowered in the short term by sparking inflation, but the unemployment goes back to its previous rate, so trying to push the unemployment rate below a certain level tends to make the economy unstable. Milton Friedman, who won the Noble Prize for Economics in the 1960s, called this level “natural unemployment” or NAIRU (the non-accelerating interest rate of unemployment). It’s the level of unemployment in an economy at which prices and jobs are stable. The NAIRU for the United States in the past two decades has been about 5%, and for most of that time, the economy has been quite healthy.

So, it’s not good if YOU are unemployed (assuming you want a job), but unemployment is a natural, unavoidable part of any economy.

New GDP Figures Turn Decline Upside-Down

Friday, October 30th, 2009

Could the Great Recession be over because the GDP did not shrink for one quarter?

  • The gross domestic product of the United States grew at a rate of +3.5% in the third quarter of 2009, which is the same amount as the average growth rate of the last 80 years.
  • Although jobs are still sparse and the housing market is still in bad shape, government programs helped encourage consumer spending on all sorts of goods.
  • There is still a risk of slowed growth or a dip in GDP because the third quarter’s growth can be attributed in part to strong stimulus packages, which will expire in coming months.

Facts & Figures

  • The stimulus packages that encouraged growth in GDP include the $787 billion package approved in the winter of 2008-2009 and the Cash for Clunkers program.
  • Jobless rate reached 9.8% in September 2009, despite GDP growth.
  • American exports (goods being sold outside the country) grew at an annual rate of 14.7% and imports (goods coming in from abroad) grew at a 16.4% annual rate.

Best Quote

“The big-picture perspective is that things have improved. The question is, how sustainable is this growth going forward?” – Jan Hatzius, Chief U.S. Economist at Goldman Sachs

The Educated, Unemployed Generation

Wednesday, October 21st, 2009

It’s normal to be unemployed right after college, but being young and unemployed for a long time is bad for everyone.

  • Young people are being disproportionately affected by the recession because they’re missing out on entry-level employment opportunities, even when they’re highly qualified. Employers lose, too: young employees bring freshness and ambition to the job.
  • Being unemployed in one’s youth can lead to lower lifetime earnings due to missed opportunities, experiences, and sometimes a stigma. On a large scale, this will adversely affect tomorrow’s retirees, who will depend on this generation’s earnings to fund their Social Security benefits.
  • Some call for government action in the form of a more flexible minimum wage (employers that must pay the increased minimum wage are increasing their education and experience requirements commensurately), or increased training and apprenticeship programs. But the budget deficit makes these options unlikely.

Facts & Figures

  • The unemployment rate for 16- to 24-year-olds is more than 18% in the U.S., 39% in Spain, 24% in France, and 19% in Britain.
  • 46% percent of 16- to 24-year-old Americans were employed in September 2009.
  • A study showed that 15 years out of school, workers began their careers in a recession earned 2.5% less than workers who began in a better economic climate.

Best Quote

“Every morning I wake up thinking today’s going to be the day I get a job. I’ve not had a job for months, and it’s getting really frustrating.” – Dan Schmitz, recent college graduate

Latest Labor Stats Show Six Applicants For Every U.S. Job

Thursday, September 24th, 2009

These days, simply shining up your resume or strategically name-dropping in an interview may not be enough to land a paying gig…

  • Though it is widely believed the recession is at an end in the U.S., the unemployment problem is still sobering, and the ratio of unemployed Americans to available jobs is at a record high.
  • During the economic crisis, many companies laid off employees and took conservative financial stances to prevent losses. That added up to a large pool of jobseekers but increasingly fewer job openings.
  • Companies are afraid to resume hiring or try to expand now because they aren’t certain what the economic future will bring. Plus, any increase in overall workload can easily be shifted onto existing employees.

Facts & Figures

  • According to July data, there are currently more than six jobseekers for every job opening. In the 2001 recession, there were just over two jobseekers for every job.
  • The nationwide unemployment rate is up to 9.7%.
  • Job losses have hit hard in every sector of the economy, even in typically high-growth industries like healthcare and education.

Best Quote

“There’s too much uncertainty out there. There’s not going to be an upsurge in job openings for quite a while, not until employers feel confident the economy is really growing.” – Thomas A. Kochan, Labor Economist at M.I.T.’s Sloan School of Management.

Behind The Mask Lies A Friendly Face

Tuesday, June 23rd, 2009

Who knew that being unemployed was a superpower? This write-up describes people who have turned a frustrating, unfortunate situation into an opportunity to do something… super.

  • With the current economic downtrend, many of those who have lost their jobs are taking value in what they can do as opposed to what they have and are helping out in communities, having been labeled as “real-life superheroes.”
  • Some are completely dressed from head to toe in a cape and a mask while many just go out as regular citizens. Reactions from the public have been mixed; some see these superheroes as losers, but many respect them.
  • Although without super powers these superheroes are somewhat limited in what they can do, many help the homeless and patrol high-crime neighborhoods.

Facts & Figures

  • Estimates place the number of real-life superheroes between 250 and 300.
  • The superhero movement started on Myspace as fellow comic enthusiasts joined forces.
  • Homeless outreach is the most common form of help these superheroes undertake; one group raised $700 in gifts and brought them to St. Mary’s Children Hospital in New York.

Best Quote

  • “The movement is growing.” – Ben Goldman, historian of real-life superheroes

Pros Help Nonprofits Kick It Up A Notch…

Monday, June 15th, 2009
Lawyers and business professionals are taking their big business breeding to the nonprofit world.
  • A growing number of lawyers and business professionals is flocking to the nonprofit world. Some made the move because they lost their jobs, while others are craving a career change.
  • Usually college students and recent grads seek out these nonprofit jobs, eager to work but also to learn. This new surge of professionals, armed with their experience and expertise, is extremely valuable to nonprofits.
  • Nonprofits are now prioritizing applicants with business and legal backgrounds, making them more competitive than ever.

Facts & Figures

  • Peace Corps applications are up 16% from last year, with a 50% increase among applicants over 50 years old.
  • Teach for America applications are up 42% this year, with an 80% increase among working professional applicants (rather than college students).

Best Quote

“Business-savvy volunteers are particularly good at helping nonprofits do more with less. These people are setting up credit unions, writing grants, managing resoures – it’s called indirect service.” – Sandy Scott, Director of Public Affairs at AmeriCorps

Macroeconomics is…

Tuesday, June 9th, 2009

Macroeconomics is the study of overall trends in the economy: unemployment, interest rates, price levels, and growth rates.

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