The 405 Club

The monthly employment situation report came out yesterday. The summary is grim (again):

Nonfarm payroll employment continued to decline in April (-539,000), and the unemployment rate rose from 8.5 to 8.9 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Since the recession began in December 2007, 5.7 million jobs have been lost. In April, job losses were large and widespread across nearly all major private-sector industries. Overall, private-sector employment fell by 611,000.

The number of unemployed persons increased by 563,000 to 13.7 million in April, and the unemployment rate rose to 8.9 percent. Over the past 12 months, the number of unemployed persons has risen by 6.0 million, and the unemployment rate has grown by 3.9 percentage points.

The unemployed number was under the consensus (Bloomberg range: -810,000 to -580,000), but the unemployment rate was at the high end of the range (8.5% to 9.0%). Let’s put aside the question of whether or not this discrepancy indicates that the economists surveyed were bad at math. The numbers are horrible, but the declines were not as bad as March.

Lately, the media has latched on to such positive second derivative numbers as good news. Today has been no different. I see a Bloomberg link titled Stocks in U.S. Advance as Jobs Report Shows Worst of Recession May Be Over (the link was broken when I clicked it, so I can’t tell if there’s a headline / article mismatch or not). The job numbers are getting worse. They will continue to get worse, they just might not get worse as fast as before. That’s not exactly good news.

Table A-12 gives us the alternative measures of labor underutilization (their term). U-6, the broadest definition of unemployment (includes people who were looking for full time jobs that had to settle for part time jobs and such) is now at 15.8%. To most people, this is the most relevant measure. The non-seasonally adjusted number is 15.4%. The fact that the unadjusted number fell from 16.2% last month might give some hope, but it should be tempered by the fact that the number is still quite bad.

-By Guest Blogger Crazynutjob