The U.S. Bureau of Labour Statistics reported last week that the unemployment rate fell to 8.2 % . But the total number of new jobs added was a disappointing 83,000 below what the market had been expecting so bearish sentiment got a bit of a boost. The rate fell principally because there were fewer workers actively seeking work. This might be because of demographic factors as aging baby boomers begin to leave the work force the labour force participation numbers will be falling. But it is also because net new job creation has been somewhat sluggish despite the recovery in the GDP and company balance sheets. The broader definition of unemployment also fell from 14.9 % in February to 14.5 % in March.
The second chart and table below courtesy of the U.S.Bureau of Labour Statistics show us both the trend and the fact that unemployment peaked 29 months ago in October 2009 at 10 %. Nonetheless this is a very slow recovery which still has a long way to go before it delivers substantially better unemployment rates. At this rate of improvement it may well take another two years before the unemployment rate falls to below 6 %. Part of the problem has been the lack of employment creation at the state and local government levels which continue to make virtually no contribution to employment growth because of the obsession with deficits as opposed to unemployment. Despite the significant stimulus packages at the beginning of the recession the congressional opposition to enhancing them has caused the federal contribution to reducing the rate to be less than it might have been. The corporate and small and medium business sector have begun to rehire but are still overly cautious about their balance sheets. Given austerity in Europe, a slow down in Asia and heavy consumer debt load the rate of new job creation is smaller than it needs to be.
The first chart below shows us the rate of unemployment since 1980. It shows that the recession of the 1980s was also very severe with unemployment peaking even higher at 10.8 % in November of 1982 and falling to 8 % by 1983 and then after two more years falling to 6.9 % by November 1986 a full four years after its peak in 1982. So as painful and frankly unnecessary as the unemployment has been it is not the first time in recent history that the recovery from a severe recession has been as slow and difficult. That said, the moment it becomes politically possible further employment stimulus measures ought to be introduced in Congress to strengthen the recovery and these measures don’t involve austerity. All charts and tables courtesy of the U.S.Bureau of Labour Statistics
Unemployment rate 1980 to present
Series Id: LNS14000000
Series title: (Seas) Unemployment Rate
Labor force status: Unemployment rate
Type of data: Percent or rate
Age: 16 years and overDownload: