American unemployment rate drops to 8.2 % but job creation still unsatisfactory

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
Seasonally Adjusted
Series title:        (Seas) Unemployment Rate
Labor force status:  Unemployment rate
Type of data:        Percent or rate
Age:                 16 years and overDownload:

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual
2002 5.7 5.7 5.7 5.9 5.8 5.8 5.8 5.7 5.7 5.7 5.9 6.0
2003 5.8 5.9 5.9 6.0 6.1 6.3 6.2 6.1 6.1 6.0 5.8 5.7
2004 5.7 5.6 5.8 5.6 5.6 5.6 5.5 5.4 5.4 5.5 5.4 5.4
2005 5.3 5.4 5.2 5.2 5.1 5.0 5.0 4.9 5.0 5.0 5.0 4.9
2006 4.7 4.8 4.7 4.7 4.6 4.6 4.7 4.7 4.5 4.4 4.5 4.4
2007 4.6 4.5 4.4 4.5 4.4 4.6 4.7 4.6 4.7 4.7 4.7 5.0
2008 5.0 4.9 5.1 5.0 5.4 5.6 5.8 6.1 6.1 6.5 6.8 7.3
2009 7.8 8.3 8.7 8.9 9.4 9.5 9.5 9.6 9.8 10.0 9.9 9.9
2010 9.7 9.8 9.8 9.9 9.6 9.4 9.5 9.6 9.5 9.5 9.8 9.4
2011 9.1 9.0 8.9 9.0 9.0 9.1 9.1 9.1 9.0 8.9 8.7 8.5
2012 8.3 8.3 8.2 8.1

About haroldchorneyeconomist

I am Professor of political economy at Concordia university in Montréal, Québec, Canada. I received my B.A.Hons (econ.&poli sci) from the University of Manitoba. I also completed my M.A. degree in economics there. Went on to spend two years at the London School of Economics as a Ph.D. student in economics and then completed my Ph.D. in political economy at the University of Toronto. Was named a John W.Dafoe fellow, a CMHC fellow and a Canada Council fellow. I also was named a Woodrow Wilson fellow in 1968 after completing my first class honours undergraduate degree. Worked as an economist in the area of education, labour economics and as the senior economist with the Manitoba Housing and Renewal Corporation for the Government of Manitoba from 1972 to 1978. I also have worked as an economic consultant for MDT socio-economic consultants and have been consulted on urban planning, health policy, linguistic duality and public sector finance questions by the governments of Manitoba, Saskatchewan,the cities of Regina and Saskatoon, Ontario and the Federal government of Canada. I have also been consulted by senior leaders of the British Labour party, MPs from the Progressive Conservative party, the Liberal party and the New Democrats on economic policy questions. Members of the Government of France under the Presidency of Francois Mitterand discussed my work on public sector deficits. I have also run for elected office at the municipal level. I first began to write about quantitative easing as a useful policy option during the early 1980s.
This entry was posted in austerity, business cycles, fiscal policy, full employment, U.S., Uncategorized, unemployment. Bookmark the permalink.

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