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Friday, December 05, 2008


november jobs

it is no longer ridiculous to talk about a depression. we're in one.

it is true that a loss of 530,000 jobs is, in the grand scheme, not the end. bespoke contextualized this report well.

but -- compounded with large downward revisions for september and october as well -- the employment picture is going from gray to black with a speed reminiscent only of a full-fledged depression.

henry blodget makes a couple of points overlooked by reflexive optimists. first, the headline unemployment rate is misleading at 6.7% because of the statistical whitewashing the u-3 number gets. a more sensible definition of unemployment -- and one much closer to the method used in the last depression -- is u-6, which is inclusive of those who are falling off the dole because they've become despondent of finding work at all, as well as those who've taken part-time work while looking for a real job (the "marginally attached", in the parlance). that rate has skyrocketed to a seasonally-adjusted 12.5% from 11.8% in october, and will go much higher in coming months.

secondly, blodget rightly notes that unemployment in the great depression didn't start at 25%. indeed, we are at 12.5% likely suffering from an unemployment problem significantly worse than was the united states of late 1930, when the rate was less than 10%. what is comparable, however, is the rate of increase. from 1929 to 1930, unemployment ran from 4% to 9%; from november 2007 to november 2008, u-6 has run from 8.4% to 12.5%.

with joblessness set to further accelerate in coming months as companies get more aggressive about downsizing, we should not be surprised if even the mainstream u-3 rate gets well into the teens, with u-6 perhaps approaching 20%. and that will surely put aside any reflexive reticence to compare situations that in truth are frighteningly similar.


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