November 9, 2009

• <US Labor market in October>

  In overall terms, US labor market remained weak in October-09 : Unemployment rate continued to rise, company continued to cut jobs and earnings growth kept decelerating.

  Apart from a slower cut in payroll and a upward revision to data in Aug and Sep, there is little reverting the weak US labor market. Luckily, US Senate passed an extension of unemployment benefits (by 20 weeks), so that some will have minimum income support.

  
  Unemployment rate soared to 10.2% in Oct (9.8% in Sep), a level unseen since Aug-83. Since monthly record began in 1940, the record-high unemployment rate was 10.8% in 1983. Of course, if we include annual data, we could have jobless rate as high as 25% during the great depression

  

  In US, discouraged workers – workers left labor force because believing no job is available – are not counted as unemployed (In HK, they are counted as unemployed). So the above unemployment rate has been underestimated. According to US Bureau of Labor Statistics, there were about 800k such workers in Oct (against labor force of about 150 mn).

  If you count those having part time job, these “discouraged” workers to those unemployed, the “adjusted unemployment” rate is 16.3% (Table U-6 here). Awful

  
  For those unemployed, the average unemployment duration (i.e. you sum up how many weeks these unemployed persons being unemployed, and then dividend by the no. of unemployment) broke record again, to 26.9 weeks.

  That means, on average, every unemployed person in US was unemployed for 6 months. This is problematic, as numerous studies showed the longer you are unemployed, the less likely you are able to find a job (you lost skills etc. during the unemployment).

  

  Don’t be too happy if you still manage to get a job : your income growth is slowing and your working hourly is stagnant

  

  

  While we escape Great Depression 2.0, the recovery in labor market is yet to be seen.

  • 5:35 am
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