Don’t Quit Your Job if you can Help It!

April’s employment data was released today.  We now stand at an 8.9% unemployment rate which represents a 26 year high.  Every one appears to be spinning away the bright side of over 539,000 lost  jobs with the refrain that at least it’s not as bad as it was in January.  But, just because it’s marginally better, doesn’t mean the worst is over. All time series have variation and this may or may not signal the end of the worst of the worst monthly losses.

I’m still trying to figure out how people are finding glimmers of hope in this news given the historical perspective  shown in this graph  from the NY Times as presented by its blog Economix.  This compares the current recession to previous recessions.  As you can see, we’re still straight off the cliff at this point.  Equally impressive is this graph from Market Watch which shows the monthly change in nonfarm payroll growth.  It seems that the monthly changes may have bottomed, but it’s way too early to tell if there’s going to be any improvement.  That’s when you have to examine some of the underlying factors in the market.  Remember, variation in any series is to be expected so you’ll get ups and downs just from random variation.  Those movements don’t necessarily indicate a trend.  What do economists say about these numbers?

From Economix:

“The employment data do not yet corroborate the extent of the diminishment of the intensity of the recession suggested by other economic indicators (ISMs, consumer confidence, etc,). However, if we continue to see declines in the four-week average of jobless claims (which has fallen for four straight weeks), this may suggest smaller declines in employment later in the second quarter. Nonetheless, relating this report to the bank stress tests, the unemployment rate in April is already at the “alternative more adverse” average level assumed for the 2009…” — John Ryding, Conrad DeQuadros, RDQ Economics

“In April, more than one in four unemployed workers, 27.2 percent, had been without jobs for six months or longer, the highest rate on record since the government started calculating this statistic in 1948.” — National Employment Law Project

“The unemployment rate rose to 8.9 percent, but this is entirely due to a surge in the size of the labor force, as household employment is reported to have risen…
“[W]ith the smaller headline job loss number, many are interpreting the April employment report
as yet another sign that the economy is “stabilizing,” but the more accurate assessment is that the economy’s pace of contraction is slowing, which is not quite the same as stability and is still a long way from the economy actually improving.” – Richard F. Moody, chief economist, Forward Capital, LLC

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