When will the unemployment rate hit 10%?

MarathonMind wrote:

Some problems here: The "not seasonally adjusted" numbers are actually higher than last year:

U-3 = 10.6%

U-6 = 18.0%

Is there any reason to ignore seasonal factors right now? I haven't heard anyone questioning the value of seasonal adjustments, except perhaps for political gain.

Here's a decent, cursory read on the situation:

https://www.schwab.com/public/file?cmsid=P-2751277&cv247

Sagarin, good link. Take a listen to the interview with the Gary Shilling on BB yesterday--second segment. Here is the podcast link:

http://www.bloomberg.com/tvradio/podcast/takingstock.html

For the record, it's three months later and the household survey shows over a million net job gains.

Yep. Job growth is beginning. SOME of the recent positive number was due to the Census workers, and skeptics can always find reasons to say a number is artificial, but we are on the cusp of steady job growth...doesn't mean we might not have a month or two that steps back, but we've been out of the recession now for about 9 months, and things are looking better and better every day. The Dow will likely top 11,000 next week. AMAZING considering it was at 6400 just less than 13 months ago.

"The number of long-term unemployed (those jobless for 27 weeks and over) in-

creased by 414,000 over the month to 6.5 million. In March, 44.1 percent of

unemployed persons were jobless for 27 weeks or more. (See table A-12.)

The number of persons working part time for economic reasons (sometimes re-

ferred to as involuntary part-time workers) increased to 9.1 million in March.

These individuals were working part time because their hours had been cut back

or because they were unable to find a full-time job. (See table A-8.)

Among the marginally attached, there were 1.0 million discouraged workers in

March, up by 309,000 from a year earlier.

In March, nonfarm payroll employment rose by 162,000. Job growth continued in tem-

porary help services and in health care. Federal government employment increased

due to the hiring of temporary workers for Census 2010. Job losses continued in

financial activities and in information. (See table B-1.)"

http://www.bls.gov/news.release/empsit.nr0.htm

So the biggest creator of jobs is the government, followed by that bastion of efficiency in health services, and an uptick in temporary hiring, which, but for the census skewing the numbers, would normally be a reliable leading indicator. The number of UNemployed in the household survey ticked higher while the labor force partcipation rate stayed pretty much the same.

We have an unprecedented money printing operation going on and we are in unchartered waters with regard to the second act. Nobody can be certain how long it can last, but the rationality versus solvency argument has extended much longer than it should've throughout history, and this time is no exception (and I expect that we're not done yet).

But, there is a Ghost of Christmas Past, and he will be revisiting. We can keep playing this fun little game and nuance every data point, but this thread was started merely as a talking point to rebut the self-aggrandizer who quoted economists back when they were predicting unemployment would not rise above 7.6%, but you full well know my lens is a ten year lens. Of course, that began two years ago.

And, yes, I still think the market goes higher because the Fed has successfully engineered asset inflation rather than inflation itself, and the wealth effect it engenders, while illusory, will no doubt exacerbate the situation. Nonetheless, I finally pulled almost all of my long-term money out last week, full-well knowing that there are many still sitting on the sidelines and that the global reflationary trade is alive and well, for now. Still long the trading account, but hedged. Long volatility as well. Stocks are very expensive, especially for those with a 10-year outlook. Carry on minions... And have a Happy Easter.

webby wrote:

For the record, it's three months later and the household survey shows over a million net job gains.

BTW, you do realize that most of those are part-time right? And I wouldn't put a lot of stock in the government's numbers. They are subject to multiple adjustment and there's a lack of clarity under the surface.

But, while I expected the cap on the unemployment rate to go above 10% (and we could well get there yet if the government's counterfeiting act doesn't do its "job"), I've been most vocal about structurally high unemployment for an awfully long time. And a few predictable quarters of INorganic, robust growth and less-than-robust job gains aside, assuming we don't double dip, the highest probability is for a square-root shaped recovery, which is consistent with elevated structural unemployment.

It will be interesting to see where we are in 2014.

Sagarin wrote:

"The number of long-term unemployed (those jobless for 27 weeks and over) in-

creased by 414,000 over the month to 6.5 million. In March, 44.1 percent of

unemployed persons were jobless for 27 weeks or more. (See table A-12.)"

Does anyone have any insight on who these people are? That's a jobless interval that's hard for me to fathom, even in hard times. Once a person has been looking for work for over two years, I have to think that they are just about out of the labor force for good. I wonder how many of these people worked in something like the auto industry for 30 years and just don't have any idea what to do now. I wonder how many will soon be reclassified as "retired," and how many were just dead weight in prosperous companies and are better thought of as "unemployable." (This might help explain the extraordinary productivity numbers of late.)

My heart goes out to the many good hard-working people that I know are in this position, so I apologize if this comes across as insensitive, but I just can't believe that there are quite that many qualified people who can't find jobs for over two years, despite honest efforts to find work. I'm in one of the hardest hit states of the recession, and it certainly doesn't reflect the job market here. I know a handful of people who were laid off, and none searched for more than a few months before they found work. Even an acquaintance of mine who is a recovered meth addict with a prison record has had intermittent work.

Sorry, I see that it's 27 weeks . . . not months. Still a long time, but not so hard to fathom.

A few other #s to consider:

150k - number of new labor market entrants every month

3% - GDP growth required just to employ these new market entrants (forget about currently unemployed)

# of hours worked/week/person - 31

Year of lowest number of hours/week worked since records have been kept - 2010

Capacity utilisation - 70%

Labor force participation - 64%

There is so much slack. For joe jobs that will employ the bottom quartile, there are none.

so while GDP was $14trn in 2007, and now maybe $13 (maybe), if you spread it across the whole population, its still quite bleak.

One the other hand, for the top 2 quartiles, unemployment is not really an issue anymore. So there will be growth, if you happen to have been BORN into the right economic circumstances. So from Flagpole's perspective, he is right - things are "back" as far as he can see.

Shorting this market is dangerous - the PPT is on the bid, and equity fund flows are still net negative for the past 15 months. So who the hell has been buying?.....Government Slacks buys 5k S&P large at a pop...right on the floor, in front of everybody...(I'd love to do that - left hand on right elbow, right palm facing in, flashing five...thats a big trade).

Flagpole wrote:

The Dow will likely top 11,000 next week. AMAZING considering it was at 6400 just less than 13 months ago.

Are you aware of how much the Federal Reserve is printing? It isn't amazing at all. Where do you think that money is going?

idkjjjhhdj wrote:

Flagpole wrote:

The Dow will likely top 11,000 next week. AMAZING considering it was at 6400 just less than 13 months ago.

Are you aware of how much the Federal Reserve is printing? It isn't amazing at all. Where do you think that money is going?

It's still amazing, and yes, I'm aware of it all brother. A year ago doom and gloomers like yourself were saying that not only would the government print a ton of money but that the Dow would head down to 3700 or even ZERO and that civilization as we know it was just about over. Um...ok.

Scenario: ObamaCare and the rest of Obamunism collapses America. All retirement account dumped by government into (worthless) treasuries?

http://www.bloomberg.com/apps/news?pid=20603037&sid=aHFCE999fWR0

The U.S. Treasury and Labor Departments will ask for public comment as soon as next week on ways to promote the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams, according to Assistant Labor Secretary Phyllis C. Borzi and Deputy Assistant Treasury Secretary Mark Iwry, who are spearheading the effort...

I'll sell u that trade...all you want....Read up on asset-liability matching.

Real Wealth wrote:

Scenario: ObamaCare and the rest of Obamunism collapses America. All retirement account dumped by government into (worthless) treasuries?

http://www.bloomberg.com/apps/news?pid=20603037&sid=aHFCE999fWR0

The U.S. Treasury and Labor Departments will ask for public comment as soon as next week on ways to promote the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams, according to Assistant Labor Secretary Phyllis C. Borzi and Deputy Assistant Treasury Secretary Mark Iwry, who are spearheading the effort...

Flagpole wrote:

It's still amazing, and yes, I'm aware of it all brother. A year ago doom and gloomers like yourself were saying that not only would the government print a ton of money but that the Dow would head down to 3700 or even ZERO and that civilization as we know it was just about over. Um...ok.

And don't forget about all of the inflation/hyper-inflation predictions too.....

Darnell wrote:

And don't forget about all of the inflation/hyper-inflation predictions too.....

I'm far more worried about deflation than inflation, STILL. We are in a secular deleveraging period. I am the first person here you heard utter the "D" word as well as projecting unemployment would go to double digits. Here's another outlook by Mauldin. He sums up nicely the same scenario I see. Don't get comfortable, and that's just it -- complacency is getting high again.

Off the Grid is correct about momentum, there's no telling what THIS government will do, and I'd bet the market crests 11,000 before correcting or starting a sideways pattern with a downward slope, but I'd rather be out early and into other asset classes than risk potential carnage. Read this (it's nothing you haven't heard me say, but it's penned by someone with "better" credentials, only not really):

And webby, I know you seem like a reasonable guy, but do we have to go through the myopic period of every month? is this fun, when it's not even a realistic time frame and you full well know it? I'd pretty much left well enough alone on these threads. I understand Flagpole's insatiable need to pat himself on the back with each new milestone that ends with four zeroes and keep making gestures toward the person who predicted the Dow wouldn't return to 10,000 within 20 years (though, while we may have put in the absolute low, I'm not sure we've put in the nominal low -- in fact, I'd bet we haven't). Read the outlook. The employment numbers are superficial, which is what I told you yesterday. Place your bets gentlemen.

Sagarin wrote:

I'm far more worried about deflation than inflation, STILL. We are in a secular deleveraging period.

Deflation is ideal, as long as one still has an income/job. Any deflation would likely be short term, as governments prefer hyperinflation/debasement/default/war. And the worst case scenario, real goods become impossible to buy with paper at any price. Barter or die:

This may give some insight into the long-term unemployment picture:

http://articles.courant.com/2010-03-10/business/hc-work-penalty.artmar10_1_unemployment-work-unemployed

It's dangerous to take a lower-paying job of uncertain duration under the current unemployment benefits rules. Sooner or later, a lot of people are going to have to settle for lower-paying jobs in unfamiliar industries, or they'll have to retire.