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Forget Friday's headline jobs number, weekly jobless claims & U6 point to continued improvement in the labor market

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October 08, 2009 – Comments (22)

I don't care what the headline monthly unemployment report that the BLS released last week said, behind the scenes the jobs situation continues to improve.

In a post that I wrote in late September titled Has the Permabear's favorite employment statistic already peaked? I talked about how the permabear's favorite employment statistic, U6 aka "Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers" may have already peaked.

Once again we saw an improvement in U6 in September.  It peaked at 16.8% in June, fell to 16.5% in August, and fell again to 16.1% in September.

I'll reiterate what I believe this improvement in U6 means because I believe that it is extremely important:

How is it possible for U6 to have peaked when the main unemployment rate is still rising you ask?  Well, I'll tell you (even if you didn't ask ;) ).  Remember that the U6 statistic includes people who are "employed part time for economic reasons."  The first thing that companies do when the economy begins to recover isn't run out to employment agencies to try to find new employees.  Instead they increase their labor input by bringing part-time workers back on full-time.  This may be what we are seeing happening right now.  The record number of people working part-time when they would rather be working full-time has stabilized and is slowly beginning to fall.

The fact that part-time workers are being called back to full-time work may be a leading indicator that a peak in the main unemployment number is just around the corner and a sign that the economy is improving, albeit slowly.

Another positive sign on the labor front was this morning's weekly jobless claims.  The claims number dropped 33,000 week-over-week to 521,000. 

Here's an excellent chart from Calculated Risk that shows the improvement in weekly claims:

The employment situation obviously is still a mess, but I am not nearly as concerned about it as I was about it as long as we continue to see gradual improvement in the numbers.  We are slowly closing in on the 400,000 level that is thought to be key barrier between labor contraction and expansion.

From a personal anecdotal perspective, my company has more meetings with potential new clients over the next month than we have had over the past year combined.  Now I'd like to think that all of this potential new business is solely because of all of my excellent management and hard work, but I must grudgingly admit that an improvement in the economy may have had some impact. 

I'm not a raging bull on the economy, but I do think that we will return to growth, sub-par growth compared to what we have become accustomed to but growth nonetheless, some time in 2010.

In other positive economic news this morning,

Retailers' Same-Store Sales Top Estimates

Deej

22 Comments – Post Your Own

#1) On October 08, 2009 at 10:52 AM, drgroup (69.25) wrote:

"The claims number dropped 33,000 week-over-week to 521,000"

Are you emplying this is due to fewer claims being filed? Or is it because these claims have run out of benefits and drop off of the unemployment claims total.

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#2) On October 08, 2009 at 10:54 AM, alstry (35.36) wrote:

Deej,

You are the poster child for "worse is better than expected."

My guess is that is your management style as the Fed keeps printing more and more Free Money.

Pretty soon America will be a nation with lots of Free Money and a strong Military.....how well do you fight???

 

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#3) On October 08, 2009 at 10:59 AM, leohaas (32.77) wrote:

drgroup,

You are clueless. The 521K number reported is for new claims. Has nothing to do with continuing claims. That number dropped from 6.11M to 6.04M. That number is affected by people exhausting their benefits, but the number you refer to is not. At all.

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#4) On October 08, 2009 at 11:01 AM, davejh23 (< 20) wrote:

"Once again we saw an improvement in U6 in September.  It peaked at 16.8% in June, fell to 16.5% in August, and fell again to 16.1% in September."

Do you have a link?  The report I read on Friday showed that U6 increased to 17.0%.

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#5) On October 08, 2009 at 11:08 AM, davejh23 (< 20) wrote:

Just did a Google search and looked at a handful of articles on the most recent numbers...all show that U6 increased to 17.0%:

http://www.zacks.com/stock/news/25452/Employment+Report+in+Depth+-+Analyst+Blog


"The broader U-6 measure of unemployment rose to 17.0% from 16.8% in August and 11.2% a year ago. Overall, U-6 is probably a better measure of the overall weakness in the labor market than the more widely reported "official" U-3 number."

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#6) On October 08, 2009 at 11:08 AM, TMFDeej (99.41) wrote:

Hi drgroup .  Thanks for reading.  You are referring to the continuing claims number.  I don't personally pay much attention to that statistic because as you mentioned the fact that people are exhausting their benefits can lead to anomalies in it.

The number that I was referring to was new unemployment claims.

Deej

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#7) On October 08, 2009 at 11:10 AM, alstry (35.36) wrote:

dave....

don't bother deej with the facts....just because practically every city, county, state, school system, hosptials, and most corporations are firing, not to mention a record number of small business failures.......he is clicking his ruby slippers and believing things are getting better.

What we are doing in America is dividing the nation between those that get Free money and those that don't get Free money.  We are only handing the Free money to those that DON"T pay taxes like money losing businesses and the poor.

Evidence of this is the fact that taxes are evaporating....notice how Deej doesn't talk about that even though he claims employment is getting better.

Taxes NEVER lie and niether does the math.

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#8) On October 08, 2009 at 11:14 AM, TMFDeej (99.41) wrote:

Hi Dave.  The problem is that you're not looking at the raw data aka "Not seasonally adjusted" numbers like I prefer to focus on.  You're looking at the BLS' adjusted number. 

As someone who has worked in an industry where many people incorrectly focus on seasonally adjusted numbers I have learned over the years to ignore them.  Usually the people who create the adjustments do more harm than good.  Just look at the good old adjustment Birth / Death adjustment that the BLS uses. 

Here's a link to the data from this month's report:

Table A-12.  Alternative measures of labor underutilization

Again, I was talking about the real "Not seasonally adjusted" numbers.

Deej

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#9) On October 08, 2009 at 11:20 AM, TMFDeej (99.41) wrote:

As many of you know...when I started blogging unemployment was at about 6%.  I use U6 as the unemployment figure because it just seems practically the right one.  In Alstry's eyes, even though people are still NOT working and unable to find a job AFTER their benefits run out, for some crazy reason Alstry views them as unemployed even though some Fools don't...

Here is the chart from the Department of Labor Table A12

http://www.bls.gov/news.release/empsit.t12.htm

Please look at U6 three columns in... March 2009 at 16.2%.  Then read the Note defining "marginally attached workers"...I think the common definition for those people defined as maringally attached would be UNemployed.

Under many European views...would U6 should be expanded which would result in a current rate of over 20%...

My prediction for 30% or more is the Department of Labor U6 rate.......that is the number that I refer to as functional unemployment and what CNBC has referred to as "real" unemployment.

Hopefully this clarifies any confusion once and for all.

- Alsty

Alstry's case for 30-50% Unemployment

HAHAHAHAHAHAHAHAHAHA

wait, wait, let me catch my breath...

HAHAHAHAHAHAHAHAHAHAHA

I would be happy to get into tax revenue and how recent reports indivate that states are receiving better than expected tax revenue in a future post if you'd like.

Deej

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#10) On October 08, 2009 at 11:43 AM, drgroup (69.25) wrote:

Deej... thanks for clarifying this.

Leohaas... asking for information does not make one clueless. It is smallminded people with a little knowledge that they covet, who are clueless about...

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#11) On October 08, 2009 at 11:44 AM, alstry (35.36) wrote:

Deej,

Our workforce has dropped by 6 million people when those that likely are looking for work has probably increased by 10,000,000.  That is a net 16,000,000 Americans that are likely looking for work but not counted in the workforce.  That would put the real U3 number at 20% and the U6 at closer to 30%

What recent reports about improving tax receipts...other than maybe North Dakota...and now I hear even they are slowing????

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#12) On October 08, 2009 at 12:12 PM, TMFDeej (99.41) wrote:

Alsty, we already went over this.  Rather than citing actual statistics like most credible people who write articles and blogs do you just make things upout of thin air.

According to the Bureau of Labor Statistics, the total U.S. Civilian labor force was 154,577,000 in August 2009, down from 155,387,000 in August 2008.  That's a decline of 810,000 or approximately 0.5%.  The real stat is -810,000, not the exaggerated -10,000,000 that you used.

Earlier this year you said

My prediction for 30% or more is the Department of Labor U6 rate.......that is the number that I refer to as functional unemployment and what CNBC has referred to as "real" unemployment.

It sounds like your forecast is a moving target.  You change the "facts" to make them conveniently support your arguments.

Deej

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#13) On October 08, 2009 at 12:14 PM, TMFDeej (99.41) wrote:

Alsty, we already went over this.  Rather than citing actual statistics like most credible people who write articles and blogs do you just make things upout of thin air.

According to the Bureau of Labor Statistics, the total U.S. Civilian labor force was 154,577,000 in August 2009, down from 155,387,000 in August 2008.  That's a decline of 810,000 or approximately 0.5%.  The real stat is -810,000, not the exaggerated -10,000,000 that you used.

Earlier this year you said

My prediction for 30% or more is the Department of Labor U6 rate.......that is the number that I refer to as functional unemployment and what CNBC has referred to as "real" unemployment.

It sounds like your forecast is a moving target.  You change the "facts" to make them conveniently support your arguments.

Deej

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#14) On October 08, 2009 at 12:24 PM, jesusfreakinco (28.88) wrote:

Now are we all talking about the actual workforce or the shadow workforce (i.e. with illegal alients counted)?

Serious question - do U6 include illegals?  If not, I tend to believe the stats are very warped because a lot of illegals that have worked in the trades are out of work and, therefore, job losses are probably highly understated.

JFC

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#15) On October 08, 2009 at 12:32 PM, alstry (35.36) wrote:

My 16,000,000 number is simply the likihood of the number of people who have entered the workforce but not counted.....there is no way to verify this number as it is not reported...but just use a little common sense with all the people that are no longer counted and have lost incomes....it seems likely that many have been forced to look for work AND their spouses...but this statistic will not be reported.

I can guarantee you this...as long as we maintain the same policies...sales will slow, profits will decline, and tax receipts will evaporate until there is not enough economy left to sustain the US infastructure absent going to war.

Keep blogging your nonsense as conditions continue to deteriorate...in war...we all bleed the same....I know a lot about this subject.

Many retailers report September sales declines Report this comment
#16) On October 08, 2009 at 1:37 PM, TMFDeej (99.41) wrote:

My prediction for 30% or more is the Department of Labor U6 rate.......that is the number that I refer to as functional unemployment and what CNBC has referred to as "real" unemployment.

Alsty, you said yourself that U6 is the "real" unemployment rate and that you were basing your prediction upon it.  Are you now saying that you have changed the metric that you're using to forecast unemployment?

I thought that Alstynomics was all about being right...not about being inconsistent.

I'm sure that you'll ignore this question and change the subject.  Keep rooting for war.

Deej

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#17) On October 08, 2009 at 1:47 PM, russiangambit (29.27) wrote:

There are less people left to cut, so of course the claims have to slow down. All it means we are closer to the rock bottom, when we starts getting out of the hole is anyone's guess but it is not now.

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#18) On October 08, 2009 at 2:00 PM, rofgile (99.30) wrote:

Scoreboard:

 TMFDeej 1

 Alstry 0

 

 woot!

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#19) On October 08, 2009 at 3:25 PM, leohaas (32.77) wrote:

Group, I'm sorry for calling you clueless. That was uncalled for.

Alstry, keep on inventing your statistics. Based on those, you can prove anything, including your zombulation theory.

Deej, keep up the good work. To make the CAPS blog a little bit more balanced, we need the input from some who do not believe the world is about to end. Just look at the Bush years to see how dangerous group think can be...

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#20) On October 08, 2009 at 5:11 PM, drgroup (69.25) wrote:

leohaas ... 10-4

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#21) On October 09, 2009 at 9:00 AM, JakilaTheHun (99.94) wrote:

It's amusing watching the permabears trying to invent new, largely imaginary statistics in order to try to prove their own ideological agenda.  It's almost like watching Creationists invent reasons why scientific methods for dating fossils are completely wrong and dinosaurs walked the Earth 6,000 years ago.

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#22) On October 14, 2009 at 2:56 PM, ayekappy (< 20) wrote:

It's amusing watching the permabulls say that the job market is improving when there are still 10k people applying for positions that have 100 slots available.  You can shoot green things out of your behind all day, but it's definitely been no fun being in the job market for the last 1 1/2 years.  How are many people going to buy Christmas presents this year with maxed credit cards and 60 day late mortgages?

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