In a typical 30 day month, at current unemployed rates, we add 1.8 million new benefactors to the unemployment rolls each and every months. We have been doing this for 20 months. The 9.4% percent unemployment rate is now the longest consecutive 9% rate in American history. The Carter recession, which Reagan inherited, ran 19 consecutive months in the 9% range. Under Obama, we may be looking at another four or five months of record numbers.
Of course, we add jobs each and every month. This offsets the unemployment report. Currently, less than half of the weekly "unemployment" numbers are being reversed by adding jobs. In the first week of this year, for example, unemployment fell from 9.8% to 9.4% . New benefit applicants was set at 403,000 for the week while less than 280,000 jobs were added. Net job loss: 123,000 or an annual rate of 1.47 million people added to the unemployment totals for the year.
In the present circumstance, a lower or declining unemployment number, say from 9.8% to 9.4% is much more the result of people running out of benefits and/or simply giving up on their job search than for any other stated reason. If folks lose their benefits, they drop off the unemployment rolls making that number appear to have improved !! If they give up looking for a job, that, also, makes it look as if things are improving. In both cases, however, things have only gotten worse.
When it is all said and done, we need to add 140,000 jobs per week just to keep up with population growth. On top of that, we need to add another 240,000 jobs per to counter a very normal jobs attrition rate. Add these numbers together and we discover that we need a total of 380,000 jobs per week before the unemployment rolls are affected in a positive way.
Admittedly, the 380,000 is an estimate but it seems to be number a that works well with the current reality.
Midknight Review uses the 380,000 number as a baseline figure. It is measured against the weekly unemployment report. As soon as the unemployment number falls below 400,000 per week, we are getting close to reversing actual or real unemployment totals. Understand that while 9.4% of our work force is drawing unemployment benefits, somewhere between 15% and 17% are actually out of work.
We are not so biased that we cannot admit that the weekly numbers have improved from a year and a half ago. But we seem to be "stuck" at or around 420,000 newly unemployed per week. We have been at this level for well over a year. At the height of the recession, the weekly unemployed numbers were at 680,000.
As an aside, when Obama brags about "bringing those numbers down" from 680,000 or more per week -- at the height of the recession -- he is just kidding. The Stimulus was enacted on Feb 17 of 2009, but no monies were expended for more than six months. In other words, the market corrected itself without any help from the Feds and that is a concrete fact. But we digress.
Again, when these "improved numbers" are tied to a very consistent but high 9.3 % to 9.8% report, we do not have an improving jobs market. Rather, we have a depressed work force that is no longer looking for work or has run out of benefits.
Keep that in mind when you hear "a good report." It probably means next to nothing that is good. Understand that there are all kinds of numbers "out there." The ones that seem to count most are two: a downward and consistent unemployment number (we are talking about a three month trend ) and a weekly unemployment of approximately 380,000 on a weekly basis. When those two factors become part of the weekly report, we have actually turned the corner and headed in the right direction.
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