The November US regional and state unemployment figures was recently released. The figures show an overall decrease in the unemployment rates. A total of 37 states had their unemployment rates decrease, while the numbers for 8 states increased; six states had no change. The number of states with double-digit unemployment rates remains at fifteen (not including Puerto Rico). Here are some of the highlights:
Overall, the "official" national unemployment rate (U-3) decreased by 0.2%, from 10.2% to 10.0% over October's number. For the past twelve months, the national rate has increased by 2.8% (down 0.4% from last month).
For the most inclusive unemployment rate measured (U-6), the decrease was 0.3%, from 17.5% to 17.2%. For the past twelve months, U-6 has increased by 3.7% (down 1.2% from last month). The spread between U-3 and U-6 decreased from its historic peak of 7.3% in September to 7.2%.
In terms of a monthly change, the states with the largest decreases were Kentucky and Louisiana, both with a decrease of 0.7%. Connecticut and Nevada followed with decreases of 0.6% each. The state with the largest increase was South Carolina, whose unemployment rate rose 0.3% (as did Puerto Rico's).
On an annual basis, the only state remaining with an increase over 5.0% is Michigan, at 5.1%. Three states are tied for second at 4.3% (Alabama, Florida and Nevada).
A total of fifteen states have double-digit unemployment rates, unchanged from October (not including Puerto Rico, which has an unemployment rate of 15.9%). The state with the highest unemployment rate continues to be Michigan at 14.7%, down 0.4%. Rhode Island comes in second with a rate of 12.7% (down 0.2%), while three states tied for third with a rate of 12.3%: California (down 0.2%), Nevada (down 0.6%), and South Carolina (up 0.3%). The remaining states (in declining order) are: Washington D.C. (11.8%), Florida (11.5%), Oregon (11.1%), Illinois (10.9%), 9%), Oregon (11.3%), North Carolina (10.8%), Kentucky and Ohio (both at 10.6%), Alabama (10.5%), Tennessee (10.3%), and Georgia (10.2%).
The states with the lowest unemployment rates are North Dakota (4.1%, down 0.1%), Nebraska (4.5%, down 0.4%), and South Dakota (5.0%, unchanged).
The states with the lowest annual increases are North Dakota and Nebraska at 0.9%, Vermont at 1.1%, Minnesota at 1.3%, Louisiana at 1.4%, and Colorado, Kansas and Montana at 1.5%.
In terms of non-farm payroll employment, four states had significant decreases in the number of jobs. Those states are Hawaii (-6,000), Michigan (-14,000), Mississippi (-6,100) and Nevada (-8,800).
For annual changes in non-farm payroll employment, the states with the biggest decreases are California (-617,600), Florida (-284,800), Texas (-271,700), Illinois (-250,400), Michigan (-240,200), and New York (-210,500). The states with the smallest decreases are South Dakota (-6,800) and Vermont (-7,800).
The PDF version of the Bureau of Labor Statistics press release can be found here.
The Economist had a recent graph showing oil reserves as of the end of 2008, with the number of years remaining for each country's reserves at the 2008 rate of production. I posted a similar graph from The Economist back in June 2006, so we'll do a little analysis to see how things have gone in the past three years.
First, there have been some changes in the rankings for total reserves. The top four (Saudi Arabia, Iran, Iraq and Kuwait) remain the same, but Venezuela has moved up one notch, replacing the UAE in fifth place. Russia remains at #7, but Libya has moved up to #8, replacing Kazakhstan. Numbers 10 (Nigeria), 11 (United States) and 12 (Canada) remain the same, but Qatar has moved ahead of China for 13th place. Angola comes in at #15 in the 2008 chart, up four places. Eight countries that were on the 2005 chart were omitted this time (in alphabetical order): Algeria, Azerbaijan, Brazil, India, Mexico, Norway, Oman, and Sudan).
The 2005 chart mentioned that if production were to continue at 2005's level of production, the world would have 41 years' worth of oil left. The good news is that, three years on, global supplies should actually last for another 42 years.
Doing a quick-and-dirty analysis, we can find out which countries have been winners over the past three years and which were losers. Winners are those countries whose reserves will survive longer today than they were expected to last in 2005's estimate, taking into account the three years of production that have passed. (This could happen either because more oil reserves have been proved in the past three years, because production slowed down, or both.)
In fact, all of the countries were winners, except for three; the winners being: Saudi Arabia (3.5 years), Iraq (3), Kuwait (2.6), Venezuela (30!), Russia (3.8), Libya (4.6), Nigeria (10.6), United States (3.4), Canada (12.1), Qatar (19.1), China (2.1), and Angola (2.7).
The three losers were Iran (-3.1), the UAE (-4.3), and Kazakhstan (-7.0).
The full Economist article:
Although the price of oil peaked at $147 a barrel in 2008, the world’s proven oil reserves—those that are known and recoverable with existing technology—fell only slightly, to 1,258 billion barrels, according to BP, a British oil company. That is 18% higher than in 1998. OPEC tightened its grip slightly in 2008, and commands slightly more than three-quarters of proven reserves. Saudi Arabia and Iran together account for almost one-third of the total. Venezuela, with nearly 8%, has the largest share of any non-Middle Eastern country. BP reckons that if the world continues to produce oil at the same rate as last year, global supplies will last another 42 years, even if no more oil reserves are found.
I was looking at one of the economics links I just posted, Does climate change affect economic growth? And I must say, I find this particular theory weak. The authors' summary reads:
Hot countries tend to be poorer, but debate continues over whether the temperature-income relationship is simply a happenstance association. This column uses within-country estimates to show that higher temperatures have large, negative effects on economic growth – but only in poor countries. The findings are big news for future global inequality.
Personally, I'd think that the temperature-income relationship is happenstance, especially when one looks at Southeast Asian countries like Singapore, Malaysia, Thailand and Indonesia. All of these countries are hot year-round, but that hasn't stopped any of these countries from progressing economically.
The authors wrote:
First, higher temperatures have large, negative effects on economic growth, but only in poor countries. In poor countries, we estimate that a 1ºC temperature increase in a given year reduced economic growth in that year by about 1.1 percentage points. In rich countries, changes in temperature had no discernable [sic] effect on growth.
Presumably, in hot poor countries the economy should remain poor year-in and year-out if this theory holds. Thus, a hot poor country should remain poor with little to no chance of growing economically.
But this flies in the face of the economic histories of Southeast Asian countries. Of the four countries I mentioned above, Singapore, by far, has grown the most over time, despite an average daily high temperature of 88° Fahrenheit (31° Celsius) year-round. In 1960, the nominal GDP per capita for Singapore was a mere US$427. (In comparison, the U.S.'s nominal GDP per capita in 1960 was US$2,912.) By 2008, Singapore's nominal GDP per capita had risen to US$37,597 (with the U.S.'s nominal GDP per capita being US$46,841). That's an annual growth rate over 48 years of 9.78% for Singapore and 5.96% for the U.S.
Now, granted, you won't find as strong of numbers for the other Southeast Asian nations, but if you look at the GDP per capita graphs since 1980 for Indonesia, Malaysia and Thailand, you will see a fairly steady upward climb in the GDPs per capita with the only exceptions being in the late 90s due to the Asian financial crisis. (One could probably make a similar case for the State of Arizona if State Domestic Product numbers were available.) These growth rates can't be explained due to moderate daily temperatures; this region has a tropical climate.
It seems to me that this theory has a limited value due to its inability to explain the economic success of countries like Singapore. The authors need to explain a case like Singapore, which went from a poor country to a rich country over the past fifty years despite the hot climate here.
Warning: The above video is Islamophobic; also, it may be rather slow in streaming in.
What follows is derived from a comment I wrote on another person's diary at Daily Kos that tackles the issues raised in the above video. The purpose of the video is to show how Muslim demographics, as represented by a total fertility rate statistic (see the definition below), is changing how Europe and North America will look in the next 50 years. Of course, the producers of this video see Islam as a threat and are using the video to encourage fellow Christians to proselytize to Muslims.
The "Muslim Demographics" video presents a number of demographic statistics, primarily focusing on countries in Europe and North America, purporting to show how these countries will eventually turn Muslim. The problem with the video is that a number of the statistics presented are of a dubious quality, and the producers neglect to mention some other statistics that are relevant - and damaging - to their argument.
I have checked the total fertility rates in the CIA's World Factbook against what is claimed in the video. Most of the fertility rate statistics presented in the video are off, mostly being understated (to make matters look worse, no doubt). Below are the statistics presented in the video (first column) and per the CIA (second column):
France 1.8 - 1.98 United Kingdom 1.6 - 1.66 Greece 1.3 - 1.37 Germany 1.3 - 1.41 Italy 1.2 - 1.31 Spain 1.1 - 1.31 European Union 1.38 - 1.51
Now here's where I have problems (in part because I don't know where the producers were getting their numbers from). They give the example of France, saying that French families have a fertility rate of 1.8 children per family, but that Muslim families in France have a fertility rate of 8.1 children. However, if the Muslim population in France is so big (it isn't), then the non-Muslim fertility rate should be lower than the 1.8 presented. What that number is, off-hand, I don't know (and I'm not sure that the French national statistics bureau knows either*).
But let's ignore that and look at the real problem. According to the CIA the percentage of Muslims in France is 5-10% of the total population. OK, let's use the higher number, 10%. The US Census Bureau, which does year-by-year estimates for each country's population through the year 2050, says that France has a population in 2009 of 64,420,073; 10% of that would be (roughly) 6,442,000 Muslims in France. In 2050 (slightly more than the 39 years estimated by the producers for Muslims to become a majority in France), the French population is estimated to be 69,768,223. Half of that number is (roughly) 34,884,000.** So, Muslims need to both breed and immigrate to the tune of 28 million** new people (give or take a half-million) while non-Muslim French society shrinks correspondingly. Do you see where I'm going? Do you see how preposterous the argument is?
The other countries (and we'll only focus on Europe for now) are not too different (all numbers from the CIA World Factbook):
United Kingdom 2.7% Muslim Greece 1.3% Germany 3.7% Italy, Spain and the European Union, all NA
The base figures upon which the Muslim population growth rates are applied are so small that it will take much longer than 40 years for Muslims to become the majority religion in much of Europe, if ever, insha'allah.
Now for the Canadian fertility rate, the producers actually overstated the statistic, claiming 1.6 vs. the CIA's number of 1.58. For the US, the claim is also 1.6 (although they also claim 2.11 with "Latino immigration"). The CIA comes up with a fertility rate of 2.05. And the claim of 9 million American Muslims seems excessively high, especially when most American Muslims claim 2-6 million at the most.
Overall, as a Muslim, I find the video typical of Christian proselytizing: Islam as the boogey man. The myth that "Islam is going to take over the world" has been a rallying cry among Christians for a long time now, but that doesn't mean it will become true nor even that Muslims seek such an agenda. I give the data in the video little credence, and even if Muslims do come to dominate the demographic landscape in European countries, so what? It's not like Europeans can't have babies like everyone else.
The secondary threat in the video is very clear: immigration is allowing hordes of dark people to settle in white Europe and America. "The horror!" And yet the anti-immigration crowd doesn't stop to think about certain implications their agenda would create if it became public policy. As the video shows (at the 1:34 mark), a shrinking population creates a smaller and smaller workforce. Who is going to shoulder the financial burden of dependents, both children and elderly, if the native working population (normally defined as those between the ages of 15 and 64) keeps shrinking? Who will help keep tax revenues and social security benefits topped up if the native working population keeps shrinking? Yes, thank God for those immigrants who do the work native citizens don't want to do yet pay into the system for the benefit of all.
The Christians realize, of course, that there's little they can do to either stop the number of Muslims being born or immigrating into Western countries. That's why the "call to action" at the end of the movie is to proselytize. Convert the Muslims into becoming Christians instead. Heh; fat chance of that. Better for them to join the winning team.
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* How would they know when even the CIA gives such a wide base figure of 5-10% for the entire Muslim population in France?
** Thanks to anonymous for the correction.
CIA World Factbook Definition for "Total Fertility Rate":
This entry gives a figure for the average number of children that would be born per woman if all women lived to the end of their childbearing years and bore children according to a given fertility rate at each age. The total fertility rate (TFR) is a more direct measure of the level of fertility than the crude birth rate, since it refers to births per woman. This indicator shows the potential for population change in the country. A rate of two children per woman is considered the replacement rate for a population, resulting in relative stability in terms of total numbers. Rates above two children indicate populations growing in size and whose median age is declining. Higher rates may also indicate difficulties for families, in some situations, to feed and educate their children and for women to enter the labor force. Rates below two children indicate populations decreasing in size and growing older. Global fertility rates are in general decline and this trend is most pronounced in industrialized countries, especially Western Europe, where populations are projected to decline dramatically over the next 50 years. (CIA World Factbook)
Update: Martijn at Closer has a post about the Muslim Demographics video that's helpful in several respects: it has a transcript of the video, an excerpt of a good review by Tiny Frog, along with some general comments about the video as it relates to The Netherlands, where Martijn is located. There are also links to several other reviews (including my diary over at Street Prophets, which was a slightly edited version of this post), and a significant excerpt from another article on the topic. Overall, if you're interested in the topic, it's well worth your time to read Martijn's post and peruse some of his links.
James Hamilton at Econbrowser has been looking over initial claims for unemployment insurance the past few weeks. His most recent post suggests a 50% chance that the recession may end by June. Remember that unemployment is a lagging economic indicator so that, if we really are nearing the end of the recession, then this decrease in initial unemployment insurance claims is a very good sign. On the other hand, as Dr. Hamilton points out, there's still a very good chance (50% historically) that unemployment claims could go back up again, something that's readily apparent in the first graph in my post back in February on US unemployment levels.
The Labor Department reported today that initial claims for unemployment insurance fell by 14,000 during the most recent available week. That brings the 4-week average down for the third consecutive week and puts it 3.3% below the peak reached April 9.
Black line: seasonally adjusted new claims for unemployment insurance, weekly since January. Blue line: average of 4 most recent weeks as of each date.
That ongoing drop in the 4-week average is noteworthy because in each of the last 5 recessions, once the new claims number began declining from its peak value reached during the recession, the NBER subsequently dated the recovery from that recession as beginning within 8 weeks.
...
If we leave out the 1970 recession, there are 230 weeks in which the NBER declared the economy to have been in recession during the 5 recessions of 1974, 1980, 1982, 1990, and 2001. In 22 of these weeks, we saw as big a drop as we've seen this month, namely, the 4-week average dropped by more than 3.3% over a 3-week period. Of these 22 favorable readings, 11 turned out to be part of the final move out of recession, while in the other 11, new claims turned back up to reach a subsequent higher peak. Thus, if all you had to go on was the data on new unemployment claims and its behavior in previous recessions, you might conclude that there's a 50% chance that an economic recovery will have started by the beginning of June.
For some other possible signs of "green shoots," check out Bonddad's post on inventory levels in the 1Q09 GDP report.
Update:Economist's View reposted an article by Robert Gordon that was originally published on VoxEU. Gordon has been a member of the NBER Business Cycle Dating Committee since 1978, although this article is his own work and was not written in collaboration with any other member of the committee. The article is a little long and technical, but the quotation below comes from the conclusion:
It is always too early to make definitive conclusions, but the recent 2009 peak in new claims looks sufficiently similar to previous recession peaks to allow a conclusion that it is highly probable that the new claims peak has now occurred. The evidence provided here suggests several differences between the recent peak and previous false peaks in earlier recessions. The recent peak occurred much later in the recession than previous false peaks, and the run-up of new claims in the two months prior to the recent peak was substantially faster than in previous false peaks.
To this point I have examined a single indicator to see if it is useful in predicting the end of recessions without any consideration of what is going on in the rest of the economy. Our conclusion is supported by the fact that previous false peaks occurred when new claims were at 80 to 90% of the level at the ultimate true peak. For the peak of 4 April 2009 to be false by this historical precedent, the ultimate future peak would have to be in the range of 730,000 to 800,000. As the weeks go by, such a sharp future increase in new claims looks increasingly implausible.
Bottomline – The US turn-around will come in May or June 2009
My reasoning leads me to conclude that the ultimate NBER trough of the current business cycle is likely to occur in May or June 2009, substantially earlier than is currently predicted by many professional forecasters.
Real Time Economics, a blog at the Wall Street Journal, looked at a forthcoming Census Bureau report about "...the phenomenon of women voluntarily leaving the workforce after having kids." That the report finds both the poorest and richest families are the ones whose mothers leave the workforce doesn't seem too surprising; what isn't addressed but seems more significant is that the child care industry relies almost solely upon the middle class for its customer base. (What does that say about American family values?)
One of the potential problems with this blog post it that it only addresses the economic factors in this type of decision (more specifically, family income levels); It doesn't address any non-economic reasons for why women might stay at home to raise their children. Likewise, as one woman commented, the report (at least as commented on by the WSJ) only talks about women who stay at home and not about any men who might do the same.
...[M]ost working women return to the work force a year after having a child. With women’s earnings making up a significant chunk of household income, the demographers say, families may find it too costly to punt on a second paycheck or an additional retirement account.
The Census study found that women at the highest income levels (those above $200,000), or whose husbands are at the highest income levels, are slightly more likely than median income earners to opt out of the labor force — meaning that, indeed, some rich women bail out on work to raise their kids.
Another group that was more likely to opt out were women with household incomes less than $50,000 — and among that group the opt-out effect was largest among those with household incomes less than $20,000. In other words, they can’t afford child care so they stay home instead of working.
The March US regional and state unemployment figures were released on April 17th. The figures, overall, continue to worsen, although there was some slight signs of improvement in several states. One state, North Dakota, and the District of Columbia had declining unemployment rates, while three states recorded no change in the past month. On the other hand, Indiana has joined the ranks of states with double-digit unemployment rates, which now total eight. Here are some of the highlights:
Overall, the "official" national unemployment rate (U-3) increased by 0.4%, from 8.1% to 8.5%, over February's number. For the past twelve months, the national rate has increased by 3.4%.
For the most inclusive unemployment rate measured (U-6), the increase was 0.8%, from 14.8% to 15.6%. For the past twelve months, U-6 has increased by 6.5%.
In terms of monthly change, the state with the largest increase was Oregon, with an increase of 1.4%. Washington and West Virginia tied for the second largest increase, at 0.9%, while Wisconsin came in fourth with a 0.7% increase.
On an annual basis, four states have increases over 5.0%: Oregon at 6.6%, South Carolina at 5.5%, North Carolina at 5.5%, and Michigan at 5.0%.
The states with the lowest annual increases are North Dakota at 1.2%, Iowa at 1.3%, Nebraska at 1.5%, Louisiana and Wyoming at 1.6%, Arkansas at 1.7%, and Utah at 1.9%.
A total of eight states now have double-digit unemployment rates, up from seven in February. The state with the highest unemployment rate is Michigan, at 12.6%, up 0.6%. Oregon comes in second with a rate of 12.1% (up 1.4%), and South Carolina places third with a rate of 11.4% (up 0.5%). In fourth place is California with a rate of 11.2%, up 0.6%. In fifth place is North Carolina at 10.8% (up 0.1%); in sixth is Rhode Island at 10.5% (no change), and in seventh is Nevada at 10.4% (up 0.4%). The newest state in the ranks of the double-digit unemployment rates is Indiana, at 10.0%, up 0.6%.
The state of North Dakota and the District of Columbia both had positive (i.e., negative) changes in their unemployment rates. Both dropped down 0.1% each, from 4.3% to 4.2% for North Dakota, and from 9.9% to 9.8% for Washington D.C.
As mentioned above, Rhode Island (10.5%) had no change in its unemployment rate between February and March; the other two states with no change are Georgia (9.2%) and New York (7.8%).
The states with the lowest unemployment rates continue to be North Dakota (4.2%, down 0.1%), Wyoming (4.5%, up 0.6%), Nebraska (4.6%, up 0.3%), South Dakota (4.9%, up 0.3%) and Utah (5.2%, up 0.1%).
In terms of non-farm payroll employment (i.e., number of jobs), the states with the biggest decreases since February are California (-62,100), Florida (-51,900), and Texas (-47,100).
For annual changes in non-farm payroll employment, the states with the biggest decreases are California (-637,400), Florida (-424,300), Michigan (-270,500), and Illinois (-232,600).
The PDF version of the Bureau of Labor Statistics press release can be found here.
The February US regional and state unemployment figures were released on March 27th. The figures, overall, continue to be bad, although some of the over-the-month rate changes between January and February were not as severe as they were the month before. One state, Nebraska, also had a declining unemployment rate. On the other hand, the number of states with double-digit unemployment rates has increased to seven. Here are some of the highlights:
Overall, the "official" national unemployment rate (U-3) increased by 0.5%, from 7.6% to 8.1%, over January's number. For the past twelve months, the national rate has increased 3.3%.
For the most inclusive unemployment rate measured (U-6), the increase was 0.9%, from 13.9% to 14.8%. For the past twelve months, U-6 has increased by 5.8%.
In terms of monthly change, the states with the largest increases were North Carolina and Oregon, with changes of 1.0% each. One state, New Jersey, had a 0.9% increase, while four states had 0.8% increases. Those states are Georgia, Hawaii, New York and West Virginia.
On an annual basis, three states have increases over 5.0%: North Carolina at 5.5%, Oregon at 5.4%, and South Carolina at 5.3%. Michigan and Nevada are tied for fourth at 4.6%.
The states with the lowest annual increases are Iowa at 1.0%, Wyoming at 1.1%, Nebraska at 1.2%, and North Dakota at 1.3%.
A total of seven states now have double-digit unemployment rates, up from four in January. The state with the highest unemployment rate is Michigan, at 12.0%, up 0.4%. South Carolina comes in second with a rate of 11.0% (up 0.6%), and Oregon places third with a rate of 10.8% (up 1.0%). In fourth place is North Carolina with a rate of 10.7%, also up 1.0%. Tied for fifth place is California and Rhode Island, both with a rate of 10.5%, up 0.4% for California and 0.2% for Rhode Island. The seventh place state, Nevada, also has double-digit unemployment with a rate of 10.1%, up 0.7%.
The states with the lowest unemployment rates continue to be Wyoming (3.9%, up 0.2%), Nebraska (4.2%, down 0.1%), North Dakota (4.3%, up 0.1%), South Dakota (4.6%, up 0.2%) and Iowa (4.9%, up 0.1%).
In terms of non-farm payroll employment (i.e., number of jobs), the states with the biggest decreases since January were California (-116,000), Florida (-49,500), and Texas (-46,100).
For annual changes in non-farm payroll employment, the states with the biggest decreases are California (-605,900), Florida (-399,400), Michigan (-277,000), and Ohio (-222,100).
The PDF version of the Bureau of Labor Statistics press release can be found here.
The January US regional and state unemployment figures were released on March 11th. The figures, overall, continue to get worse, although there was one minor bright spot in the District of Columbia. Here are some of the highlights:
Overall, the "official" national unemployment rate (U-3) increased by 0.4%, from 7.2% to 7.6%, over December's number. For the past twelve months, the national rate has increased 2.7%.
For the most inclusive unemployment rate measured (U-6), the increase was 0.4%, from 13.5% to 13.9%. For the past twelve months, U-6 has increased by 4.9%.
In terms of monthly change, the states with the largest increases were North Carolina, Oregon, and South Carolina, all with a 1.6% increase; four states had a 1.4% increase, California, Indiana, Michigan, and Ohio, while three states had a 1.3% increase, Alabama, Maine and Washington.
On an annual basis, two states tied for the largest increase, North Carolina and South Carolina, both at 4.7%. The next three are Oregon (4.6%), Indiana (4.4%), and Michigan (4.3%).
The states with the lowest annual increases are Iowa at 0.9%, Wyoming at 1.0%, and North Dakota and West Virginia at 1.2%.
The state with the highest unemployment rate is Michigan, which increased 1.4% to 11.6%; South Carolina comes in second with a rate of 10.4% (up 1.6%), and Rhode Island places third with a rate of 10.3% (up 0.9%). California also has a double-digit unemployment rate of 10.1%, up 1.4%.
The states with the lowest unemployment rates continue to be Wyoming (3.7%, up 0.3%), North Dakota (4.2%, up 0.7%), Nebraska (4.3%, up 0.3%) and South Dakota (4.4%, up 0.5%).
In terms of non-farm payroll employment (i.e., number of jobs), the states with the biggest decreases since December were California (-79,300), Michigan (-60,800), Ohio (-59,600) and Texas (-50,600).
The one bright spot in terms of non-farm payroll employment was an increase in the number of jobs in the District of Columbia, up 5,800 (perhaps due to the change in administration and a corresponding ripple effect through the local economy).
For annual changes in non-farm payroll employment, the states with the biggest decreases are California (-494,000), Florida (-355,700), Michigan (-263,800), and Ohio (-214,600). Wyoming is the only state that continues to have a positive annual change in employment, up 7,000 jobs for the year.
The PDF version of the Bureau of Labor Statistics press release can be found here.
My first thought was, while comparing the current recession to the previous two downturns makes sense, I didn't know how this recession compared to the others before 1990-91, such as the big recession in 1981-82 (a vivid memory for myself). Were there any recessions that were worse than either 1981-82 or 2007-09? (For my analysis, I'm using November 2007 as the start of the current recession.)
What I did was to download the US employment levels data, seasonally adjusted, from the Bureau of Labor Statistics (BLS) for the period of January 1948 to the present. From this data, I found nine downturns in which employment sank on a significant basis, followed by a recovery period. I then took percentages from the nine downturns in which the highest level of employment prior to the downturn (the peak month) is equal to 100%. Following months, through to the point where the employment level once more reached the level of the peak month, were then compared as a percentage to the peak month.
What I found is that the 2007-09 recession is already the eighth worst downturn of the nine. Through January 2009, the employment level is at 96.89% of the peak month's level, a drop of 3.11%. Only the 1953-54 recession is worse (-3.82%). And, of course, there is no bottom in sight yet for the 2007-09 data; if current trends continue, 1953-54's record will be broken in either February or March at the latest.
Adding to the distress is the fact that 2007-09 is already in its fourteenth month past the peak. Only two other downturns took longer: 1953-54, which lasted sixteen months, and 1981-82, which lasted twenty months.
Eventually, of course, previous recessions reached a bottom and then began a period of economic recovery. Of the eight previous recoveries, the average length of time was 12.38 months from the trough month through to the level where employment reached the previous peak. (It should be noted, though, that the previous two recoveries, 1991-93 and 2002-03, took twenty-one and seventeen months respectively, which were by far the two longest recoveries since 1948.)
If the 1953-54 recession is any guide to what may be in store for this recession, any recovery back to November 2007 employment levels will not occur prior to March 2010 at the earliest, and quite possibly not until August-December 2010.
Let's hope I'm wrong, and that we reach the trough and the recovery months more quickly.
Here's a graph to make you wet your pants a little. As The Gavel points out, the current recession is much, much more serious in terms of job losses to date (3.6 million and counting) than the previous two. And there's no bottom in sight.
This chart compares the job loss so far in this recession to job losses in the 1990-1991 recession and the 2001 recession – showing how dramatic and unprecedented the job loss over the last 13 months has been. Over the last 13 months, our economy has lost a total of 3.6 million jobs – and continuing job losses in the next few months are predicted.
By comparison, we lost a total of 1.6 million jobs in the 1990-1991 recession, before the economy began turning around and jobs began increasing; and we lost a total of 2.7 million jobs in the 2001 recession, before the economy began turning around and jobs began increasing.
Overall, the "official" national unemployment rate (U-3) increased by 0.4%, from 6.8% to 7.2%, over November's number. (November's percentage was revised upward by 0.1%.) For the past twelve months, the national rate has increased 2.3%.
For the most inclusive unemployment rate measured (U-6), the increase was 0.9%, from 12.6% to 13.5%. For the past twelve months, U-6 has increased by 4.8%.
In terms of monthly change, the states with the largest increases were Indiana and South Carolina, both with a 1.1% increase; six states had a 1.0% increase: Massachusetts, Michigan, Nevada, New Jersey, New York and Oregon.
On an annual basis, the state with the largest increase continues to be Rhode Island with an increase of 4.8%. North Carolina remains in second place with an increase of 4.0%, and Nevada has jumped into third with an increase of 3.9%.
The states with the lowest annual increases are North Dakota at 0.3%, Arkansas at 0.7%, and Iowa and Oklahoma at 0.8% each.
The state with the highest unemployment rate is Michigan, which increased 1.0% to 10.6%; Rhode Island remains in second place, with a rate of 10.0% (up 0.7%). South Carolina comes in third at 9.5% (up 1.1%).
The states with the lowest unemployment rates continue to be Wyoming (3.4%, up 0.2%), North Dakota (3.5%, up 0.2%), and South Dakota (3.9%, up 0.5%).
In terms of non-farm payroll employment (i.e., number of jobs), the states with the biggest decreases since November were California (-78,200), Michigan (-59,000), and New York (-54,000).
For annual changes in non-farm payroll employment, the states with the biggest decreases are California (-257,400), Florida (-255,200), and Michigan (-173,000). Texas continues to be the nation's bright spot, with an annual increase of 153,700, down 67,500 from November.
The PDF version of the Bureau of Labor Statistics press release can be found here.
A short, interesting Freakonomics blog post over at The New York Times: what do people do when they're unemployed? Are they lazy with an excess amount of free time on their hands? Or do they try to be busy and find ways to raise money while working at home?
How do unemployed people spend their time? How does unemployment affect time use in the entire economy? What is the lost output from unemployment, and what is the utility loss?
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The unemployed use the time freed up from work for pay almost entirely in leisure and personal maintenance; they do no more household work than employed people. Similarly, in areas where unemployment is perennially high, there is less work for pay, more leisure, but no more household production.
But when unemployment suddenly rises, as in a recession, people shift from work for pay to household production; people don’t take more leisure time than before.
So if we would measure output to include production at home, we would infer that a recession doesn’t reduce total output by as much as we thought; and perhaps the utility burden of a short recession is not as severe as one might imagine.
One of the most common reasons given why young people should stay in school is that the more education they have, generally speaking, the higher their income level will be. For example, a person with a graduate degree should make more money than someone with only a Bachelor's degree, a person with a Bachelor's degree should make more money than a high school graduate, and so on. Of course there are exceptions but, in general, this statement is fairly accurate.
Another reason to stay in school is that the more education one has, the more likely one won't be unemployed. The proof? The Bureau of Labor Statistics (BLS) publishes a monthly report called The Employment Situation. In this report the BLS slices and dices the employment and unemployment numbers in a number of different ways, one of which is to look at the employment and unemployment numbers by the level of education people 25 years and older have (Table A-4). What the report shows is that there is a consistent pattern in terms of the unemployment rate vs. the amount of education people have. The more education one has, the lower the unemployment rate. In December 2008:
Those who had less than a high school diploma had an unemployment rate of 10.9%
For high school graduates with no college education, the unemployment rate was 7.7%
For those people who either had some college education or an associate's degree, the unemployment rate was 5.6%
For those people with a Bachelor's degree or higher (Master's, professional, or doctorate), the unemployment rate was 3.7%
Keep in mind that the overall unemployment rate for December was 7.2%.
I get a lot of hits from businesses and universities because I tend to write on topics that are of interest to them; for these people I'm preaching to the choir. (Although, if you're in college but considering dropping out, don't! Obviously the odds are better for you in these rough economic times to continue to stay in school until you at least get your Bachelor's degree.) For those of you who are in high school (or teaching high school students, get the message out to), stay in school! Go on to college if you can. It's far easier to ride out a recession if you have a job and are making money than not. The odds will be in your favor.
The November US unemployment figures were released recently. The figures, overall, are continuing to get worse. Here are some of the highlights:
Overall, the "official" national unemployment rate (U-3) increased by 0.2%, from 6.5% to 6.7%, over October's number. For the past twelve months, the national rate has increased 2.0%.
For the most inclusive unemployment rate measured (U-6), the increase was 0.7%, from 11.8% to 12.5%. For the past twelve months, U-6 has increased by 4.1%.
In terms of monthly change, the state with the largest increase was Oregon (again), with a 0.9% increase; North Carolina had the next largest increase, at 0.8%, and the District of Columbia and Indiana had increases of 0.7% each.
On an annual basis, the state with the largest increase continues to be Rhode Island with an increase of 4.1%. North Carolina has moved into second place, with an increase of 3.2%, and Georgia and Idaho are tied for third with increases of 3.0% each.
The states with the lowest annual increases are Nebraska at 0.4%, Iowa and South Dakota at 0.5%, Wisconsin at 0.8%, and Kansas, New Hampshire and Utah at 0.9%.
The state with the highest unemployment rate is Michigan, which increased 0.3% to 9.6%; Rhode Island, which was tied for the highest rate in October remained at 9.3% to place second. California and South Carolina are tied for third with a rate of 8.4%.
The states with the lowest unemployment rates continue to be Wyoming (3.2%), North Dakota (3.3%), and South Dakota (3.4%). Utah has been joined by Nebraska at 3.7% each.
In terms of non-farm payroll employment (i.e., number of jobs), the states with the biggest decreases since October were Florida (-58,600), North Carolina (-46,000), California (-41,700), Michigan (-36,900) and Georgia (-30,000).
For annual changes in non-farm payroll employment, the states with the biggest decreases are Florida (-206,900), California (-136,000), Michigan (-112,700), and Arizona (-82,200). Two states continue to have statistically significant increases over the past year: Texas (221,200; down 9,200 from October) and Wyoming (8,200; down 1,300).
The PDF version of the Bureau of Labor Statistics press release can be found here.
Harold Meyerson at the Washington Post had an interesting article today; however, it was the second half that I want to highlight:
Lesson Two: In matters economic, the Civil War isn't really over.
If Abraham Lincoln were still among the living as he prepared to turn 200 six weeks from now, he might detect in the congressional war over the automaker bailouts a strong echo of the war that defined his presidency. Now as then, the conflict centered on the rival labor systems of North and South. Now as then, the Southerners championed a low-wage, low-benefits system while the North favored a more generous one. And now as then, what sparked the conflict was the North's fear of the Southern system becoming the national norm. Or, as Lincoln put it, a house divided against itself cannot stand.
Over the past century, of course, the conflict between North and South has been between union and non-union labor. The states of the industrial Midwest and the South had common demographics (Appalachian whites and African Americans, though the Northern states also were home to Catholics of Eastern European origin) but developed two distinct economies.
Residents of the unionized north enjoyed higher living standards, both from their paychecks and the higher public outlays on health and education, than did their counterparts in the union-resistant South.
But, just as Lincoln predicted, the United States was bound to have one labor system prevail, and the debate over the General Motors and Chrysler bailout was really a debate over which system -- the United Auto Workers' or the foreign transplant factories' -- that would be. Where the parallel between periods breaks down, of course, is in partisan alignment. Today's congressional Republicans are hardly Lincoln's heirs. If anything, they are descendants of Jefferson Davis's Confederates.
This argument is not completely novel; for example, Kevin Phillips spent a significant chunk of his book American Theology on the influence of the South over American politics (which Richard Nixon exploited in his Southern strategy). This is where it's a necessity to revitalize the Frostbelt's economy and, in particular, to rebuild the infrastructure - not only of the entire United States - but especially of the country's northern tier. The north needs to rally around unionization in order to increase personal income levels and to improve the region's education and health care, as Meyerson points out.
From a political perspective this means that the Democrats must cut through the Republicans' BS and pass the legislation necessary to help stimulate the economy. Monetary policy at this point is nearly useless. Fiscal policy, in the form of government spending, is the only significant tool available to the government in order to speed up the recovery of the American economy and to improve the country's future business competitiveness.
In an announcement that was of little surprise to most of us, the National Bureau of Economic Research (NBER) finally declared that the United States has been in a recession since December 2007. What may not be quite as well known is that not every state is necessarily undergoing an economic recession at any given time. I thought it might be interesting to see which states are doing well despite the recession and which states are suffering the most.
...combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average).
Based on this index number, individual state economies can be compared against each other and the nation as a whole to see how well the state is doing. The Philadelphia Fed also create month-by-month color-coded maps so that one can see at a glance each state's performance. Below is the most recent map available, from October 2008. (You can find all of the previously published maps since January 2005 here.)
Looking at the data since December 2007, when the recession officially started, what we find is that fourteen states have actually had economic growth as a percentage change over the past eleven months. Thirty-five states have had a contracting economy while one state (Kansas) has had neither a recession nor growth (a 0.0% "change"). (There is no data for the District of Columbia.) The fourteen states, in order of decreasing economic performance, are: Wyoming, Texas, South Dakota, New Hampshire, North Dakota, Virginia, New York, West Virginia, Colorado, Oklahoma, Louisiana, Nebraska, Massachusetts, and California. What's surprising to me is that California is in this list as they currently have the third highest unemployment rate in the country.
On the other side, the bottom ten states since last December are Delaware (41st), Arizona, South Carolina, Pennsylvania, Rhode Island, Michigan, Idaho, Nevada, Washington, and Oregon (50th). All of these states have had their index drop by at least 2.2% since December and, in the cases of the latter four, by over 4.0%. (Oregon's index has dropped by a whopping 6.1%.)
Of course these index numbers can change significantly from month to month. Both Oregon and Nevada have seen their index numbers drop by double digits within the eleven-month span (and not for the better). However, while things may look gloomy for some individual states, the economy may become better for them within a short period of time while the rest of the country labors under the current recession.
The October US unemployment figures were recently released and, with very few exceptions, the numbers are rather dismal. (Highlights can be found here.) The numbers that were released, however, are only the "official" statistics. Meaning, the official unemployment rate that the U.S. Bureau of Labor Statistics gives out in its monthly press release is only one of six unemployment rates that it actually calculates. The "official" unemployment rate is the not-so-imaginatively named "U-3." There are two smaller unemployment rates (U-1 and U-2), and three larger (U-4 through U-6). What I'm concerned about is U-6.
The official definition of U-6 is:
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.
...where...
Marginally attached workers are persons who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the recent past. Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not currently looking for a job. Persons employed part time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule.
Yada yada yada.
In essence, U-6 covers everyone who's either unemployed, whether they receive unemployment benefits or not, or might be working a part-time job but who really want to be working full-time (i.e., they're underemployed).
On to the statistics then. In October, the "official," U-3 unemployment rate was 6.5%. This is the highest unemployment rate we've seen since March 1994. However, the U-6 unemployment rate in October was 11.8%. This is the fourth month in a row that U-6 has been over 10%, with the lowest rate this year having been in February, at 8.9%. The last time U-6 was this high was in January 1994, when it was 11.8%. (Ironically, this is also the very first month U-6 was published.)
As most economists are presuming today, the country is almost certainly in a recession at this time (even though it hasn't been officially announced yet). How do these unemployment rates, then, compare against the last three recessions? U-6, being a rather limited series of data, only covers one time period when unemployment was almost as bad as it is today. In June 2003, U-3 peaked at 6.3%, while U-6 peaked in September, at 10.4%; the largest spread between the two unemployment rates that year was 4.3%.
The next earliest spike in unemployment rates happened in June 1992, when U-3 reached 7.8%. However, there wasn't any U-6 rate at that time, so we can only guess what it might have been. Doing a little spreadsheet analysis, my own guess is that the spread between U-3 and U-6 at the time was about 5.3%; add that to the 7.8% and the hypothetical U-6 unemployment rate may have been about 13.1%. The worst of the three recessions, though, was that of the early 80s. U-3 peaked in November and December 1982 at 10.8%; this is the only time U-3 has ever peaked above 10% since 1948, when the current series of unemployment rate data starts. Assuming that the spread between U-3 and the hypothetical U-6 was still around 5% at that time (and I think it may have actually been larger), total unemployment and underemployment probably would have been around 16% in late 1982.
So. Unemployment is bad now. It's slightly worse than it was six years ago, but it's also not as bad as it was back in the early 90s or the early 80s, which was much, much worse. Consider that your positive thought for the day. ;)
A couple blogs I read have commented about the Youtube video (below) of financial commentator Peter Schiff's predictions from 2006 and 2007 about the current financial crisis. Crooks & Liars has given a very simplistic response: "Peter Schiff was right." Yeah, of course; so? Angry Bear thinks the real problem is that the various shows Schiff has appeared on (primarily Faux News, CNBC, and Bloomberg) deal in economic propaganda:
If we do not learn to understand "crap" reporting, if we do not learn to understand story telling for selfish purpose, if we do not learn to understand that propagandizing is not solely a political tool, but more importantly an economic tool, we will not solve our's and the worlds current economic condition.
That's true, but I'm not completely convinced that the problem is that the financial news shows and networks are really propagandizing. To me, propagandizing involves deceit, either through lying by omission, providing a loaded message or, as in the case of the Bush misadministration, just plain lying. I'm not sure that the financial news shows and networks are necessarily lying per se (even Faux News, although they do so blatantly on political news); instead, these people are "religious" fanatics. They have become true believers in the Gordon Gecko mantra "Greed is good." With the American economy jimmied through debt instruments (such as bonds), not even significant economic problems in the past (e.g., the Crash of 1987, the S&L crisis of the late 80s-early 90s, or the recessions of 1990-91 or 2001-02) have caused any doubt in their minds that the system is broken. Schiff, to me, is like the woman from Greek mythology, Cassandra.
Cassandra, the daughter of King Priam of Troy, was loved by Apollo, who gave her the gift of prophecy; however, because she would not return his love, he cursed her to correctly predict the future yet never be believed:
In more modern literature, Cassandra has often served as a model for tragedy and Romance, and has given rise to the archetypal character of someone whose prophetic insight is obscured by insanity, turning their revelations into riddles or disjointed statements that are not fully comprehended until after the fact. (Wikipedia)
Schiff correctly predicted the future several years ago, beginning to warn of the structural problems in the economy (that have not been addressed yet, despite all these billions of dollars being spent in bailouts), yet, at that time, Schiff's message was largely ignored if not publicly derided. (Has Laffer ever paid Schiff the one cent bet and written a letter of apology?) The paradigm, that "Greed is good" and the idea that the American economy can survive on debt and a service economy while hollowing out the manufacturing sector, needs to be broken. Now if that paradigm is "propaganda," then I'll agree with that too.
A good article on Islamic finance (if you're interested in the subject) at VoxEU, the European economics blog. The three authors, all of whom work for the International Monetary Fund (IMF), give a brief analysis of the state of the Islamic finance market, a listing of significant challenges facing the industry, and some concluding remarks. Below are some excerpts, primarily from the introduction and the conclusion; the section on challenges is significant and noteworthy, but I'll let my readers go to the original post to read it if they're interested.
BTW, in case you're unfamiliar with the Latin phrase, "Quo Vadis?", it means, "Where are you going?"
Since the summer of 2007, the global financial system has undergone a period of dramatic turbulence, which has caused a widespread reassessment of risk in both developed and emerging economies. The global financial turbulence appears to have had a limited impact on the Islamic finance industry, which has been in an expansionary phase in recent years (Economist, 2008; Financial Times, 2008). This rapid growth has been fueled not only by surging demand for Sharia’ah compliant products from Muslim financiers but also by investors around the world, rendering the expansion of Islamic finance a global phenomenon. In fact, there is currently over $800 billion worth of deposits and investments lodged in Islamic banks, mutual funds, insurance schemes (known as takaful), and Islamic branches of conventional banks.
...
...[P]erhaps the most striking has been the growth of sukuk, the most popular form of securitized credit finance within Islamic finance. sukuk commoditize capital gains from bilateral risk sharing between borrowers and lenders in shari’ah-compliant finance contracts into marketable securities without interest rate charges.
The sukuk market has held its own amid groundswell concern about the credit crunch and dysfunctional money markets. Although the current level of issuance remains a fraction of the global volumes of conventional bonds and ABS, the sukuk market had soared in response to growing demand for alternative investments before the first episode of severe market disruptions in 2007 showed first effects (Jobst et al, 2008). Gross issuance of sukuk has quadrupled over the past few years, rising from $7.2 billion in 2004 to close to $39 billion by the end of 2007, owing in large part to enabling capital market regulations, a favorable macroeconomic environment, and large infrastructure development plans in some Middle Eastern economies (see Figure 1).
By 2008, however, sukuk volumes dropped to $15.2 billion (about 50%) while the structured finance market dried up with just $387 billion issued (down by about 80%) during the same time. Factors contributing to this decline include the presentation of new rules on sukuk, the global financial crisis, and Gulf states’ currency risk. The slowdown in issuance was most pronounced in Malaysia, where fewer domestic transactions at smaller volume have balanced the market shares of Gulf Cooperation Council and Southeast Asian countries.
The rapid evolution of Islamic finance activities points to the available profit opportunities that beckon. This in turn has prompted a vetting process among a number of jurisdictions around the world to establish themselves as leading Islamic financial centres. In this regard, the case of London is perhaps the most remarkable insofar as it has managed to extend its leading position in world financial markets to become a center for Islamic finance. Similarly, Hong Kong, New York, and Singapore are also making important advances to accommodate Islamic finance within their jurisdictions and aspire to join the ranks of the more established Islamic centers such as Bahrain, Dubai, and Kuala Lumpur.
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Islamic finance faces many challenges, including recent regulatory changes, illiquidity issues, liquidity risk management concerns, need for harmonized regulation, regulatory disparity amongst national supervisors, and a potentially unlevel playing field.
...
Despite the number of challenges outlined above, the long-term prospects look promising for Islamic finance. Financial institutions in countries such as Bahrain, the United Arab Emirates, and Malaysia have realized considerable demand for shari’ah-compliant assets and are gearing up for more shari’ah-compliant financial instruments and structured finance. In addition, financial innovation, driven by both domestic and foreign banks, will promote alternatives modes of intermediation and contribute to further development and refinement of shari’ah compliant derivative contracts.
As Islamic finance comes into its own, greater regulatory harmonization will be inevitable. Recent efforts have addressed legal uncertainty imposed by Islamic jurisprudence, discrepancies of national guidelines, and poorly developed uniformity of market practices. The Islamic Financial Services Board has moved ahead with its standardization efforts of the Islamic financial services industry that will foster the soundness and stability of the system. Globally accepted prudential standards have been adopted by the Islamic Financial Services Board that smoothly integrate Islamic finance with the conventional financial system.
Finally, despite the declining global sukuk issuance in 2008, emanating from both the Accounting and Auditing Organization of Islamic Financial Institutions decision and the impact of the financial crisis, the sukuk market will regain momentum, driven by demand from financial institutions, insurance companies, and pension funds across Islamic and non-Islamic countries. Many challenges still lie ahead, but the banks’ search for profitable opportunities and the ensuing financial innovation process in tandem with favorable regulatory developments at domestic and international levels will ensure that the Islamic finance industry will continue to develop at a steady pace in the long-run. The jury is still out how Islamic finance will be affected in the short-run by the repercussions of the global financial crisis.
The November US regional and state unemployment figures was recently released. The figures show an overall decrease in the unemployment rates. A total of 37 states had their unemployment rates decrease, while the numbers for 8 states increased; six states had no change. The number of states with double-digit unemployment rates remains at fifteen (not including Puerto Rico). Here are some of the highlights:
