by Calculated Risk on 12/04/2009 11:09:00 AM

Two more graphs ...

Unemployed over 26 Weeks

Back in September, David Leonhardt wrote on the job churn rate in the NY Times:

Try thinking of it this way: All of the unemployed people in the country are gathered in a huge gymnasium that’s been turned into a job search center. The fact that this recession is the worst in a generation means that there are many, many people in the gym. The fact that the economy is churning so slowly means that there is not much traffic into and out of the gym.

If you’re inside, you will have a hard time getting out. Yet if you’re lucky enough to be outside the gym, you will probably be able to stay there.

Millions of workers are still stuck in that gymnasium, and a record number of workers have been unemployed for more than 26 weeks.

The blue line is the number of workers unemployed for 27 weeks or more. The red line is the same data as a percent of the civilian workforce.

According to the BLS, there are a record 5.887 million workers who have been unemployed for more than 26 weeks (and still want a job). This is a record 3.8% of the civilian workforce. (note: records started in 1948)

Diffusion Index

The second graph shows the BLS diffusion indexes for total private employment and manufacturing employment.

Think of this as a measure of how widespread the job losses are across industries. The further from 50 (above or below), the more widespread the job losses or gains reported by the BLS.

Both the "all industries" and "manufacturing" employment diffusion indices had been trending up - meaning job losses are becoming less widespread.

Back in March, I pointed out the increase in the diffusion index was "a sliver of good news" in a very grim employment report. The diffusion index in March suggested that the situation was no longer getting worse.

Now the index shows job losses are less widespread. However this still shows a minority of industries are hiring, and the index will probably be above 50 when the employment recovery begins. (For more on how this is constructed, see the BLS Handbook)

Earlier employment posts today:

Employment Report: 11K Jobs Lost, 10% Unemployment Rate for graphs of unemployment rate and a comparison to previous recessions.

Seasonal Retail Hiring, Employment-Population Ratio, Part Time Workers

by Calculated Risk on 12/04/2009 09:24:00 AM

Here are a few more graphs based on the employment report ...

Seasonal Retail Hiring

Retailers are hiring seasonal workers at slightly above the pace of last year ...

Typically retail companies start hiring for the holiday season in October, and really increase hiring in November. Here is a graph that shows the historical net retail jobs added for October, November and December by year.

This really shows the collapse in retail hiring in 2008.

Retailers only hired 54.2 thousand workers (NSA) net in October. This is essentially the same as in 2008 (59.1 thousand NSA). However retailers hired 321.3 thousand workers in November (NSA), an increase from the 233.7 thousand last year. This suggests retailers are a little more optimistic than last year.

Employment-Population Ratio

Click on graph for larger image in new window.

This graph shows the employment-population ratio; this is the ratio of employed Americans to the adult population.

Note: the graph doesn't start at zero to better show the change.

The general upward trend from the early '60s was mostly due to women entering the workforce.

This measure was flat at 58.5% in November; this is the lowest level since the early '80s.

The Labor Force Participation Rate fell to 65.0% (the percentage of the working age population in the labor force). This is the lowest since the mid-80s.

When the job market starts to recover, many of these people will reenter the workforce and look for employment - and that will keep the unemployment rate elevated for some time.

Part Time for Economic Reasons

From the BLS report:

The number of people working part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed in November at 9.2 million. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.

The number of workers only able to find part time jobs (or have had their hours cut for economic reasons) declined slightly to 9.246 million.

The all time record was set last month.

Earlier employment post today:

Employment Report: 11K Jobs Lost, 10% Unemployment Rate for graphs of unemployment rate and a comparison to previous recessions.

by Calculated Risk on 12/04/2009 08:30:00 AM

From the BLS:

The unemployment rate edged down to 10.0 percent in November, and nonfarm payroll employment was essentially unchanged (-11,000), the U.S. Bureau of Labor Statistics reported today.

Click on graph for larger image.

This graph shows the unemployment rate and the year over year change in employment vs. recessions.

Nonfarm payrolls decreased by 11,000 in November. The economy has lost almost 4.8 million jobs over the last year, and 7.2 million jobs¹ during the 23 consecutive months of job losses.

The unemployment rate decreased to 10.0 percent. Year over year employment is strongly negative.

The second graph shows the job losses from the start of the employment recession, in percentage terms (as opposed to the number of jobs lost).

For the current recession, employment peaked in December 2007, and this recession is the worst recession since WWII in percentage terms, and 2nd worst in terms of the unemployment rate (only early '80s recession with a peak of 10.8 percent was worse).

The 11,000 jobs lost was surprising and was much better than other indicators (like ADP, weekly initial claims, ISM reports) would have indicated. The decrease in the unemployment rate was expected because of the large increase last month (and the unemployment rate is noisy). More to come ...

¹Note: The total jobs lost does not include the preliminary benchmark payroll revision of minus 824,000 jobs. (This is the preliminary estimate of the annual revision that will be announced early in 2010).

by Calculated Risk on 12/04/2009 12:16:00 AM

Just a few forecasts ...

From CNBC: Look Ahead: Jobs Report Has Markets on Edge

Economists expect November's decline in non farm payrolls to come in at about 125,000, and unemployment is expected to hold steady at 10.2 percent. ... Bill Stone, chief investment strategist at PNC Wealth Management ... said PNC expects job losses of 150,000 for November.

From MarketWatch: Another 100,000 jobs lost, economists predict

Another 100,000 jobs were destroyed during November, according to the median forecast of economists surveyed by MarketWatch. It would be the 23rd consecutive month of job losses, the longest losing streak since the 1930s.

The official unemployment rate is expected to remain at 10.2%, the highest since 1983.

Goldman is forecasting the report will show 100,000 net jobs lost in November.

Best to all

by Calculated Risk on 12/03/2009 08:30:00 PM

From Bloomberg: Bank of America Raises $19.3 Billion in Share Sale at $15 Each

Bank of America Corp., which plans to repay $45 billion of U.S. government bailout money, raised $19.3 billion in a sale of securities at $15 apiece, a 4.8 percent discount to its common stock.

This means BofA should repay the $45 Billion in TARP money tomorrow or early next week.

I expect other banks - possibly Wells Fargo and Citigroup - to raise capital too. (ht jb)

by Calculated Risk on 12/03/2009 04:55:00 PM

In his 2001 testimony, Fed Chairman Alan Greenspan testified before the House Committee on the Budget, and while offering his usual cautions and caveats, Greenspan talked of surpluses for the foreseeable future.

Greenspan spoke of "an on-budget surplus of almost $500 billion ... in fiscal year 2010". The National Debt would soon be retired and the Boomer's retirements secure. Greenspan offered a projection of "an implicit on-budget surplus under baseline assumptions well past 2030 despite the budgetary pressures from the aging of the baby-boom generation, especially on the major health programs."

How did that work out?

The key point is that for the Fed to remain independent, the Fed Chairman - as a rule - should avoid all discussions of fiscal policy.

Now comes Fed Chairman Bernanke today on the deficit. From Ryan Grim at Huffington Post:

"Well, Senator, I was about to address entitlements," Bernanke replied [to Senator Bennett]. "I think you can't tackle the problem in the medium term without doing something about getting entitlements under control and reducing the costs, particularly of health care."

Bernanke reminded Congress that it has the power to repeal Social Security and Medicare.

"It's only mandatory until Congress says it's not mandatory. And we have no option but to address those costs at some point or else we will have an unsustainable situation," said Bernanke.
...
"Willie Sutton robbed banks because that's where the money is, as he put it," Bernanke said. "The money in this case is in entitlements."

No matter if people agree or disagree with Bernanke, to maintain independence the Fed Chairman should not be commenting on the deficit and entitlements.

And from Silla Brush at The Hill: Bernanke: 'Little bit early' to make case for second stimulus

Federal Reserve Chairman Ben Bernanke ... Bernanke emphasized that the government has spent less than half of the money in the $787-billion package passed earlier this year and that analysts are still determining its impact.

"Only about 30 percent of the funds have been disbursed," Bernanke said. "It's a little bit early to make a strong judgment, a little bit early to decide whether or not to do additional fiscal actions."

Once again - it doesn't matter whether you agree or disagree with Bernanke - he should not be talking about these issues.

A very poor performance today from the Fed Chairman.

by Calculated Risk on 12/03/2009 02:44:00 PM

From the Plain Dealer: AmTrust sale appears inevitable, according to attorneys

Peter Goldberg doesn't expect to be the CEO of AmTrust Bank much longer, but his expertise will be needed to help the AmTrust and its employees once the bank is taken over by regulators and sold to another bank.

That revelation was among many made Thursday during the initial hearing of AmTrust Bank's parent company, AmTrust Financial Corp., in U.S. Bankruptcy Court in Cleveland.

... attorneys for AmTrust Financial and its major creditors ... talked candidly about AmTrust's dismal condition and made it clear they've already started planning for what happens after AmTrust is sold.

This is probably forcing the FDIC's hand to take action soon (like tomorrow).

Here is another article from the Plain Dealer on the bankruptcy filing of the bank hold company: AmTrust's bankruptcy filing may be a lesson learned from WaMu

by Calculated Risk on 12/03/2009 11:57:00 AM

From HotelNewsNow.com: Luxury leads occupancy increases in STR weekly numbers

Overall, in year-over-year measurements, the industry’s occupancy fell 1.7 percent to end the week at 40.7 percent. Average daily rate dropped 6.7 percent to finish the week at US$84.81. Revenue per available room for the week decreased 8.4 percent to finish at US$34.54.

Click on graph for larger image in new window.

This graph shows the occupancy rate by week for each of the last four years (2006 through 2009 labeled by start of month).

Notes: the scale doesn't start at zero to better show the change. Thanksgiving was later in 2008 and 2009, so the dip doesn't line up with the previous years.

Data Source: Smith Travel Research, Courtesy of HotelNewsNow.com

This is a two year slump for the hotel industry. Although occupancy is off 1.7% compared to 2008, occupancy is off about 14% compared to Thansgiving week in 2006 and 2007.

The good news is the occupancy rate is at about the same level as 2008 (off just 1.7 percent). The bad news is this is a very low occupancy rate - 2009 will be the lowest since the Great Depression - and this is still pushing down room rates.

by Calculated Risk on 12/03/2009 10:04:00 AM

From the Institute for Supply Management: November 2009 Non-Manufacturing ISM Report On Business®

Economic activity in the non-manufacturing sector contracted in November after two consecutive months of expansion, say the nation's purchasing and supply executives in the latest Non-Manufacturing ISM Report On Business®.

The report was issued today by Anthony Nieves, C.P.M., CFPM, chair of the Institute for Supply Management™ Non-Manufacturing Business Survey Committee; and senior vice president — supply management for Hilton Worldwide. "The NMI (Non-Manufacturing Index) registered 48.7 percent in November, 1.9 percentage points lower than the 50.6 percent registered in October, indicating contraction in the non-manufacturing sector after two consecutive months of expansion. The Non-Manufacturing Business Activity Index decreased 5.6 percentage points to 49.6 percent, reflecting contraction after three consecutive months of growth. The New Orders Index decreased 0.5 percentage point to 55.1 percent, and the Employment Index increased 0.5 percentage point to 41.6 percent. The Prices Index increased 4.8 percentage points to 57.8 percent in November, indicating an increase in prices paid from October. According to the NMI, six non-manufacturing industries reported growth in November. Respondents' comments remain cautious about business conditions and reflect concern over the length of time for economic recovery."
...
Employment activity in the non-manufacturing sector contracted in November for the 22nd time in the last 23 months. ... Three industries reported increased employment, 11 industries reported decreased employment, and four industries reported unchanged employment compared to October. Comments from respondents include: "Permanent and seasonal layoffs" and "Some reduction in workforce due to slow second- and third-quarter sales."
emphasis added

This is a grim report. According to this survey, the service sector contracted in November, and employment also contracted at about the same rate as in October.

by Calculated Risk on 12/03/2009 10:01:00 AM

Fed Chairman Ben Bernanke's confirmation hearing before the Senate Banking Committee.

Here is the CNBC feed.

And a live feed from C-SPAN.

Prepared Testimony: Confirmation hearing