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August 7th, 2009

Unemployment Rate Dips, Economy Ready to Move On

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We seem to have entered a stage of the recession which HSH VP Keith Gumbinger has referred to as the “garden variety” recession. Despite still being trapped amongst inconsistent economic reports, many key indicators, in this case the employment situation, seems to be trending in the right direction.

The number of jobs lost in July has been the lowest since last August. Surprisingly, despite another 247,000 Americans losing their jobs last month, the unemployment rate actually fell by 0.1%. While the falling unemployment rate certainly has many of us encouraged, the job market is still clawing its way out of a very deep hole.

Despite the smaller number of job losses, July marked the nation’s 19th consecutive month of job reductions, bringing the total number of job cuts to 6.7 million since the recession began in December of 2007. “Adjusting for population increase, the country needs to see a positive job growth of 130,000 in order to land the unemployment rate back to zero, said Gumbinger”

Back to notion of the ‘garden variety’: “The economy appears to have returned to the place it was just before Fannie, Freddie, and Lehman collapsed last September. We’re back to where we were before the deepest part of the recession occurred,” said Gumbinger. Instead of relying on extraordinary government programs to address the key issues of the collapse, the economy finally seems ready to begin rebuilding on its own.

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6 Responses to “Unemployment Rate Dips, Economy Ready to Move On”

  1. Lucia Says: August 7th, 2009 at 2:28 pm

    Does the unemployment rate include those whose benefits have run out?

  2. Tim Manni Says: August 7th, 2009 at 3:07 pm

    Hey Lucia,

    Yes it can. While the payroll section of the report is a survey conducted with businesses, the unemployment rate is derived from a survey of various households; so yes the unemployment rate can factor in people whose benefits have run out.

    Thanks for your question,
    Tim

  3. Mitch Says: August 8th, 2009 at 10:53 am

    I think it’s a false figure myself; then again, I would. :-)

    By false, I think there are two factors, one of which they even owned up to. One, I think many people are starting to drop off the rolls without finding new work. Two, it was acknowledged that many people who normally would have been laid off now because of seasonal positions are already out of work, so that figure was lower than normal.

    So, it may be a positive number that’s supposed to perk some people up, but I don’t think we’ve seen the half of it yet, which is somewhat depressing.

  4. Tim Manni Says: August 10th, 2009 at 10:53 am

    Hey Mitch,

    I have heard similar speculations. I can understand the seasonal explanation, but it sure seems early (the report covered July) that seasonal work (I’m assuming summer jobs) would be ending. It would be seem more logical if that came up in September or October’s report.

    So do you predict that the unemployment rate will rise next month?

    Great hearing from you,
    Tim

  5. maxwell Says: August 13th, 2009 at 11:03 am

    what is the jobless rate? Looking at the raw numbers the number of people going beyond 27 weeks increased. The decrease was only in those filling new unemployment and countered by those dropping into the “given up” or “part time” categories. Job reduction has slowed but we won’t really know how the economy is fairing until the fall in my opinion. The increases in stocks and housing are typical for bear markets. Looking back historically we’ve seen these kind of rises in the middle of recession/depressions only to really hit the skids at later points. Of course the bail out dollars are so huge that they may hide losses and job reduction for some time, hopefully in time for proper regulation and adjustments + a little innovation to true re ignite the economy in a sustainable direction. Our current gains are purely inflationary though. So don’t get your hopes up but keep working hard. That’s my two cents.

  6. Tim Manni Says: August 13th, 2009 at 11:18 am

    Maxwell,

    Thanks for your “two cents,” they’re always appreciated here.

    Wow, I’m sorry, I thought I mentioned it in the story but I didn’t. The jobless rate, just another way of saying unemployment rate, was, as of last month, 9.4% (it actually fell from June’s #).

    I agree with you that the fall will be an interesting time for those of us who are monitoring these things. The unemployment reports over the past 2-3 months have been real interesting, I’m really looking to August and September’s reports to give us a future indication.

    Thanks Maxwell,
    Tim

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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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