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January 8th, 2010

Don’t Fall for Erratic Monthly Job Reports

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It’s easy to look at December’s jobless numbers and get down about the fact that 85,000 jobs were lost following November’s positive revision which found that 4,000 jobs were created, rather than the loss of the 11,000 as initially reported. It’s important that we remember to focus on the overall trend.

When you review the payroll changes over the last year, the number of jobs lost has continually improved: 584,000 jobs were lost in November of 2008, 463,000 in June of 2009, and “only” 85,000 last month.

Furthermore, job lossĀ  can still occur despite a growing economy. For example, up until the second quarter of 2008, the country experienced both economic growth as well as measurable job loss. Then the recession kicked in, eliminating economic growth. While economic growth is back (GDP was a positive 2.2% in the fourth quarter of 2009), job losses remain. That being said, the economy will have to continue to grow more strongly if we expect to bring workers back to the market.

This strategy of “trend spotting” is also effective when gauging the unemployment rate. While staying put at 10% in December, the unemployment rate is expected to keep rising. According to Moody’s Economy.com:

The unemployment rate, however, will remain firmly above 10% throughout the year. Employment is not expected to return to its prerecession peak earlier than 2013.

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2 Responses to “Don’t Fall for Erratic Monthly Job Reports”

  1. Mitch Says: January 16th, 2010 at 3:00 am

    I tend to believe that the real numbers to tell us where unemployment is will come in February, after all these temporary jobs, at least that’s my impression of why unemployment dropped a little bit, have been eliminated. Maybe I’ll be wrong, but I doubt it.

  2. Tim Manni Says: January 19th, 2010 at 10:56 am

    I guess we’ll have to wait and see.

    Thanks for commenting Mitch.
    -Tim

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