Early Indications Show Rise In December Unemployment

Unemployment in December may have worsened.

The federal government posted joblessness data for November which disappointed most analysts and politicians. These are people who have supported platforms which they believe will help create employment.

There is hope that the new $801 billion tax cut program that just passed by Congress will give businesses an incentive to hire. President Obama recently hosted 20 CEOs. One of his key messages to them was that it is time to add jobs at their companies, particularly because American company balance sheets hold nearly $2 trillion in cash. The tax bill may also improve household balance sheets enough to improve consumer spending which is still nearly two-thirds of GDP.

The December jobs picture looks bleak so far. A new Gallup poll shows that unemployment “increased to 9.3% in mid-December — up from 8.8% at the end of November and roughly matching the 9.2% of mid-November.”

The figures were much worse for people who do not have full-time work but would like to:

The percentage of part-time workers who want full-time work increased to 9.2% of the workforce in mid-December — up from 8.4% at the end of November, and the highest since mid-September. This suggests that the situation facing those working part time but looking for full-time work has deteriorated sharply during recent weeks.

The two numbers taken together indicate that the jobs situation is as bad as it was in the summer:

The increase in Gallup’s U.S. unemployment rate and the substantial worsening in the percentage of part-time workers wanting full-time work combined to send underemployment surging to 18.5% in mid-December from 17.2% at the end of November. Underemployment now matches the levels seen in September and mid-October

Gallup assigns some of the blame for the deteriorating figures to the end of the holiday hiring season.

The trend puts an even greater burden on the decision to extend Bush tax cuts.

Douglas A. McIntyre