Unemployment Begins to Look Better

If unemployment figures improve, it will happen on the heels of the announcement that third-quarter GDP was 2.5%, a figure that was not expected just a month ago.

Better unemployment and GDP numbers would leave only the third piece of the crippled U.S. economy — housing — to improve to make a recovery from the 2007 to 2009 period complete.

According to new data from Gallup, “Unemployment, as measured by Gallup without seasonal adjustment, was 8.3% for the 30 days ending Oct. 23 — down sharply from 9.0% for the 30 days ending Sept. 4.” The economy could have added as many as 300,000 jobs in the month just ending if that is true. Most economists believe that an addition of 200,000 to 250,000 workers a month will be necessary to begin to steadily replace those put out of work in the recession period. The data also would indicate some optimism among businesses. Government layoffs continue, so private payroll additions would need to be substantial to cause an unemployment level improvements.

There continues to be concern that the 2.5% GDP figure for the past quarter was an anomaly and that the economy has begun to slow again as the holidays approach. An ongoing improvement will need to be confirmed, as usual, by a sharp rise in consumer spending. If the economy is adding jobs, consumer spending should return with some force in time for the end of year shopping season.

Methodology: Gallup classifies American workers as underemployed if they are either unemployed or working part time but wanting full-time work. The findings reflect more than 18,000 phone interviews with U.S. adults aged 18 and older in the workforce, collected over a 30-day period. Gallup’s results are not seasonally adjusted and are ahead of government reports by approximately two weeks.

Douglas A. McIntyre