Misguided Optimism in Double-Digit Unemployment Rates

The Labor Department has a slew of data on the employment front this morning.  Actually, it is the unemployment front.  The data for unemployment in June showed a rate of 9.5%.  The bad news comes in the form of the change in non-Farm Payrolls, which came in at-467,000.  Where this gets tricky is inside the individual data and inside the weekly data.

Bloomberg’s consensus estimates for the change in non-Farm Payrolls was only -350,000.  The estimates on the overall unemployment rate was 9.6%.  The numbers for April were originally reported as being 9.4% unemployment and -345,00 for non-Farm Payrolls.

The weekly jobless claims came in at 614,000 and Bloomberg estimates were 619,000 in weekly jobless claims.  The week before was revised to  630,000 from a prior report of 627,000 preliminary claims.  Again, the focus here is on the continuing jobless of claims that are steadily in the unemployment benefits line.  This number fell by 53,000 to 6,751,500.  This may sound good, but this number might actually be easy to question at this point.

Amazingly, there is still much optimism under the surface here.  The 90% still working at least feel that way.  The bad news is that there is still a feeling that 10% unemployment is coming.  If you consider the discouraged, the underemployed, and the contract workers employed, we are already well through that number by a mile.

We’d love to look for the positives in this report, but all in all there aren’t any.  Hell, even the government cut 52,000 jobs.  The White House has said on multiple occasions now that 10% unemployment is coming in the near future.  Again, that is just what is counted and does not include the unofficial rate.

Ahead of the Fourth of July weekend, this sure brings about a challenge to the notion “fireworks.”

Jon C. Ogg
July 2, 2009