http://www.bloomberg.com/apps/news?pid=20601087&sid=aHA4PMI1G2ks Shrinking U.S. Labor Force Keeps Unemployment Rate From Rising By Bob Willis and Courtney Schlisserman Jan. 9 (Bloomberg) -- An exodus of discouraged workers from the job market kept the U.S. unemployment rate from climbing above 10 percent in December, economists said. Had the labor force not decreased by 661,000 last month, the jobless rate would have been 10.4 percent, according to economists including David Rosenberg at Gluskin Sheff & Associates in Toronto and Harm Bandholz at UniCredit Research in New York. “The actual unemployment rate is higher than shown by the official numbers,” Bandholz said yesterday after a Labor Department report released in Washington showed the economy unexpectedly lost 85,000 jobs in December while the jobless rate was unchanged. About 1.7 million Americans opted out of the workforce from July through December, representing a 1.1 percent drop that marks the biggest six-month decrease since 1961, the Labor Department report showed. The share of the population in the labor force last month fell to the lowest level in 24 years. December’s 10 percent unemployment rate matched the median forecast of economists surveyed by Bloomberg News. It was shy of the 26-year high of 10.1 percent reached two months earlier. The so-called underemployment rate -- which includes part- time workers who’d prefer a full-time position and people who want work but have given up looking -- rose to 17.3 percent in December from 17.2 percent. The number of discouraged workers, those not looking for work because they believe none is available, climbed to 929,000 last month, the most since records began in 1994. Length of Unemployment The backdrop to the disillusionment is that it’s taking longer and longer to find work, economists said. Workers were unemployed for 29.1 weeks on average last month, the most since records began in 1948. “Longer-term unemployment is one of the biggest problems,” said Bandholz. “Payroll declines will come to a halt in the next couple of months, but the people who are unemployed are having problems getting a job and it’s getting tougher by the month.” Revised figures showed payrolls climbed by 4,000 in November. The gain was the first since the economic slump began in December 2007. “Workers seem to be particularly discouraged by this recession,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. Participation Rate The participation rate, or the share of the population in the labor force, fell to 64.6 percent in December, the lowest level since 1985, from 64.9 percent. The labor force will probably grow this year as the economy continues to expand and Americans believe jobs will be easier to get. That will mean the unemployment rate will head higher because there won’t be enough jobs available to satisfy the demand for work. “The exodus from the labor force can’t contain the unemployment rate indefinitely,” said Ryan Sweet, a senior economist at Moody’s Economy.com in West Chester, Pennsylvania. “We expect unemployment to resume rising over the next few months, peaking near 10.5 percent in the third quarter.” Federal Reserve policy makers, while noting stabilization in the labor market, have expressed concern about unemployment and poor job prospects. That’s one reason policy makers will keep the benchmark interest rate near zero longer than most anticipate, said John Ryding. Fed ‘On Hold’ “We continue to believe that the Fed will leave monetary policy on hold throughout 2010 in light of the high level of un- and under-utilized labor resources,” Ryding, chief economist at RDQ Economics in New York, said in a note to clients. The median forecast of economists surveyed by Bloomberg News last month projected the first rate increase would come in the third quarter of this year. Treasury two-year notes yesterday gained the most in three weeks following the worse-than-expected payroll numbers. The yield fell five basis points, or 0.05 percentage point, to 0.97 percent at 4:31 p.m. in New York. President Barack Obama on Dec. 8 proposed additional spending on the nation’s transportation system, tax credits to spur hiring by small businesses and incentives to make homes more energy efficient in a second round of efforts to cut the jobless rate. “We’re going to have to work harder to create jobs.” U.S. Labor Secretary Hilda Solis said in an interview on Bloomberg Television. “This is a very stubborn recession.” To contact the reporters on this story: Bob Willis in Washington bwillis@bloomberg.net; Courtney Schlisserman in Washington at cschlisserma@bloomberg.net
For the sake of "never letting a good crisis go to waste," the administration has really bungled the broader state of the economy. At the beginning of the year, we were shedding 750,000 employees per month. Now we're shedding 85,000 employees and 661,000 already unemployed are so discouraged about finding work that they're giving up. This country is rapidly becoming "two americas" - one for Obama and his Goldman Sachs buddies, and one for the dirt poor.
Being an ultra right wing liberal I feel I must bring this up. Which party was in power when this all went down? By the way I call myself and ultra right wing liberal because I love my guns, but I have feelings.
If you ignore Denny's "Only post negative news and ignore anything that provides any sort of hope while a Dem is in power" threads, they quickly fade on down the topic list.
What do we do about the 650K people each month who plain old give up on finding a job? If the economy does pick up to the point where jobs are being added, it's going to take 1/2 of the kind of job growth we saw under Clinton just to get to even.
All that may be true. Being one of the unemployed I damn sure don't blame Obama. I hear of all the banks and bailouts are doing pretty well now.......seems to me that all this started with two Bush administrations. One possibly stolen by the crooked vote counts. All I really know is that when unemployment bites me in the ass, it comes from some conservative administration. It bit me in the 1980's, 2003, and just barely after Bush left with the economy in shambles. I have voted for every President except Nixon and Dubya 1 and 2. I voted Reagan and Bush (it's the economy stupid) senior. I am either a shade left of center or a shade right of center when I vote. I don't shout out the Union line, and vote my feelings on every election. I'm getting a little old, and WISH I could retire, but guess what? My retirement started disappearing big time in 2007 and 2008. Which party? I may never vote conservative again just out of pure damn "I've had enough and I'm not going to take it anymore. Oh by the way I am trying to get some of my depleted retirement out to save my home. The verdict is still out on that. I lost enough retirement money to pay for that damn mortgage. Now if I CAN get some out, I have to pay for taking money out early. I no longer have enough to pay it off, so I MAY be able to pay my late payments and six months more. That is the best deal they MIGHT give me. My house is up for auction in late March. I hope they hurry up and make up their mind. God forbid I become homeless and get assaulted by my former co-posters. I guess I will have to stay a little left of center for the rest of my life. Do I seem a little pissed?
Be glad they drug their sorry illegal asses back home to Mexico. Unless they are well off and don't actually need a job, Americans don't give up looking for work. The mythical 650k number is mostly illegals going home, and the rest is bored/retired people who want a job but obviously can get by without a job. Better for America that they don't compete for jobs when many people really need them..
I don't think anyone "gives up" looking for a job. I think they run out of unemployment compensation and are taken off the roles.
You should be pissed. Instead of giving you the money to give to the bank, thus buying down your mortgage, they gave the money directly to the bank and stuck you for the payments. The banks scored twice - off the govt., then off all of us who have a mortgage. If they had bought down your morgtgage, the banks would have gotten the same amount of money from the bailouts. Instead, the banks bought other banks, and they flood the market with foreclosed homes, driving down everyone's equity. Nice! BTW, Democrats took control of both houses of congress in 2007. Before that, everything seemed pretty good, though it could have been better. I blame them all.
OK. When I snap I won't differentiate between political parties, I'll just kill 'em all. I probably shouldn't say that with as many people losing it as there have been. I just wish a politician would try to break into my house.
I agree. American banks = treasonous parasitic organizations. Nonsense. The housing bubble was created by Bush policies and lack of oversight, and was already crashing in mid 2006. By January 2007 real estate activity was dead in the water.
I can't even talk about it anymore. I feel sick. Important Update............I just sent a scathing email to President Obama criticizing the bank bail out and asking him if it were true that they were going to give more help to GMAC Mortgage who happens to be the people who can't seem to help me. Since I do not know when I will be able to get back to work and my income is too low (unemployment checks) GMAC is unable to modify my loan. They tell me I have to have my house sold before March or it goes by by. I asked Mr. Obama for a loan at low interest to be paid back STARTING when I go back to work. I am sure this will be on his desk waiting tomorrow, (if they don't wake him tonight) and my financial problems will be over.
I don't understand this. You blame Bush, the new and current president at the time, for your unemployment in 2003. But you don't blame Obama, the new and current president at the time, for your unemployment in 2010?
Let me put it this way.........Republicans come to power. Lower taxes on big business. Remove financial oversight of banks. Results........huge CEO bonuses, stupid lending practices with huge bonuses........economy tanks........I'm unemployed. Democrats come to power. Raise taxes on business. Put controls on bank lending. Budgets get balanced despite higher taxes. Corporations still make huge profits. I am employed. All this doesn't happen immediately with party change. It takes a while to get the mess fixed. Two term Republican Presidents really screw the pooch. That is the way I see it. I believe I said I didn't blame Obama.
