Monday, April 26, 2010

Giddy Yap!

In my recent newsletter I had indicated that I thought the picture for unemployment would improve. I think this is good news: the state unemployment benefit claims fell by 40,000 this past week, and the Federal claims fell by 500,000. This means, based on my calculations, the following: the unemployment based on state claims fell from 9.7% to 9.6% and, more meaningful, the federal claims fell from 12.5% to 11.3%. Overall, the jobless rate, while still very high, moved from over 22% to 20.9%. I will be happy to see this continue. In another bold move, housing sales were up 27% in March, the highest in 47 years. It is likely that April will also see housing sales rise, because the requirement to have an executed sales contract, to get the federal tax credit for a home purchase, expires at the end of this month. It appears we are moving forward. Ed

Monday, April 5, 2010

Jobs, Jobs, Jobs!

Back in my November 3, 2009 blog, I indicated that I thought this recession (depression is more like it for the number of people out of work … but more on that later) was very similar in some ways to the period of 1973-74, followed by the recovery of 1975. My remark was specific to my belief that we would not see a lowering of job losses and increasing jobs creation until March of 2010. At the beginning of March, I again commented on my belief as the Labor Department reported the four-week rolling average of job losses was 470,750. It now appears that March was a turning point. The four-week rolling average of job losses, as of Thursday April 1st, was 447,250, just below the 450,000 that most economists were seeking. More importantly, the number of new jobs created, according to the Labor Department, was 162,000. This was the biggest gain since December of 2007. What I like is that, according to their report, private employers created most of these jobs. I must say, however, on a negative note, that while unemployment remains at 9.7% as the government counts the data, I count it somewhat differently. The 9.7% represents 4.66 million people who are receiving state benefits, but not the 6 million people who are on extended federal benefits that add up to an additional 73 weeks. My math says that the additional 6 million people represent 12.5% in addition to the 9.7%, or over 22% unemployment. This is a big number and most of us know at least one person, or many more, who are currently out of work! Is there hope for the unemployed? I think so. As I’ve also mentioned on several occasions, this recession seems somewhat like the one in the ‘70s. In May of 1975, hiring picked up pace very quickly and expectations of a long period of unemployment were proven wrong. We shall see as this unfolds. Ed Mallon