The unemployment rate for December fell significantly from the previous month’s 9.4% to 9.0%, the lowest level since April 2009. The briefing.com consensus was for 9.5%. However, just 36,000 new jobs were created — well below expectations. Weather may have been a factor in this disappointing number.
Here is the lead paragraph from the Employment Situation Summary released this morning by the Bureau of Labor Statistics:
The unemployment rate fell by 0.4 percentage point to 9.0 percent in January, while nonfarm payroll employment changed little (+36,000), the U.S. Bureau of Labor Statistics reported today. Employment rose in manufacturing and in retail trade but was down in construction and in transportation and warehousing. Employment in most other major industries changed little over the month.
The unemployment peak for the current cycle was 10.2%, one year ago in October 2009. The chart here shows the pattern of unemployment, recessions and both the nominal and real (inflation-adjusted) price of the S&P Composite (NYSE:SPY) since 1948.
Unemployment is usually a lagging indicator that moves inversely with equity prices (See first chart below). Note the increasing peaks in unemployment in 1971, 1975 and 1982. The inverse pattern becomes clearer when viewed against real (inflation-adjusted) S&P Composite, with its successively lower bear market bottoms. The mirror relationship seems to be repeating itself with the current and previous bear markets.
The second chart shows the unemployment rate for the civilian population unemployed 27 weeks and over. The January number is 4.1% — down from December’s adjusted 4.1%. This measure gives an alternate perspective on the relative severity of economic conditions. As we readily see, this metric is significantly higher than the peak in 1983, which came six months after the broader measure topped out at 10.8%.
The third chart is one of my favorites from CalculatedRisk. It shows the job losses from the start of the employment recession, in percentage terms compared to all recessions since 1948. Note the addition of the dotted-line alternative for the current cycle, which shows unemployment excluding the temporary census hiring.
The start date of 1948 was determined by the earliest monthly unemployment figures collected by the Bureau of Labor Statistics. The best source for the historic data is the Federal Reserve Bank of St. Louis.
Here is a link to a Google source for customizable charts on US unemployment data (not seasonally adjusted) since 1990. You can compare unemployment at the national, state, and county level.
Doug Short Ph.d is the author of dshort.com.
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