America and the Terrible, Horrible, No Good, Very Bad Jobs Numbers

By Megan McArdle

So headline unemployment now stands at 10.2%, higher than forecast.  Another 10 million or so workers are working "part time for economic reasons", meaning they want to work more hours, but can't get them.  And 2.4 million are "marginally attached to the labor force"--they have looked for work in the past 12 months, and say they want a job, but have stopped looking too hard because there doesn't seem to be anything out there.

This figure is likely to get worse before it gets better.  Corporations tend to want some evidence of sustainable recovery before they start hiring workers who will have expensive startup costs and will be traumatic to fire if there's another downturn.  They're much more likely to add work and hours on for existing employees, so I wouldn't expect to see any substantial improvement in headline unemployment until that "part time for economic reasons" figure has dropped substantially.  Right now, the best you can say is that it held steady last month.

To me, unemployment is a far more important indicator than GDP.  Given how rich America is, the misery from losing a job far outweighs a few percentage points of variation in incomes.  The NBER may decide that the recession ends next quarter.  But the mental recession will be going on for quite some time.

Counterintuitive prediction I heard last night:  "If the jobs number is bad, stand by for Barney Frank to start dismantling some big banks."

Alternative predictions:  this is good for the health care bill, because Democrats want an achievement to take voters' minds off of the employment figures; this is bad for the health care bill, because Democrats know they are already going to be in big trouble next November.

My prediction:  Democrats are going to be looking very hard for a way to pump some more money into the economy right now.  That is going to be very hard to do, between the bailouts, the tax credits, and the health care bill.  Also, the 2010 is not going to be about health care, one way or another.  It's going to be about the jobs number.

This article available online at:

http://www.theatlantic.com/business/archive/2009/11/america-and-the-terrible-horrible-no-good-very-bad-jobs-numbers/29738/