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Monday, November 9, 2009

Rosenberg Daily - More Dis-Employment

Even with the downward revisions, the number of jobs lost in the U.S. since the rally began now totals 2.8 million. Usually by the time the stock market has risen 60%, the economy has generated more than 2.0 million net new jobs.

The Household survey always leads the business cycle and this poll showed another huge 589,000 decline in October — in the past four months, employment on this basis has plunged nearly 2.0 million. ... The entire decline was in full-time jobs — the key driver of confidence, income and spending — as those working part-time for economic reasons surged at a 15% annual rate...

While temp agency employment did manage to rise 33,700, the only jobs being filled seem to be part-time positions. Permanent job losses came to 306,000 in October, bringing the total to a record 6.0 million this down-cycle. Moreover, the number of people who have been actively looking for work but to no avail surged a further 156,000, or at a 40% annual rate in October. On average, it is now taking the ranks of the unemployed 26.9 weeks to find a job, which is unprecedented...

The unemployment rate climbed to 10.2% in October from 9.8% in September, and is now just 60 basis points shy of taking out the post-WWII high of 10.8%... With the U6 jobless rate jumping from 17.0% to 17.5%, and the “normal” spread between the official series and the U6 averaging five percentage points in the past, we may well see a classic mean reversion take the official unemployment rate to over 14% at the peak. This is not good news for wage growth, discretionary spending or debt defaults. You see, in a credit cycle, the unemployment rate ceases to be a lagging indicator.

In sum, the U.S. economy is 10 million jobs short of being fully employed. This is why the Fed is very likely going to anchor the funds rate near zero because that basically represents more than five years worth of job creation.

---Rosenberg, 11.9

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