This election is supposed to be all about jobs and the economy. But judging from the news coverage, those words may be important in the context of the campaigns, but they aren’t important enough to actually talk about meaningfully. So, what say we catch up on how we’re doing.
The unemployment rate has been slowly coming down, in fits and starts. In December, it hit 8.5%.
Unemployment rate for the last 12 months
Unfortunately, there is a long way to go.
Unemployment rate for the last 5 years
There is particularly a long way to go when you get past some of the nuanced definitions that go into the “unemployment rate” and consider how much of the population is employed now compared to how much was employed before the collapse. What this shows is that what little employment growth there has been, has barely kept up with population growth, if at all. It may also show that a whole, huge wave of baby-boomers have exited the workforce permanently, due to the recession. Whatever the detailed causes… this is one of the most horrifying tidbits of data you’ve never seen in the news.
More bad news on the unemployment front. The length of time people who lose their jobs remain unemployed, has continued to increase over the years since the recession. Which means job losses have not been temporary. They have, to a large degree, been permanent. This should be, basically, considered to be such a disaster as to push everything else off the front pages until it is fixed.
Average weeks the unemployed stay unemployed
What is terrifying about that graph isn’t so much the increase in average length of unemployment from about 17 weeks before the recession to 40 weeks now. What is terrifying is how it compares to anything we’ve ever experienced in our recorded history.
Unemployed people stay unemployed longer, by a catastrophic amount, than ever.
Not quite as catastrophic, but certainly not good, is that new unemployment claims have jumped in the last few weeks.
New unemployment claims
As you can see, this number bounces a lot, and it comes out weekly. To smooth it and take some of the noise out, we usually like to look at a four week “moving average.” The increase has been enough to raise that too. Despite the alarming increase, it is still at a lower rate than it has been all year. We’d like to think this is temporary.
New unemployment claims, 4 week moving average
Put in context of the last five years, new unemployment claims are still higher than they were before the collapse, but the overall trend is improving. Slowly.
New unemployment claims, last 5 years, 4 week moving average
An alarming possibility, however, is that this recent uptick in unemployment claims it a symptom of an unfortunate turn on the global scene. If you think it has been a while since you’ve heard blood curdling shrieks from the Ron Paul / inflation panic people, there’s a good reason. The dollar has been gaining strength since last summer.
Trade weighted dollar index, last 12 months
This is the main reason gas prices came down this Fall. Global oil markets have been trading based on the Euro for several years, so when the dollar falls against the Euro, gas prices go up. When the dollar strengthens, gas prices go down. Until we start poking Iran with a stick, anyway.
Gas prices, last 12 months
Since what matters is how the dollar and the Euro (and other major currencies) compare to each other, strengthening in one is indistinguishable from weakening in another. The strength in the dollar since last summer has more to do with the Euro collapsing because of Europe’s sovereign debt crisis, than any particular US economic improvement.
Anyway, while the inflation hawks like to see a strengthening dollar, it makes imports more attractive compared to our domestic production, and our exports less attractive to the rest of the world. We’d expect to see a stronger dollar result in a slowing of export growth and a widening trade deficit. And that’s exactly what we’re seeing.
Exports are weakening with the strengthening dollar.
As the dollar has gained strength, exports that had been growing nicely have levelled off and even pulled back a little. And the trade deficit, which had shown improvement for five months, reversed course and grew.
Trade deficit grew in November, more even than was forecast.
None of this bodes well for jobs in the near future.
Of course, if we’ve seen anything since the crash, it is that economic growth and American jobs are no longer as tied together as they used to be. Our gross domestic product [GDP] continues to be positive, although extremely slow, at well less than 2%.
GDP growth is positive, but very low
For what it’s worth, the leading indicators show more of the same. Slow economic growth, enough to hopefully keep us from sliding back into recession… but not enough to fix our devastating unemployment crisis.
Leading indicators show continued positive, but very sluggish, economic growth
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