17.12.2010
News Releases, Policy Points
CHAPEL HILL (December 17, 2010) – November’s loss of 12,500 payroll positions was the second-largest monthly drop recorded so far in 2010 in North Carolina. That same month, according to data released today by the Employment Security Commission, the state’s unemployment rate rose to 9.7 percent. Additionally, the departure of 3,330 North Carolinians from the labor force reduced the size of the state’s labor force to a level last seen in July 2006.
“North Carolina’s labor market still has not turned a corner,” says John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “At a point in the business cycle when prospects should be improving, they instead have worsened.”
Last month, North Carolina employers cut 12,500 more payroll positions than they added. Net losses occurred in both the private sector (-11,500 position) and public sector (-1,000). Among private industries, education and health services netted the most positions (+4,800), followed by financial activities (+1,100), information (+300), and other services (+200). The gains were more than offset by declines in trade, transportation and utilities (-5,200), leisure and hospitality services (-5,200), professional and business services (-3,600), construction (-2,300), and manufacturing (-1,600).
Additionally, a revision to the October data reduced the net job growth first reported for the month. Instead of gaining zero positions in October, North Carolina lost 1,500 positions. With that revision, North Carolina has shed, on net, 284,300 positions – 6.8 percent of its payroll employment base – since December 2007.
“November was the second-worst month for job losses so far in 2010,” notes Quinterno. “Not only were there fewer payroll jobs in November than at any point in 2010, but total employment in North Carolina has fallen back roughly to the level recorded in December 2009. All of the job growth made earlier in 2010 has been erased. Total payroll employment now is just 0.4 percent greater than the level posted in September 2009, the month when the labor market bottomed out. ”
Since November 2009, North Carolina has lost 6,100 jobs (-0.2 percent). In terms of individual industries, professional and business services grew the most in absolute terms (+14,400), information the most in relative terms (+3.6 percent). Construction shed the most jobs in absolute and relative terms (-9,400, -5.2 percent).
The household data for November also were troubling. Last month, the labor force contracted by 0.1 percent as 3,330 individuals stopped working or seeking work. The number of employed individuals fell while the number of unemployed individuals rose to 433,240. The unemployment rate also ticked up to 9.7 percent from 9.6 percent. Moreover, the continued reduction in the size of the labor force is disturbing and suggests that joblessness is much more widespread than captured in official measures.
“Some 107,000 North Carolinians have left the labor force since April,” observes Quinterno. “That contraction is responsible for much of the recent decline in the unemployment rate and is a sign of an extremely unhealthy labor market. The size of the state’s labor force now is at the lowest level recorded since July 2006.”
“The November employment report offers no evidence that the state’s labor market has turned a corner,” added Quinterno. “Much of the growth experienced early in 2010 was due to temporary public policy supports, and the private sector has not stepped forward to fill the void in demand left by the expiration of those supports.”
17.12.2010
Policy Points
Economist Joseph Stiglitz takes stock of the global economy as 2010 ends and 2011 begins. His assessment is not a rosy one.
I am not so bullish on Europe and America. In both cases, the underlying problem is insufficient aggregate demand. The ultimate irony is that there are simultaneously excess capacity and vast unmet needs – and policies that could restore growth by using the former to address the latter.
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Both the US and Europe, for instance, must retrofit their economies to address the challenges of global warming. There are feasible policies that would work within long-term budget constraints. The problem is politics: in the US, the Republican Party would rather see President Barack Obama fail than the economy succeed. In Europe, 27 countries with different interests and perspectives are pulling in different directions, without enough solidarity to compensate. The bailout packages are, in this light, impressive achievements.
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In both Europe and America, the free-market ideology that allowed asset bubbles to grow unfettered – markets always know best, so government must not intervene – now ties policymakers’ hands in designing effective responses to the crisis. One might have thought that the crisis itself would undermine confidence in that ideology. Instead, it has resurfaced to drag governments and economies down the sinkhole of austerity.
16.12.2010
Policy Points
For the benefit week ending on November 27th, 25,445 North Carolinians filed initial claims for state unemployment insurance benefits, and 135,309 individuals applied for state-funded continuing benefits. Compared to the prior week, there were more initial and continuing claims. These figures come from data released by the U.S. Department of Labor.
Averaging new and continuing claims over a four-week period — a process that helps adjust for seasonal fluctuations and better illustrates trends — shows that an average of 15,880 initial claims were filed over the previous four weeks, along with an average of 121,819 continuing claims. Compared to the previous four-week period, there were more initial and continuing claims.
One year ago, the four-week average for initial claims stood at 21,540 and the four-week average of continuing claims equaled 187,405.
While the number of claims has dropped over the past year, so has covered employment. Last week, covered employment totaled 3.7 million, down from 4 million a year ago.
The graph (right) shows the changes in unemployment insurance claims (as a share of covered employment) in North Carolina since the recession’s start in December 2007.
Both new and continuing claims appear to have peaked for this business cycle, and the four-week averages of new and continuing claims have fallen considerably. Yet continuing claims remain at an elevated level, which suggests that unemployed individuals are finding it difficult to find new positions. Also, new claims have been on the rise since September.
Also, little change has occurred within recent months. Since April 2010, the four-week average of initial claims consistently has ranged between 15,880 and 11,200.
16.12.2010
Policy Points
Rortybomb rounds up some of the recent evidence about household deleveraging of debt.
Back when this crisis first started, people understood that this was going to be an ugly, ugly process. There were two ways of helping this process along. The first was modifying defects in the bankruptcy code to help with writing down mortgage debt, often referred to as lien-stripping or the cramdown bill. The second was a period of short sustained inflation, which was being recommended from all kinds of ideological places …
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That our current situation is the exact opposite of this happening would be an understatement. The cramdown bill failed and we’ve got a period of moral panic and hysteria around strategic defaulters, those evil-doers that nobody can actually quantify as actually existing. We also have Sarah Palin and the conservative base teaming up with the Hard Money Right to scream “Fire! Fire!” on Noah’s ark. They are going to try and make 2011 a year of siege against the Federal Reserve, stoking fears that we’ll have an inflation crisis any day now when we are actually disinflating.
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The result is exactly what you’d expect: our consumer deleveraging is mostly taking place through defaults on loans, the most painful, externality-prone, and drawn-out mechanism we have for resolving bad debts. That savings rate reflects less our ability to pay off our debts and more our inability with an unemployment crisis and the collectors kicking in the door.
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