Turn on the news

This morning brings the news that unemployment has reached double digits for the first time since 1983, rising from 9.8% to 10.2%.  And the U.S. economy has had a net loss of jobs for 22 straight months, the longest on record, dating back 70 years (to, yes, the end of the Great Depression).  There are 15.7 million unemployed, including a record 5.6 million who have been unemployed for six months or more. Since the recession officially began in December 2007, the number of unemployed has more than doubled, by 8.2 million.

The U-6 unemployment rate – which also counts discouraged and marginally attached job-seekers and involuntary part-timers – is now at an alarming 17.5%.  That’s the highest in the fifteen years that the government has been keeping track of that alternative measure.

Construction, manufacturing, retail trade, and transportation accounted for the bulk of the job losses.  To the extent that there is a bright side, temporary help services and health care services saw increased employment in October.

And if it’s any consolation, the actual unemployment rate, before making the standard seasonal adjustment (because unemployment tends to be higher in autumn) was “only” 9.5% for September and October.

In a not-altogether-unrelated development, labor productivity growth rocketed by 9.5% in the last quarter, about four times its normal rate of growth and the fastest increase since 2003 (i.e., since the aftermath of the 2001 recession).  This includes a whopping 13.6% increase in labor productivity in manufacturing, the largest since 1987.  This is ambiguous news: labor productivity, or output per hour worked, is ultimately the foundation of our standard of living, so rising productivity is basically a good thing.  But in recessionary times, for productivity to be growing almost three times as fast as output (GDP grew 3.5% last quarter), it means firms are producing more with less labor, which obviously does not do much to benefit the laid-off workers.  It may also just mean that firms have a lot of excess capacity, so workers have more capital to work with, which makes them more productive.  And indeed, industrial capacity utilization remains low, at about 70% or less since April, compared with the norm of 80%.  Daniel Indiviglio of The Atlantic provides more perspective on the productivity surge.

Not good, especially given that most forecasts are for a very slow recovery that could take a long, long time to restore the unemployment rate to pre-recession levels.  Paul Krugman says that even the much-touted 3.5% GDP growth of the last quarter is not nearly enough – it would take about a decade of 3.5% annualized GDP growth to bring us to full employment.  A decade of high unemployment is best termed not a “jobless recovery,” but a depression.

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