Unemployment rises for 3rd straight month --> 9.2% in June

[Will]

Oy vey.


Updated Prediction based on my model:





Some background for those that weren't around when I started doing this:

Originally Posted by _Will_

Keep in mind, my calculations are based off of AVERAGES over time. Just as now, in past recessions there have been temporary decreases in the middle of the overall trend of increasing unemployment.

Lets go to the recent recessions we are using to model unemployment this recession.

The 1980 recession. As stated earlier, unemployment increased on average .14% per month from the peak of the recession in 1980 until peak unemployment in 1982.

However within that unemployment growth spurt there were temporary decreases, probably also due to calculation methods, people leaving the workforce, etc.

The same for all 3 recessions. The bold red numbers represent months where we experienced temporary decreases within the broader trend:

Just a refresher, the historical basis of our calculations and mapping:

Originally Posted by _Will_

To recap the unemployment calculations I have done:


Unemployment Rate hits 9.4% in May, new projections calculated for future. - Corvette Forum

My VERY FIRST prediction from April 2009 based on my Model:

Originally Posted by _Will_

The problem is this:

Unemployment hit its peak in June 2003, ~2 years after the negative peak of GDP in Q3 2001.

Unemployment hit its peak in June 1992, ~1.5 years after the peak of negative GDP in Q4 1990.

Unemployment hit its peak in November 1982, ~2.5 years after the negative peak of GDP in Q2 1980


As we can see the length of time is positively correlated to the severity and length of the recession. 1990 was mild, 2000 somewhat mild, 1980 awful.

So even if we assume for this recession, despite its severity, a period of 1.5 years between peak GDP contraction and peak unemployment, and we assume that we hit the negative peak of GDP contraction in q4 last year, the best case scenario would be for unemployment to continue to rise until summer 2010.

From the peak of negative GDP in 1980 until peak unemployment in 1982, unemployment increased on average ~ 0.14% per month.

From the peak of negative GDP in 1990 until peak unemployment in 1992, unemployment increased on average ~ 0.09% per month.

From the peak of negative GDP in 2001 until peak unemployment in 2003, unemployment increased on average ~ 0.08% per month.


So....

If we assume the best case scenario that Q4 last year was the peak of negative GDP, and....

We assume the best case scenario of only 1.5 years until peak unemployment as in the early 1990s, and....

We assume the best case of unemployment growth of .08% per month as in the early 2000s, and....

We assume the best case scenario of unemployment decreases of .07% per month as in the 1980s....


We will hit peak unemployment around April or May 2010, and the peak unemployment rate at that time will be ~ 9.5%.

By November 2012 unemployment will be ~7.5%

We will reach full employment again around Q3 2015.

Corvette Forum - View Single Post - Unemployment Rate at 8.5%

[Chris Fowler]

Labor Force Participation Rate Drops To Fresh 25 Year Low: 64.1% | zero hedge

Employment Situation Summary Table A. Household data, seasonally adjusted

The number of people that have dropped out of the labor force is keeping that unemployment number artificially low...not to mention the under employed.

[Will]

WOW.


In January 1984, the unemployment rate was at 8% and in the middle of a FREE-FALL. Three months earlier it was 8.8%, and 3 months later it was 7.7%.


Today, with roughly the same low labor force participation rate, unemployment is at 9.2% and in the middle of a RISE. 3 months ago it was 8.8%

[AC54ME]

Originally Posted by Chris Fowler

Labor Force Participation Rate Drops To Fresh 25 Year Low: 64.1% | zero hedge

Employment Situation Summary Table A. Household data, seasonally adjusted

The number of people that have dropped out of the labor force is keeping that unemployment number artificially low...not to mention the under employed.

What he said - I agree.

Will - if the number of people 'discouraged' and no longer seeking employment, and those that took 'early retirement' in the past three years were incorporated in your analysis the actual percentage INCREASE over the next 18 months would seem to be enormous vs the present numbers.

What is the chance that you can project those?

[Will]

Originally Posted by AC54ME

What he said - I agree.

Will - if the number of people 'discouraged' and no longer seeking employment, and those that took 'early retirement' in the past three years were incorporated in your analysis the actual percentage INCREASE over the next 18 months would seem to be enormous vs the present numbers.

What is the chance that you can project those?

Maybe I'll try to figure it out this weekend. I might post here asking for help.


Honestly, if you read the description and remember this from when it started a few years ago on the OTHER forum, this was a VERY crude best-case scenario model I threw together.


Unemployment is not my area of expertise.

[AC54ME]

Originally Posted by Will

Maybe I'll try to figure it out this weekend. I might post here asking for help.


Honestly, if you read the description and remember this from when it started a few years ago on the OTHER forum, this was a VERY crude best-case scenario model I threw together.


Unemployment is not my area of expertise.

Maybe we can get you a position in the Republican Adm starting 1-21-2013 - you have a track record!

[Will]

Originally Posted by AC54ME

Maybe we can get you a position in the Republican Adm starting 1-21-2013 - you have a track record!

Well I WILL be in desperate need of a job come summer 2012.


And who else employs more unemployable people than the .gov

[RedLS1GTO]

Was just about to make a similar thread...

Hiring slowed to a stagnant pace last month, pushing the unemployment rate up for the third consecutive month and raising questions about whether the economy has what it takes to climb out of its post-recession slump.

The Labor Department reported Friday that employers added just 18,000 net jobs in June, the fewest in nine months. The jobless rate ticked up to 9.2 percent from 9.1 percent.

The pace of job growth is not even enough to keep up with population growth -- it would take about 125,000 jobs per months to do so -- and certainly not enough to bring down the unemployment rate.

President Obama is expected to address the latest jobs report late Friday morning, as he faces pressure from Republicans to do more to spur hiring. The economic situation has hung over the president as the 2012 presidential race gets underway and his GOP opponents make the weak recovery a centerpiece of their respective campaigns.

House Republicans lined up to Friday morning to pin blame for the bleak outlook on the Obama administration's economic policies.

"After two-and-a-half years, it is time for him to take responsibility," Rep. Jeb Hensarling, R-Texas, said, acknowledging that Obama inherited a bad economy but accusing him of making it worse with "job-killing regulations" and other policies

Republicans continued to promote their own jobs bills, while pointing to the unemployment report in arguing Congress cannot and will not raise taxes as part of any deal to raise the country's debt ceiling.

"It just does not make sense for Americans to suffer under higher taxes in an economy like this," House Republican Leader Eric Cantor said.

Since Obama took office, the economy is down 2.5 million jobs. The jobless rate has been at 9 percent or higher for 24 of the past 26 months.

In June, businesses added the fewest jobs in more than a year. Governments cut 39,000 jobs. Over the past eight months, federal, state and local governments have cut a combined 238,000 positions.

The latest report offered evidence that that the recovery will be painfully slow. Two years after the recession officially ended, companies are adding fewer workers despite record cash stockpiles and healthy profit margins.

Hiring has slowed sharply in the past two months, after the economy added an average of 215,000 jobs per month in the previous three months.

Economists have said that temporary factors have, in part, forced some employers to pull back. High gas prices have cut into consumer spending. And supply-chain disruptions stemming from the Japan crisis slowed U.S. manufacturing production.

Unemployment has never been so high so long after a recession ended. At the same point after the previous three recessions, unemployment averaged just 6.8 percent.

Average hourly wages declined last month. After-tax incomes, adjusted for inflation, have been flat this year. The average work week declined to 34.3 hours, from 34.4, which means employers demanded less work from their existing staffs.

The number of unemployed workers rose almost 175,000 to 14.1 million, pushing up the unemployment rate. The number of long-term unemployed -- those without a job for 27 weeks or more -- made up nearly half of that number.

There are signs that economy could improve in the second half of the year. Gas prices have come down since peaking in early May at a national average of nearly $4 per gallon. Prices averaged $3.59 a gallon nationwide on Friday, according to AAA.

And manufacturing activity expanded in June at a faster pace than the previous month, according to the Institute for Supply Management. That suggests the parts shortage caused by the March 11 earthquake in Japan is beginning to abate.

Still, the government said last month that the economy grew only 1.9 percent in the January-March quarter. Analysts are expecting similarly weak growth in April-June quarter.

The economy will grow at a 3.2 percent pace in final six months of the year, according to an Associated Press survey of 38 economists.

Still, growth must be stronger to significantly lower the unemployment rate. The economy would need to grow 5 percent for a whole year to significantly bring down the unemployment rate.

Economic growth of just 3 percent a year would hold the unemployment steady and keep up with population growth.

[AC54ME]

Economic growth of just 3 percent a year would hold the unemployment steady and keep up with population growth.

I think this is misleading.

It indicates that existing, PUBLISHED, numbers would be retained.

The PUBLISHED numbers are low (incorrect - see Chris' chart above) - thus a 3% economic growth rate/year would not be correct in retaining existing UE percentages.

It would seem that the UE percentage would increase, somewhat expanded and incrementally/proportionately, with 3% if realistic numbers were used.

IMO.

[Broken Wind]

Our fearless leader really needs to have an epiphany and understand that you cannot encourage job creation by purposely demonizing the job creators and threatening to tax the bejezus out of them. Who in their right mind is willing to take risks in this environment?

On the consumer end, our problem is simply a lack of confidence. Confidence in the economy and confidence in our leadership. Maybe 2012. It ain't happening with this nincompoop anytime soon. Mofo needs to go and Jan 2013 cannot get here fast enough.

We are in the era of malicious ignorance and neglect in the WH. Fore!!!

[Will]

[Low12s]

Prolly hit 10% after another Recovery Summer.

[LATB]

Originally Posted by Low12s

Prolly hit 10% after another Recovery Summer.

it's already waaay higher than 10% NOW!

they play with the numbers to keep it as low as possible.

fact

more likely at 15% to 20%...some estimate higher.

opinion

[Low12s]

Originally Posted by LarsAtTheBeach

it's already waaay higher than 10% NOW!

they play with the numbers to keep it as low as possible.

fact

more likely at 15% to 20%...some estimate higher.

opinion

Oh, I agree 1000%, just using the official comparison number.

[LATB]

Originally Posted by Low12s

Oh, I agree 1000%, just using the official comparison number.

[Peter Pan]

It is even slowing down in this part of Texas and the stimulus really worked with those shovel ready jobs. Seems America is in the great depression 2 and our POTOUS has no clue as a community organizer. In 2008 America fell for hope and change, the path we are on their will not be any change left soon.

[Joecooool]

Originally Posted by Broken Wind

Our fearless leader really needs to have an epiphany and understand that you cannot encourage job creation by purposely demonizing the job creators and threatening to tax the bejezus out of them. Who in their right mind is willing to take risks in this environment?

On the consumer end, our problem is simply a lack of confidence. Confidence in the economy and confidence in our leadership. Maybe 2012. It ain't happening with this nincompoop anytime soon. Mofo needs to go and Jan 2013 cannot get here fast enough.

We are in the era of malicious ignorance and neglect in the WH. Fore!!!

And you need to understand that this recession was caused by "Our fearless leader"'s predecessor.

So many of you can't wait to vote in the next GWB...

[RedLS1GTO]

Originally Posted by Joecooool

And you need to understand that this recession was caused by "Our fearless leader"'s predecessor.

So many of you can't wait to vote in the next GWB...

Canada's unemployment, which has historically almost perfectly mirrored the U.S. unemployment minus about 1% and was on the exact same track as of 2009 has been constantly decreased since then. On the other hand the US unemployment, well... we know where it has gone.

What events in early 2009 could have possibly caused this historic and never before seen split between the US and Canada?

Hmmmmmm....

You can say it started under GWB and won't get many who disagree. And you need to understand that instead of recognizing economic trends, the current idiots decided to throw a gazillion dollars (that we didn't have) at it and made it even worse.






Obama has had well more than half of a Presidential term, 2 years of which was with a Democratic controlled House AND Senate. The Democrats had plenty of time to make a difference. Unfortunately the only difference that they have made is for the worse. The "let's blame Bush" shit is well past it's expiration date.

But hey, who am I to argue. If it makes you feel better... keep on telling yourself it's all Bush's fault.

[Peter Pan]

Community Organizer has lost jobs in his first 2+ years in office and his admin says we have been out of the downturn since 09

[Will]

Originally Posted by Joecooool

And you need to understand that this recession was caused by "Our fearless leader"'s predecessor.

So many of you can't wait to vote in the next GWB...

Actually it was caused by the 1997-2007 housing bubble, which was already the biggest in history by the time GWB took the oath of office January 2001.


Bill Clinton, Robert Rubin, Andrew Cuomo, Janet Reno, et al. are the most responsible "public servants"





The Bush admin even tried to do something about.


Granted, he also went ahead and ran for reelection in 2004 taking credit for the increased minority home ownership. But that lie doesn't change the fact that the Clinton admin put the policies in place that started the bubble, and congressional democrats blocked every one of over a dozen attempts at reform in committee during GWB's presidency.


And now? Now the idiotic administration in place is trying TO START IT ALL OVER AGAIN.


Holder Launches Witch Hunt Against Biased Banks

Originally Posted by IBD

In what could be a repeat of the easy-lending cycle that led to the housing crisis, the Justice Department has asked several banks to relax their mortgage underwriting standards and approve loans for minorities with poor credit as part of a new crackdown on alleged discrimination, according to court documents reviewed by IBD.

Prosecutions have already generated more than $20 million in loan set-asides and other subsidies from banks that have settled out of court rather than battle the federal government and risk being branded racist. An additional 60 banks are under investigation, a DOJ spokeswoman says.

No Job, No Problem

Settlements include setting aside prime-rate mortgages for low-income blacks and Hispanics with blemished credit and even counting "public assistance" as valid income in mortgage applications.

In several cases, the government has ordered bank defendants to post in all their branches and marketing materials a notice informing minority customers that they cannot be turned down for credit because they receive public aid, such as unemployment benefits, welfare payments or food stamps.

Among other remedies: favorable interest rates and down-payment assistance for minority borrowers with weak credit.

For example, the government has ordered Midwest BankCentre to set aside almost $1 million in "special financing" for residents living in predominantly black areas of St. Louis. The program includes originating conventional home loans at fixed prime rates for African-American borrowers "who would ordinarily not qualify for such rates for reasons including the lack of required credit quality, income or down payment."

The same federal order, signed last month, praises Midwest for adopting "less stringent underwriting criteria" while under investigation.

In the case against Citizens Bank of Detroit, settled in May, the U.S. decrees that "the bank may choose to apply more flexible underwriting standards in connection with the programs under this order."

Such efforts risk recreating the government-imposed lax underwriting that led to the housing boom and bust, critics fear.

"It's absolutely outrageous after what we've just gone through," said former Rep. Ernest Istook, a Heritage Foundation fellow. "How can someone both be financially stable enough to merit a mortgage at the same time they're on public assistance? By definition, you don't have the kind of employment that can support such a loan."

Justice March

Justice spokeswoman Xochitl Hinojosa said the anti-discrimination notice "does not compel the banks to make loans to people who do not qualify." She said such measures are "essential to remedy the harmful effects of the banks' conduct."

But industry analysts fear Attorney General Eric Holder is rekindling an anti-bank witch hunt launched by Attorney General Janet Reno in the 1990s, when Holder served as her deputy.

Some blame that in part for the subprime boom, because banks were ordered to throw open their lending windows to credit-poor minorities. That crackdown spurred the American Bankers Association to distribute to its thousands of members "fair-lend ing tool kits" advising the adoption of more permissive underwriting criteria to help inoculate them from prosecution.

In the new prosecutions, Justice acknowledges in every case it did not prove charges of intentional discrimination, while banks have denied any wrongdoing. Many, in fact, earned outstanding ratings from anti-redlining regulators enforcing the Community Reinvestment Act.

Istook calls Holder's crusade an "egregious overreach by the government." He says many of the targets are smaller banks without the resources to fight a protracted legal battle.

The House Judiciary Committee plans to investigate.

"This is an expansion of the law," said a congressional investigator. "They're pushing the envelope as far as they can go in the enforcement of civil rights."

DOJ Demands 'Nondisclosure'

As part of settlement deals, prosecutors have required banks to sign "nondisclosure agreements" barring them from talking about the methods used to allege discrimination. Bank lawyers contend the prosecutors are trying to hide the shaky legal grounds on which the cases are built. "It's horrible what they're doing at the civil rights division," said Reginald Brown, a partner at Wilmer Hale in Washington, who has represented banks in connection to recent race-bias investigations. "They don't have any proof, just theories."

He added, "They want you to sign something saying you agree, under the condition of any settlement with them, that you won't disclose what their theories were. That's because their theories are loopy and wouldn't stand the light of day."

One such theory — "disparate impact" — holds that merely a difference in loan application outcomes is enough to prove racial discrimination — even if no intent exists on the part of loan officers to contrast based on the color of applicants, and even legitimate business factors — such as credit scores and down payments — help explain disparities in loan outcomes between white and black applicants.

Under this broad theory, banks have been accused of racism simply for failing to open branches or aggressively market mortgages in black neighborhoods — regardless of the demand for, or viability of, such loans in those areas.

Following this theory, the government has ordered several banks to advertise in black media and open branches in black neighborhoods, despite the weak economy.

Justice confirmed it has asked banks to keep its methodologies, which include computer-based statistical analysis, secret.

"In certain circumstances, when a bank has requested details of our analysis, the department has requested that a defendant agree to a confidentiality agreement," Hinojosa told IBD.

Critics say Holder's interpretation of civil-rights law is even more radical than Reno's.

For the first time, prosecutors are judging banks for the secondary impact their policies have on entire minority communities, not just households. And they're ordering reparations accordingly.

In announcing a recent $2 million settlement with Dallas-based PrimeLending, Civil Rights Division chief Tom Perez said, "We will require lenders to invest in the community that they've harmed."

Another Reno protege, Perez has compared bankers to Klansmen. Only difference is, he said, bankers discriminate "with a smile" and "fine print." He said this kind of racism, though more subtle, is "every bit as destructive as the cross burned in a neighborhood."

Perez has put in place an infrastructure to enforce "fair lending" — including a first-of-its-kind Fair Lending Unit staffed with more than 20 lawyers, economists and statisticians.

He's appointed a special lending cop to run it — Special Counsel for Fair Lending Eric Halperin, who also worked for Reno. Before returning to Justice, Halperin was chief Washington lobbyist for the Center for Responsible Lending, an anti-redlining group that urged banks to relax lending standards for low-income urban borrowers before the crisis.

Perez has required bank defendants to earmark potentially millions in funding for inner-city community organizers — who must be approved by Justice. Critics say lenders are being forced to bankroll Acorn clones that often exist just to shake them down for risky loans.

Hinojosa declined to provide a list of these "qualified organizations."

Perez is also prosecuting banks for "reverse redlining through the targeting of minority communities for predatory loans."

Istook finds it odd that the government is condemning lenders for doing too well what it pressured them to do in the name of diversity before the crisis. "Banks are damned if they do, damned if they don't," he said.

Also, critics say Justice is acting as a bank regulator by enforcing its own quota system for multicultural loans. The civil rights division has set "benchmarks" for minority lending, and will monitor bank lending volume and activity in that area among the banks it's suing.

In effect, Justice is using private banks to carry out affirmative-action lending, Istook says, a campaign he describes as "legal plunder."

Holder Launches Witch Hunt Against Biased Banks - Investors.com