This morning I went to work via the gym. I try to head there before work on Mon, Wed and Fri to take care of my physical well being. I’ve been getting a bit bored with the same run of country music on my iPod Shuffle so lately I’ve taken to loading podcasts on topics ranging from real estate and investing to self-improvement. It’s a buy one get one free sale at the gym now, a mental workout for the same low price of punishing my body.
Enough about my workout, except to say that while I was on my back at the bench press, trying to not let the barbell land on my face, I was listening to a discussion on the recent jobs report that came out Friday, April 4th. I found that discussion interesting and it got me thinking about unemployment and whether things were really as bad as the media portrays. So I decided I’d dig a little deeper into the jobs report and unemployment data and share what I learn with you here on Minding My Own Business. I read some of the articles on the internet including this one at the NY Times, and spent some time routing through the Bureau of Labor Statistics (BLS) website.
Let’s hit the headlines just to make sure everyone is up to speed…80K jobs down and 5.1% unemployment. And the news folks of course throw in the “Worst unemployment rate since September 2005″ just to sell a few extra copies and add to all the negativity. The news media hype both positive and negative gets to me. It’s more the flip-floppiness (is that a word?) of it all that I dislike. Lately I’ve heard them trumpeting the bottom of the market correction one day, only to roll back into the dolldrums of recession and bear market fears the next day. I’m beginning to think there was probably a lot less market volatility in the days before the internet and mass media. But I digress…
So is 5.1% unemployment all of a sudden such an outrageous number?
I found the following data on the Bureau of Labor Statistics (BLS) web site:
Data extracted on: April 7, 2008 (9:33:26 PM) (Yes, I did this while watching the NCAA Championship, Rock Chalk Jayhawk!!)
Labor Force Statistics from the Current Population Survey
| Year | Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | Annual |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1998 | 5.2 | 5.0 | 5.0 | 4.1 | 4.2 | 4.7 | 4.7 | 4.5 | 4.4 | 4.2 | 4.1 | 4.0 | 4.5 |
| 1999 | 4.8 | 4.7 | 4.4 | 4.1 | 4.0 | 4.5 | 4.5 | 4.2 | 4.1 | 3.8 | 3.8 | 3.7 | 4.2 |
| 2000 | 4.5 | 4.4 | 4.3 | 3.7 | 3.8 | 4.1 | 4.2 | 4.1 | 3.8 | 3.6 | 3.7 | 3.7 | 4.0 |
| 2001 | 4.7 | 4.6 | 4.5 | 4.2 | 4.1 | 4.7 | 4.7 | 4.9 | 4.7 | 5.0 | 5.3 | 5.4 | 4.7 |
| 2002 | 6.3 | 6.1 | 6.1 | 5.7 | 5.5 | 6.0 | 5.9 | 5.7 | 5.4 | 5.3 | 5.6 | 5.7 | 5.8 |
| 2003 | 6.5 | 6.4 | 6.2 | 5.8 | 5.8 | 6.5 | 6.3 | 6.0 | 5.8 | 5.6 | 5.6 | 5.4 | 6.0 |
| 2004 | 6.3 | 6.0 | 6.0 | 5.4 | 5.3 | 5.8 | 5.7 | 5.4 | 5.1 | 5.1 | 5.2 | 5.1 | 5.5 |
| 2005 | 5.7 | 5.8 | 5.4 | 4.9 | 4.9 | 5.2 | 5.2 | 4.9 | 4.8 | 4.6 | 4.8 | 4.6 | 5.1 |
| 2006 | 5.1 | 5.1 | 4.8 | 4.5 | 4.4 | 4.8 | 5.0 | 4.6 | 4.4 | 4.1 | 4.3 | 4.3 | 4.6 |
| 2007 | 5.0 | 4.9 | 4.5 | 4.3 | 4.3 | 4.7 | 4.9 | 4.6 | 4.5 | 4.4 | 4.5 | 4.8 | 4.6 |
| 2008 | 5.4 | 5.2 | 5.2 |
To set up the graph, the vertical axis shows unemployment in percent while the horizontal axis displays time in months. In the table, you’ll find yearly data broken down by month with annual averages shown at the end of each row. You can find this data at the BLS. This data is “unadjusted” rather than “seasonal.” I’m not sure of the difference in definition between the two. But when comparing the two flavors of data there are only minor differences between the data, on the order of 0.1-0.2 percent. I don’t consider that significant. I chose a time span of ten years initially to start reviewing the data.
Look over the data above yourself, but I don’t believe the “Worst since September 2005″ statement. Maybe the worst since last month or since January. Maybe we’re working in the fine lines between “unadjusted” and “seasonal” data, but I doubt it.
So how bad is 5.1% relative to previous years. Looking at the graph we are still below the unemployment levels of the early 2000’s. So while we may be on an uptick in unemployment relative to the last couple years, we’re better off than the 2002-2004 and on par with what is shown for 2005. This doesn’t seem like a large cause for alarm to me. But then again, I have a job.
After reviewing the last decade, I decided to take an even longer view on the data. I selected all the years BLS had available which takes us back to 1948. I’ll spare you the table and just go to the graph which is shown below.
So what do you conclude about our current unemployment level after reviewing this graph? My conclusion: It’s too early to say “we are on the cusp of an upward trend,” and current unemployment rates are still below the average unemployment rate of 5.6% over this time period.
Oh by the way, the European Union is currently running at about 6.7% unemployment, Spain at 9.0%, Germany at 7.6% and Canada at 5.1%. All this data is available on the BLS website. Things could be worse if you ask me.
What do you think about the unemployment rate?
- Jeff
Learn about personal finance to succeed at minding your own business.
3 responses so far ↓
1 Are You Educating Your Kids? The US Jobs Report Says You Should! | Minding My Own Business // Aug 18, 2008 at 4:25 pm
[...] Unemployment…How Bad Is It? It All Adds Up [...]
2 Mark // Oct 26, 2008 at 7:38 pm
What is worse inflation or Unemployment? and what are some reasons? Are these going to get worse?
Thank You
3 Jeff // Oct 27, 2008 at 5:49 am
@ Mark - Thanks for stopping by.
In general I think both unemployment and inflation are “bad.” Both serve to slow down the economy.
However at this point in time I’m not certain that either is a huge threat to the US economy by themselves. Certainly they are part of the bigger picture and contribute to the collective slowdown, but we are in the current economic situation primarily because of the credit mess the banks got themselves into and the related housing slowdown. This coupled with the rise in energy costs has created a situation where the American consumer has come under increased economic pressures.
Unemployment remains near historic averages (currently 6.1% in Sep 08 per the Bureau of Labor Statistics, BLS.gov) As I mentioned above in the post, since 1948 the average unemployment rate is 5.6%, so 6.1% isn’t a huge difference.
I don’t expect inflation to be a big factor going forward for the near future. With so much destruction of wealth, coupled with production slowdowns, and tightening credit I find it hard to believe that we’ll be in a position where too much money is chasing too few goods.
Thanks for the question.
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