Jobless rate slips

Current news:

Current news:

The number of people who have been out of work for six months or longer eased to 6.2 million from 6.4 million.

The broader measure of unemployment, which includes those whose hours have been cut, those who are working part time because they could not find full-time jobs, and those so discouraged that they have given up on the search, was 16.1 percent, down from 16.7% in December.

That still left 13.9 million people out of work! Wow – is the Great Recession really over?

Length of Average Unemployment

Similar to the Great Depression, people are currently experiencing a long duration of unemployment. By January 2010, the average wait to find employment was 35.2 weeks. In February 2011, the number of long-term unemployed out of work is 27 weeks or longer. Unfortunately we don’t know the number of weeks during the Great Depression as the government records for this statistic began in 1948.

Unemployment Rate Drops to 9%

The U.S. unemployment rate fell sharply to 9 percent in January from 9.4 percent in December, as more than 620,000 previously jobless people found work, the Labor Department said Friday. There was a net gain of 36,000 jobs — the lowest level in four months — but economists blamed bad weather for the weak number.

The number of self-employed rose by 165,000 to 9.7 million, the highest total since last May. The construction industry lost 32,000 jobs, and in the transportation and warehousing industry, courier and messenger jobs dropped by 45,000 over the month. Manufacturing added 49,000 jobs and retail trade jobs grew by 28,000.

The unemployment rate has fallen by eight-tenths of a percentage point in the past two months. That is the steepest two-month drop in nearly 53 years. But part of the decline occurred as many of those out of work gave up on their job searches. That number rose to 2.8 million last month from 2.6 million in December.

The number of long-termed unemployed — people out of work for 27 weeks or more — fell to 6.2 million from 6.4 million, but that group accounted for 43.8 percent of the jobless. Employment is stronger but those gains are not enough to bring back the swollen ranks of workers who have been unemployed for a very long time.

Among whites, the unemployment rate fell to 8 percent from 8.5 percent in December, and among blacks, it dipped to 15.7 percent from 15.8 percent. The rate among Hispanics dropped to 11.9 percent from 13 percent, and among Asians, the rate fell to 6.9 percent from 7.2 percent.

Unemployment

The unemployment rate at the height of the Great Depression was 25%; the Great Recession reached 9.8%, and for January 2011 it has dropped to 9.0%. Unemployment for those who earn greater than $150,000 is only 3%, while the poor is impacted at 31%. The rich get richer and the poor get poorer! Factors such as where you live, race, income, and age greatly affect one’s experience with the severity of unemployment.

Bank Bailout Program

But would it have been worse if the Bank Bailout program was not implemented? And at quite a cost to the U. S. taxpayer. There has been a recent announcement that the government is expected to make a $12.3 billion profit on the $45 billion investment in Citigroup (NYSE: C). Treasury's acting assistant secretary for the bailout program said in a statement: "Our investment in Citigroup has produced a significant profit for taxpayers. As we exit our investments ... it's clear that the cost of the TARP program will be a fraction of what many had once feared during the depths of the crisis."

The U.S. government made $13.5 billion selling its stake in General Motors (NYSE: GM), and it'll soon be selling its stake in AIG (NYSE: AIG). Treasury provided a total of $410 billion in disbursements from the TARP fund. With the Citigroup warrant auction, the amount that Treasury has received back in repayments and income on its investments totals $271 billion, Treasury said.

With that said, TARP is still expected to cost taxpayers $28 billion. It's a scary thought that $28 billion is less expensive to taxpayers than we first feared.

The government warned that banks were too big to fail, but then allowed and encouraged banks JPMorgan (NYSE: JPM) -- alias J.P. Morgan Chase Bear Stearns Washington Mutual -- and Bank of America (NYSE: BAC) -- aka Bank of America Countrywide Merrill Lynch -- to acquire other banks. What about some other absurdities from the financial crisis, like ex-Merrill CEO John Thain, now CEO of CIT Group (NYSE: CIT), using company money to buy a $70,000 desk while his bank was receiving taxpayer support. To be fair, the information is wrong. The desk was only $18,000; the credenza cost $70,000.

Bank Foreclosures

Many banks foreclosed during the Great Depression. Between January 1933 and March 1933 over 50% of the banks or 9,096 banks failed. Between December 2007 to May 2009, only 57 U. S. banks failed, or .6% of the total banks.

On September 15, 2008, Lehman Brothers Bank filed for bankruptcy. This bankruptcy was the largest in U. S. history. Today banks are still not in a great position to lend.

Global Industrial Production

During the Great Depression industrial production had a massive three-year decline. Today’s global markets experienced an initial shock, then global trade and global production continued, albeit more slow than prior to the Great Recession.

Global stock markets have mounted a sharp recovery; however, the proportionate decline in stock market wealth remains even greater than at the comparable stage of the Great Depression.

Thousands of unemployed Chinese graduates flock to a job fair in Wuhan, central China's Hubei province on March 7, 2009. China vowed to help train one million graduates in the next three years to boost their qualifications, and promised loans to business that hire graduates, as unemployment continues to grow. (STR/AFP/Getty Images)

United States Manufacturing Decline

Both the Great Depression and the Great Recession have been impacted by an immense decline in manufacturing production. Industrial production declined by 19% between Q32008 and 1Q 2009, and then leveled off. During the Great Recession it declined by 12% in the first three quarters and did not recover until 1932.

The Deficit Effect on American Youth

Gross Domestic Product (GDP) Growth

GDP growth is the greatest factor in determining what constitutes a depression versus a recession. I know many feel this economic crisis is our generation’s depression but in economic terms, it is not.

The unofficial definition of a depression is broadly defined as a drop in 10% of the GDP. Between 1929 and 1933 the U.S. GDP dropped more than 30%.

The definition of a recession is when economic growth contracts for two quarters straight, with severity measured in actual decline and visible in real GDP, real income, employment, industrial production and wholesale-retail sales. The economy was slowing in 2007, and in early 2008, with severe declines later in 2008 and in early 2009. The 4^th quarter of 2008 and the 1^st quarter of 2009 were the first successive quarters since the Great Depression that sustained growth below -5.0%.

http://www.bea.gov/newsreleases/national/gdp/gdp_glance.htm

The definition matters to some. In reality, it is how you and yours are impacted by the economic crisis.