“Unemployment rate falls as more people stop looking for work,” Kenneth Schortgen, January 7, 2011

The economy needs to create 125,000 new jobs per month simply to keep up with the population demands for work.  You will notice that even during December, one of the highest months for hiring due to temporary retail needs, only 110,000 jobs were created, and thus there was a deficit of 15,000 jobs last month simply to stay even with the population.

Secondly, the Labor Department does not record those unemployed who are not out actively looking for work.  Once someone falls off the unemployment benefit roles, there is no requirement to apply for jobs to ensure benefits. When these people fall off, they are no longer counted in the unemployment data.

While the economy hiring 110,000 new workers is much better news than we have had in the last three years, at least 250,000 jobs need to be created each month to validate growth.  Even with 250,000, it would take at least 28 months of this to employ the more than 7 million who have lost their jobs since the recession began.

The government models tell you the unemployment rate is now at 9.4%.  The real data and true unemployment however is at 17%, and will only get higher until we begin to see consistent job creation at least double what December provided.

http://www.examiner.com/finance-examiner-in-national/unemployment-rate-falls-as-more-people-stop-looking-for-work

Comments about the facts

So do you agree with all of these factors comparing the Great Depression with the Great Recession?

Bob M. has some comments:

Over 100 banks have failed.  The unemployment rate reached 10% and then declined only because those who ran out of support - 99 weeks - are no longer counted.  If you add the unemployed and the underemployed the true figure is probably 20-25%.  One out of every six people in this country is experiencing a problem in getting food.  One of every four mothers with infants is having a problem affording diapers.

At the same time the situation is not as severe as it was in the Great Depression, when we were still moving from an agricultural society to an industrial one.  The movement today is from an industrial society to a service society, which again calls for dislocation and different skill sets.

Those that marketed their goods came out of the depression better than those that pulled back on the marketing expenditures.

In addition: the FDIC reports that 324 banks have failed since 2008, with 25 in 2008, 140 in 2009 and 157 bank failures in 2010.  This doesn't count the mega-banks that were bought up during the panic in 2008.

Bank Failures:

 http://www.fdic.gov/bank/historical/bank/2010/index.html

Double Dip during the Great Depression

The Great Depression consisted of two major economic dips. The first occurred from august 1929 through March 1933. The second economic decline, known as “Roosevelt’s Recession,” occurred from May 1937 through June 1938.

Although the American economy is on the rebound – or at least some statistics say so – the current oil crisis, the length of unemployment and the state of the federal government’s budget crisis, we are still at risk for a Double Dip.

Protectionism

Protectionism is the economic policy of restraining trade between states through methods such as tariffs on imported goods, restrictive quotas, and a variety of other government regulations designed to discourage imports and prevent foreign take-over of domestic markets and companies. During the Great Depression, there was more protectionism in Europe that in the United States, but both societies became less open. The United States passed the Smoot-Hawley Tariff Act in 1930, and it is believed to have prolonged the Depression.

New structures like the G20, European Union Commission and the International Monetary Fund help to curb protectionist policies, but don’t eliminate them. It is still too early to tell how current policies will impact the scale of the Great Recession.

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.