Unemployment rate continues to rise; will hit 8.5% in 2009

Some economists are predicting that the unemployment rate will hit 8.5% in 2009. Today, we already hit 8.5% unemployment rate when not seasonally adjusted, up from 7.1% in December and 5.4% a year ago. January is typically the highest month for the unemployment rate. According to "The Employment Situation" for January 2009, released today by the U.S. Department of Labor, seasonally adjusted, the unemployment rate was 7.6%, up from 7.2% in December and 4.9% a year ago. Since 1948, the unemployment rate has never risen by more than .5% in a 12 month span without entering into a recession. The unemployment rate is now up 2.7 percentage points in the last twelve months and is up 3.2 percentage points from its recent low of 4.4%.

Nonfarm payrolls decreased by 598,000 in January, 577,000 in December, and 597,000 in November. This month they revised the previous two months of December and November downward by 66,000 jobs. In December they revised downward the amount of jobs lost in the previous two months by 154,000. In November, they made a downward revision of 199,000. They also made huge revisions for last year and revised as far back to 2004. Last month, the total jobs lost from December 2007 to December 2008 was reported to be 2,589,000. This month, with the revisions, the total jobs lost from December 2007 to January 2009 has reached 3,572,000 jobs. The average recession since World War II has had a loss of 1,917,000 jobs on average. The biggest loss before this recession came in 1982 with 2,838,000 jobs lost. In terms of job loss, we are in the biggest recession since the Great Depression. And the end is not in sight yet.

The U.S. Department of Labor released the Weekly Claims data for Unemployment Insurance yesterday. Initial claims were at 626,000 for the week ending January 31st. This is up from the previous week's number of 591,000. The four week average of initial claims, which is not as volatile, was at 582,250. This is up from the previous week's figure of 543,250. Continued claims for unemployment insurance increased to 4,788,000 for the week ending January 24th up from the previous week's number of 4,768,000. The four week average for continued claims was also up to 4,672,000 from 4,628,000. This is the highest continued claims has ever been. The previous high was in 1982. Initial claims is faster to move up and signals increases in the unemployment rate. Continued claims take longer to go down than the initial claims once the unemployment rate is elevated. The Unemployment rate doesn't drop until continued claims start to come down.

Sphere: Related Content