Posts Tagged ‘u.s. jobs report’
The just-released U.S. Labor Department report shows an addition 3.17 million American workers filed jobless claims in just the past week. This means that in a period of only seven weeks the U.S. shed 33.5 million jobs due to the Covid-19 pandemic. The employment picture in the United States is utterly dismal, with no end in sight to the contraction of employment numbers. Though there is wishful thinking on “reopening” the American economy, the reality on the ground shows freefall economic collapse engendered by a health crisis, with no short-term-term solution in sight, except continuation of the slowdown of economic activity.
The news from Europe is equally dire. The Bank of England is forecasting that the UK economy will contract in 2020 due to shutting down economic activity in response to the coronavirus by 14 percent. According to the Bank of England, this is the nation’s worst economic contraction in three hundred years. In the Eurozone officials forecast a rate of quarterly economic contraction of 7.5 percent.
A global recession is already underway, at an intensity far beyond that of the 2007-09 Global Financial Crisis. The current Global Economic Crisis created by Covid-19 suggests that a severe global depression is an increasingly likely prospect for the world.
The U.S. Labor Department released this morning its weekly report on jobless claims. The data shows last week’s record-setting 3.3 million claims has doubled this week to more than 6.6. million. This number exceeds not only the global financial crisis of 2007-09, but even the Great Depression of the 1930s, in the rapidity of job destruction.
The coronavirus pandemic has now unleashed a severe global economic crisis of catastrophic proportions. Unfortunately, this is only the beginning. With a vaccine at least a year, and more likely 18 months , away from development and production, the entire planet is the grips of not only a massive health crisis, but a virtual meltdown of economic activity.
As the pace of jobs destruction accelerates, demand is also being annihilated, compounding the depth and pace of economic contraction. Undoubtedly, this will also generate a severe financial shock globally, as equities collapse, bond spreads widen and sovereign and corporate debt insolvency rampages with destructive ferocity.
Not much talk anymore about green shoots from U.S. Federal Reserve chairman Ben Bernanke. Despite infinite and very creative attempts by politicians in the U.S., the U.K. and the Eurozone to twist and spin economic statistics to make it appear that the world is indeed recovering from the global economic crisis, the data that is emerging is so bad it can no longer be “massaged.” The latest jobs report from the United States showed that in the month of August, zero jobs were created by the economy. The official news was bad by itself, but it hides an even worse reality. Even with no net new jobs created, the official discounted unemployment rate in America remained at 9.1percent. With approximately 200,000 new adults entering the work force each month, the only way that could have happened with no change in the U3 unemployment rate is if 200,000 discouraged job seekers left the labor market, or were merely eliminated form the ranks of the unemployed by the slick action of a statistician’s pencil.
While America’s jobs crisis worsens, Europe has its own woes to contend with. The sovereign debt crisis is clearly getting more dangerous, with both Spain and Italy increasingly vulnerable to the bond vigilantes. And the U.K. is experiencing sluggish or non-existent economic growth, in the process undermining the objectives of its austerity program. The global economic and fiscal situation is so bad, even the IMF is starting to hit the panic button. I think the happy talk from politicians may just about have run out of steam.
Three days after the Democratic Party lost control over the U.S. House of Representatives in the midterm election, the Obama administration heralded a supposedly impressive jobs report. According to the Bureau of Labor Statistics, the U.S. economy created a net total of 150,00 jobs during October. Sounds good. However, the unemployment rate stood at 9.6 percent, suggesting that previously discouraged workers reentered the job market.
Now here is where things get really strange. According to Nouriel Roubini, there is something contradictory about the claim of strong job creation in October. Here is what he tweeted: “Household survey: employment fell 330K last month & labor force participation rate at 25yr low. How does that square with 150K jobs gain?”
If Professor Nouriel Roubini is skeptical about the laudatory jobs report just released, we all should be.
