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The Almost Daily 2¢ - Unemployment, Foreclosures and The Obama Spin Posted: 13 Jan 2009 10:39 AM CST ![]() ![]() The two most important details that this chart reveals is that incidence of foreclosure and rates of unemployment should generally be expected to peak together and that unemployment "spikes" should be expected to take at least two to three years simply to get to the peak. In fact, the average length of time to reach the peak of an unemployment spike (base month to peak month) for the last four recessionary periods was roughly 2.25 years. So, unless you believe that either our current period of unemployment will be shorter than average or you include 2007 as a whole year of rising unemployment, we are likely looking at an additional year or possibly even nearly two years to simply reach the peak in unemployment. Also, it's important to keep in mind that even after the peak, periods of unemployment take a long time (many years) to play out and that our current predicament should be expected to heal particularly slowly as many millions of specialized workers are forced to make significant and complicated job changes in order to become productive workers again. Another important detail the above chart reveals is that during the "dot-com" bust rising home prices all but eliminated the incidence of foreclosures as stressed households could either choose to borrow from their homes equity to stay afloat financially or simply sell their home at a profit and switch to a more modest housing arrangement. Today though, there is no equity cushion. Finally, I want to draw your attention to a chart that was supplied with president-elect Obama's recent whitepaper titled "The Job Impact of the American Recovery and Reinvestment Plan". ![]() Massive government spending notwithstanding, there is absolutely NO chance that unemployment could be made to peak by June of 2009… It's simply not possible and reveals an early insight into the new administrations clever twist of spin. Where the Bush administration was famous for their "the economy is fundamentally sound" spin, the Obama administrations appears poised to repeat effectively the same behavior with random propositions of "creating OR SAVING" millions of jobs as well as presenting forecasts that Obama's own economic advisors must know are simply outlandish. |
Economic Jolt: Job Openings and Labor Turnover November 2008 Posted: 13 Jan 2009 11:21 AM CST ![]() These results are clearly indicating that the slowdown in the employment market has developed substantially over the last six months and now is quickly accelerating down into territory typical of recessionary contraction. Job "openings" (click chart below for larger version), the reports most leading "demand side" indicator, has now declined on a year-over-year basis for five consecutive months strongly suggesting that the private sector is planning to curtail future hiring activity. ![]() ![]() ![]() It's important to understand that job "quits" are included as a component of the "separations" data series as "quitting" is a valid means of workers "separating" from employers but their inclusion tends to create an overall procyclical trend in what would otherwise be logically thought of as a countercyclical process (i.e. downturn leads to increase in separations not decrease). ![]() ![]() |
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