Unemployment Falls to Single Digits - Update
After three straight months of double-digit ratings, the official U.S. unemployment rate fell from 10% to 9.7% in January 2010. The economy shed 20,000 non-farm payroll jobs, a significant decrease from the 85,000 lost in December 2009.
Retail trade employment rose by 42,000 in January 2010, after showing little change in the prior two months. Job gains occurred in retail verticals including food stores (14,000), clothing stores (13,000), and general merchandise retailers (10,000).
The January 2010 unemployment rate reflects unemployed persons actively looking for work. According to the Bureau of Labor Statistics, it stood at 5% when the recession began in December 2007. Since that time, the number of unemployed persons has increased about 92%, from 7.7 million to 14.8 million. In December 2009, 15.3 million persons were counted as unemployed.
Looking beyond these numbers, many more Americans are unable to find work than those counted in the official unemployment figure. The civilian labor force participation rate, which is the proportion of the non-institutionalized civilian population age 16 and older serving in the labor force, marginally rose from 64.6% to 64.7%. This figure stood at 66% in December 2007. The employment-population ratio, which measures the ratio of employed persons to the total non-institutionalized civilian population age 16 and older, also slightly improved from 58.2% to 58.4%. It stood at 62.7% in December 2007.
Several other pieces of unemployment data show mixed signals about the the U.S. job situation. These include:
- The number of employed persons working part-time for economic reasons dropped 9.7%, from 9.2 million to 8.3 million.
- About 2.5 million persons were marginally attached to the labor force, an increase of 409,000, or 19.6%, from 2.09 million persons in January 2009. These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the four weeks preceding the survey.
- Among the marginally attached, there were 1.1 million discouraged workers, a 49.8% increase from 734,000 discouraged workers a year earlier and 44% of total marginally attached workers. Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The other roughly 1.77 million persons marginally attached to the labor force in January had not searched for work in the four weeks preceding the survey for reasons such as school attendance or family responsibilities.
However, a recent privately produced source of unemployment research indicates that more jobs may be on the way in 2010. According to the November 2009 Outlook from the National Association of Business Economists (NABE), the official U.S. unemployment rate should peak in Q1 2010. However, beginning in Q2 2010, the NABE study predicts U.S. employers will begin adding jobs, which will ease the U.S. unemployment rate.
Although economists surveyed by NABE predict U.S. employers will begin hiring next year, they do not foresee an immediate turnaround. Sixty-one percent predict unemployment will not return to pre-recession levels until 2012, and the consensus is that unemployment will remain above 9% throughout 2010.