Finance Column » Your Money This Week » Auld lang unemployment?

Auld lang unemployment?

By Gregg Fields ·
Monday, January 10, 2011
Posted 9 am ET

And so the holiday season ended for millions of Americans, clinking champagne flutes and slurring their way through a rousing rendition of "Auld Lang Syne.''

Considering the economic news of last week, perhaps 2011 should have been greeted with a different theme song. The Knack's 1979 hit ''Frustrated'' seems particularly appropriate. Because in the first full week of the New Year, Americans got another unemployment report that was cause for pause to anyone whose resolutions included finding work in 2011.

First, the good news: Unemployment fell to 9.4 percent from 9.8 percent.

Now, the bad news: Big deal. That, at least, is a condensation of Federal Reserve Chairman Ben Bernanke's testimony to Congress last week.

Bernanke noted that that 40 percent of America's jobless have been without work for more than six months. ''Long-term unemployment not only imposes exceptional hardships on the jobless and their families, but it also erodes the skills of those workers and may inflict lasting damage on their employment and earnings prospects,'' he testified.

Perhaps it's time "Duh'' is classified as an economic term.

Most of the drop in unemployment in December wasn't because people got hired. Rather, it's because they quit. Or more specifically, quit looking. The government doesn't count people who have given up their job search.

One of the more prescient comments on the labor situation came from J.P. Morgan economist Anthony Chan, who says it's going in the right direction. ''But that is not the same as telling the kids in the minivan:  'We are there.' '' At current rates, it'd be faster to walk.

The economy did add 103,000 jobs last month. But analysts say the U.S. needs to generate about 120,000 jobs per month just to keep up with population growth.

Translation: We're falling behind, but at a slower pace. It's a bit like celebrating that a bad restaurant is serving smaller portions.

One problem is that the private sector's 113,000 gains were blunted by government reductions. During the boom, cities and states grew addicted to inflated property tax receipts. But as they say, you can't squeeze blood from a foreclosure. Government payrolls shrank by 10,000 in December. Presumably, that includes every snowplow operator in New York City.

But it's a time for new beginnings. And this week there may be optimistic hints on 2011. Friday morning, we'll get a retail sales report. Beyond a barometer on Christmas spending, it will suggest whether Americans are regaining enough confidence to splurge. Look for a market reaction, one way or another. Later that day, we get more data when the University of Michigan's consumer sentiment survey is released.

Here's hoping they're worth a toast.

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Pigbitin Mad
January 13, 2011 at 3:53 pm

“It is flowing in the right direction,” Mr. Chan said, referring to labor market growth. “But that is not the same as telling the kids in the minivan: ‘We are there.’ ”

Once again the Titans of Wall Street who created this mess look down on us as petulant children. If we would only wait another 20 or 30 years (by which time I will likely be dead). Once big business has exhuasted all the cheap labor and raised them up to our level will we be able to compete again. Only this time we will be the ones working for 20 cents an day and a bowl of rice. Kinda makes me wish I were dead now.