Five Labor Market Slides

I want to share some slides about the employment situation.  Other than the first slide (which I pulled from Bloomberg), the remaining four slides are from Boston Fed President Eric S. Rosengren’s recent speech (“Small Business Funding and the Economic Recovery”).  Here are some quick thoughts:

1. The weekly claims for unemployment insurance moved back up to 399K.  It seems consistent with the employment report (where 42K of the 200K jobs created were in the “messenger and courier” business).  See slide below.

2. Many people are working part-time even though they want full-time work.  These are people who have had their hours cut or just can’t find full-time work.  It’s a sign of the weakness in the labor market.  See slide below.

3. The next slide shows just how much deeper this labor market recession has been.  It will take significant growth to get this line back to even.

4. Unlike the prior recession (2001 – 2002), this recession has seen small firms lose employees to a greater extent than large firms.  This is consistent with the idea that financing is very difficult for small firms.  See slide below.

5. You can see that some of the states with the most significant decreases in home value have also experienced the highest unemployment rates.  We could attribute this to lots of reasons such as the reverse wealth effect (driving consumption down).  But, it’s also possible that the drop in home values is hurting the ability to start a new business – since home equity loans often provide the financing for new ventures.  See slide below.

All of this helps to reinforce why the labor market will continue to be slow to recover.

Have a great week.

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