Job Losses: How Bad Could It Get? (Morningstar) Video

Get it off your chest – be the first to comment on this video!

Job Losses: How Bad Could It Get? (Morningstar)

Hello, this is Bob Johnson, Associate Director Of Economic Analysis at Morning Star. Today, the labor department issued its monthly employment numbers as they do every month and these are the most authoritative numbers on employment. And I have with me to discuss today those numbers, Bill Burdman senior analyst on our financial stem. Bob: Bill wecome. Bill: Hi Bob. Bob: Bill, could you talk to me a little bit about the numbers that actually came out this morning? Bill: Well, we have the monthly payroll and household numbers, both came out this morning. The payroll survey and the household survey; the household survey produces the unemployment rate. The unemployment rate went from 6.8%, November 2 7.2 % and in December an increase. That’s not in consistent with the recession; we are still in recession in the employment area. A total on the employment side, the total employment and from the payroll survey, they survey affirms the rate of job lost continue to be significant. Bob: And what was number Bill? Bill: Down 524,000 in December which was not as bad as the 584,000 revised job lost number that we have in November but job loses have been accelerated on the payroll side through November but at least they didn’t accelerate further in December which is a good sign. In a week, it has been largely concentrated in the manufacturing sector which is an area that can improve in due course with a turn around in the economy. Bob: Very good Bill. Then, if we look at the numbers, what sector surprised you the most? Bill: Well, two cautionary notes that caught my eye and it came from the household survey. The total employment number from the household survey was the job lost that we’ve had in November and December. It is higher than it was in the payroll numbers and within that household number. There are the part-time workers and they breakout the number of people who are working part-time “for economic reasons.” There are people who work part-time because they work part-time and the share of people that have been working part-time jobs for economic reasons because they simply can’t find a job, a full time job. It has risen significantly since August, rising steadily from 23% in August to 30% in December which is a trend that hasn’t been broken yet. Bob: Bill, relative to expectations, what was the market thinking today and what do we end up with? Bill: I think the market was prepared for a pretty bad number and I think the market might have been relieved in a part, the market has been down today of course but there are other reasons that the stock market is down. At least so far today in the news but I sense that the numbers will be probably a little better than what people are fearing and what could have been worse. Bob: Okay, and in terms of what are you are thinking, how does this number line up with where we are in recession and how bad could it get? Bill: Well, compared to what I was thinking about 7:00 am or so, I think its about in lined, it will be a bit worse than what I have expecting at 7:00 am, but in terms of where we are compared to the past recessions, we’ve had worse recessions so far and longer one’s so far than what we had in 2001. Looking back, job looses have been accelerating in recent months but that’s also something that tends to happened in the end, not at the beginning or the middle of recessions. So, the fact that job losses have been accelerating in recent months isn’t necessarily a sign that we have a longer recession ahead of us. Bob: Now, my forecast is for something like an 8-9 unemployment rate and so we’ve started at the bottom of 4.7 or so, we are on our way to maybe something like 8% to 9% range. Is this number that we saw today consistent with that? Bill: We are moving right on that path. We haven’t deviated from it, you’ve got an E-chart there that looks at past recessions and you’re thinking about how to get to that 8% to 9% number and we are right on that. Bob: Okay, and just in terms of the numbers, they’re all kind of out there. If we got to 8-9% unemployment, how many more months of job losses out of these 500,000 to 600,000 range would we have to have? Bill: If we get there, it would take at this rate, it looks like around half a year or so of continuing job losses along the lines of what we’ve had in recent months which is significant and it’s a problem but that’s the number that— Bob: would get us there. Bill: to get to that 8%. For the jobless rate, to get to that jobless rate, that jobless rate numbers, a number that peaks well after the end of recessions and previous recessions. So, from an investment perspective, you know the fact that jobless rates maybe significantly higher, say six months down the road. Even if that is true, it isn’t necessarily a sign that we are at near at the end of the recession. Recovery maybe, honest, before the end of that up-tank and the unemployment— Bob: Well very good, what other things do you think there are to be positive about here in the economy? I mean everybody is so focused on this job report and how negative it is. What things are you looking that may make it more positive? Bill: The job report certainly was a bad one but its one that we should have been bad after what happened in November. There are a lot of things that I think to be very optimistic about in terms of a possible recovery I think in the next year. We’ve got short term interest rates running at near record levels. We’ve got yield curves widening, yield curve is a good predictor of economic activity. When we’ve got a wider yield curve which is a proxy for money market creation and lending by the banks were swimming upstream and that’s a score given the capital condition in our banking system but it is still a positive and not a negative. Things are looking good. Bob: And then what other things that we might see everyday as a consumer are looking better? Bill: Well prices, I think from a consumers perspective and real brought this is something we’ve talked about. To what extent, we are seeing a slow down if not a decline in consumer prices in a lot of places. The oil price declines, certainly that’s one thing and gasoline prices is one facet to that but we’ve also seen slowing inflation rates and from a consumer perspective, the value that we’re getting as consumers at the counter and the services I think that are out there for us and the competition that’s out there for consumers were getting more value and there might be more real growth on the consumption side than the data that are picking up, given the way that the data have computed. Bob: Okay, well very good. And we’ve also got to expose Obama’s tax plans to put some more money in consumers pockets. Bill: In the short one, its hard not to expect anything but positive from the stimulus packages that are coming, both on the monicker and the physical side, so that’s a positive. At least in the short run, there are longer term consequences that we’re going to have to deal with though. Bob: So we’re in a recession, the numbers weren’t good today, they weren’t pretty but they’re consistent with the normal recession and we’ve got some reasons to be optimistic and going forward, and Bill will be back in another month to talk to you about the employment numbers again. Bill: Good. Bob: Thanks.

Featured Links:

Forced Job Loss - the Early Warning Signs

This article discusses the possible warning signs that a person should pay attention to. These warning signs can serve as advanced warning to people, to get them prepared if the worse should happen. Additionally, it provides advise on what action to

http://www.articlesbase.com/business-articles/forced-job-loss-the-early-warning-signs-611607.html/9461024403

Hello, this is Bob Johnson, Associate Director Of Economic Analysis at Morning Star. Today, the labor department issued its monthly employment numbers as they do every month and these are the most authoritative numbers on employment. And I have with me to discuss today those numbers, Bill Burdman senior analyst on our financial stem.

Bob: Bill wecome.

Bill: Hi Bob.

Bob: Bill, could you talk to me a little bit about the numbers that actually came out this morning?

Bill: Well, we have the monthly payroll and household numbers, both came out this morning. The payroll survey and the household survey; the household survey produces the unemployment rate. The unemployment rate went from 6.8%, November 2 7.2 % and in December an increase. That’s not in consistent with the recession; we are still in recession in the employment area. A total on the employment side, the total employment and from the payroll survey, they survey affirms the rate of job lost continue to be significant.

Bob: And what was number Bill?

Bill: Down 524,000 in December which was not as bad as the 584,000 revised job lost number that we have in November but job loses have been accelerated on the payroll side through November but at least they didn’t accelerate further in December which is a good sign.

In a week, it has been largely concentrated in the manufacturing sector which is an area that can improve in due course with a turn around in the economy.

Bob: Very good Bill. Then, if we look at the numbers, what sector surprised you the most?

Bill: Well, two cautionary notes that caught my eye and it came from the household survey. The total employment number from the household survey was the job lost that we’ve had in November and December. It is higher than it was in the payroll numbers and within that household number. There are the part-time workers and they breakout the number of people who are working part-time “for economic reasons.” There are people who work part-time because they work part-time and the share of people that have been working part-time jobs for economic reasons because they simply can’t find a job, a full time job. It has risen significantly since August, rising steadily from 23% in August to 30% in December which is a trend that hasn’t been broken yet.

Bob: Bill, relative to expectations, what was the market thinking today and what do we end up with?

Bill: I think the market was prepared for a pretty bad number and I think the market might have been relieved in a part, the market has been down today of course but there are other reasons that the stock market is down. At least so far today in the news but I sense that the numbers will be probably a little better than what people are fearing and what could have been worse.

Bob: Okay, and in terms of what are you are thinking, how does this number line up with where we are in recession and how bad could it get?

Bill: Well, compared to what I was thinking about 7:00 am or so, I think its about in lined, it will be a bit worse than what I have expecting at 7:00 am, but in terms of where we are compared to the past recessions, we’ve had worse recessions so far and longer one’s so far than what we had in 2001. Looking back, job looses have been accelerating in recent months but that’s also something that tends to happened in the end, not at the beginning or the middle of recessions. So, the fact that job losses have been accelerating in recent months isn’t necessarily a sign that we have a longer recession ahead of us.

Bob: Now, my forecast is for something like an 8-9 unemployment rate and so we’ve started at the bottom of 4.7 or so, we are on our way to maybe something like 8% to 9% range. Is this number that we saw today consistent with that?

Bill: We are moving right on that path. We haven’t deviated from it, you’ve got an E-chart there that looks at past recessions and you’re thinking about how to get to that 8% to 9% number and we are right on that.

Bob: Okay, and just in terms of the numbers, they’re all kind of out there. If we got to 8-9% unemployment, how many more months of job losses out of these 500,000 to 600,000 range would we have to have?

Bill: If we get there, it would take at this rate, it looks like around half a year or so of continuing job losses along the lines of what we’ve had in recent months which is significant and it’s a problem but that’s the number that—

Bob: would get us there.

Bill: to get to that 8%. For the jobless rate, to get to that jobless rate, that jobless rate numbers, a number that peaks well after the end of recessions and previous recessions. So, from an investment perspective, you know the fact that jobless rates maybe significantly higher, say six months down the road. Even if that is true, it isn’t necessarily a sign that we are at near at the end of the recession.

Recovery maybe, honest, before the end of that up-tank and the unemployment—

Bob: Well very good, what other things do you think there are to be positive about here in the economy? I mean everybody is so focused on this job report and how negative it is. What things are you looking that may make it more positive?

Bill: The job report certainly was a bad one but its one that we should have been bad after what happened in November. There are a lot of things that I think to be very optimistic about in terms of a possible recovery I think in the next year. We’ve got short term interest rates running at near record levels. We’ve got yield curves widening, yield curve is a good predictor of economic activity. When we’ve got a wider yield curve which is a proxy for money market creation and lending by the banks were swimming upstream and that’s a score given the capital condition in our banking system but it is still a positive and not a negative.

Things are looking good.

Bob: And then what other things that we might see everyday as a consumer are looking better?

Bill: Well prices, I think from a consumers perspective and real brought this is something we’ve talked about. To what extent, we are seeing a slow down if not a decline in consumer prices in a lot of places. The oil price declines, certainly that’s one thing and gasoline prices is one facet to that but we’ve also seen slowing inflation rates and from a consumer perspective, the value that we’re getting as consumers at the counter and the services I think that are out there for us and the competition that’s out there for consumers were getting more value and there might be more real growth on the consumption side than the data that are picking up, given the way that the data have computed.

Bob: Okay, well very good. And we’ve also got to expose Obama’s tax plans to put some more money in consumers pockets.

Bill: In the short one, its hard not to expect anything but positive from the stimulus packages that are coming, both on the monicker and the physical side, so that’s a positive. At least in the short run, there are longer term consequences that we’re going to have to deal with though.

Bob: So we’re in a recession, the numbers weren’t good today, they weren’t pretty but they’re consistent with the normal recession and we’ve got some reasons to be optimistic and going forward, and Bill will be back in another month to talk to you about the employment numbers again.

Bill: Good.

Bob: Thanks.

Transcription by: Scribe4you Transcription Services