U.S., Canadian and Euro Area Labor Statistics

January 8, 2010

The United States may have left behind its GDP recession but remains in a growth recession, the term used by economists when economic expansion is too weak to cut unemployment.  Employment fell in every month of 2008 and eleven of twelve months last year, the exception being a revised and tiny increase of 4K in November.  Jobs fell 85K in December and by 69K per month (pm) in the fourth quarter.  That was down from losses of 199K pm in 3Q, 428K pm in 2Q, 691K pm in 1Q, 553K pm in the final quarter of 2008, 208K pm in 3Q08, 153K pm in 2Q08 and 113K pm in 1Q08.  The jobless rate of 10.0% last month was the same as in November and twice as much as two years earlier when the recession began.

To absorb new labor market entrants in the United States, reabsorb workers laid off in the recession, and thereby cut into the unemployment rate in a meaningful way, employment needs to expand 170K or better per month.  This is what happened after the last deep recession from mid-1981 to end-1982.  Quarterly growth in jobs (thousands per month) in 1983 and 1984 followed the trajectory shown below, and the unemployment rate fell from 10.8% at the end of 1982 to 7.2% at the end of 1984.

  1Q 2Q 3Q 4Q
1983 107 310 408 326
1984 400 350 288 254


The different dynamics of a growth recession were observed after the last U.S. recession, which ended in November 2001.  The progression of job changes during the eight quarters following that recession are shown below, and that cycle saw the unemployment rate at the end of 2003, 5.7%, actually two-tenths of a percentage point above the 5.5% level in November 2001.  Fed officials are resisting calls to tighten sooner than they want because they doubt inflation can accelerate against a backdrop of so much labor market slack.  Fed critics point out that the late seventies and early nineteen eighties saw high unemployment and accelerating inflation coexist.  That’s not an appropriate comparison, however, because inflation had already climbed into double digits before the 1981-2 recession began.  This time price pressures are very subdued at the start.  It takes more force to start a heavy freight train from a standing position than to speed one up after decent velocity has already been attained.

  1Q 2Q 3Q 4Q
2002 -101 -16 -56 -7
2003 -96 -19 +29 +115


The Canadian jobless rate also held steady last month, only such was 1.5 percentage points below the U.S. level.  The number of unemployed Canadians was 29.6% higher than a year earlier, a gain of 358K.  Canadian employment slid 2.6K in the final month of 2009 but posted a fourth-quarter 11.1K per month rate of increase, which is akin to an 86K per month rate of rise in the larger U.S. labor market.  As in the United States, Canada lost more manufacturing jobs in December, 9.7K to be exact compared to the U.S. factory job decrease of 27K.  Canadian total employment was 1.9% lower in December than a year earlier and peaked more recently, October 2008, than the prior cyclical high in U.S. jobs.  Canadian manufacturing jobs were 9.8% lower than at the end of 2008, however.  Average hourly wages posted similar December-to-December gains of 2.4% in Canada and 2.2% in the United States.

Euroland had the identical unemployment rate in November, 10.0%, as did the United States.  The European Monetary Union jobless rate had been 8.0% a year earlier.  In the Great Recession, Europe suffered a sharper GDP decline than the United States but saw unemployment and job losses affected less severely in the past year.  Among the four largest economies that share the euro, the November unemployment readings were 7.6% in Germany, 8.3% in Italy, 10.0% in France, but a horrific 19.4% in Spain.  Young workers in Euroland have been very hard hit, with a 21.0% jobless rate, up from 16.6% a year ago.  It is harder to fire workers in Europe than the United States, so firms are very reluctant to take on youthful employees at a time of weak and very uncertain growth.

Copyright Larry Greenberg 2010.  All rights reserved.  No secondary distribution without express permission.

Tags: , ,


Comments are closed.