by Calculated Risk on 3/06/2009 11:43:00 AM

One more stunning graph from the employment report ...

From the BLS report:

In February, the number of persons who worked part time for economic reasons (sometimes referred to as involuntary part-time workers) rose by 787,000, reaching 8.6 million. The number of such workers rose by 3.7 million over the past 12 months. This category includes persons who would like to work full time but were working part time because their hours had been cut back or because they were unable to find full-time jobs.

Click on graph for larger image.

Not only has the unemployment rate risen sharply to 8.1%, but the number of workers only able to find part time jobs (or have had their hours cut for economic reasons) is now at a record 8.6 million.

Of course the U.S. population is significantly larger today (about 305 million) than in the early '80s (about 228 million) when the number of part time workers almost reached 7 million. That is the equivalent of about 9.3 million today, so population adjusted this isn't quite a record - yet - but the rapid increase is stunning.

by Calculated Risk on 3/06/2009 09:43:00 AM

Click on graph for larger image in new window.

This graph shows the job losses from the start of the employment recession, in percentage terms (as opposed to the number of jobs lost).

For the current recession, employment peaked in December 2007, and this recession was a slow starter (in terms of employment and declines in GDP).

Howver job losses have really picked up in recent months (red line cliff diving on the graph), and the current recession is now the worst recession in percentage terms since the 1950s - although not in terms of the unemployment rate.

In the early post-war recessions (1948, 1953, 1958), there were huge swings in manufacturing employment and that lead to larger percentage losses. For the current recession, the job losses are more widespread.

In February, job losses were large and widespread across nearly all major industry sectors.
BLS, February Employment Report

Here is a look at how "widespread" the job losses are using the employment diffusion index from the BLS.

A diffusion index is a measure of the dispersion of change. This gives a feel for how widespread job gains and losses are across industries. The closer to 50, the more narrow the changes in employment.

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UPDATE: The BLS diffusion index is a measure of how widespread changes in employment are. Some people think it measures the percent of industries increasing employment, but that isn't quite correct. From the BLS handbook:

The diffusion indexes for private nonfarm payroll employment are based on estimates for 278 industries, while the manufacturing indexes are based on estimates for 84 industries. Each component series is assigned a value of 0, 50, or 100 percent, depending on whether its employment showed a decrease, no change, or an increase over a given period. The average (mean) value is then calculated, and this percent is the diffusion index number.

So it is possible for the diffusion index to increase (like manufacturing increased from 7.2 to 15.1) not because industries are hiring, but because fewer industries are losing jobs.

Think of this as a measure of how widespread the job losses are across industries. The further from 50 (above or below), the more widespread the job losses or gains reported by the BLS.

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Before September, the all industries employment diffusion index was close to 40, suggesting that job losses were limited to a few industries. However starting in September the diffusion index plummeted. In December, the index hit 20.5, suggesting job losses were very widespread. The index has only recovered slightly since then (23.8 in February).

The manufacturing diffusion index has fallen even further, from 40 in May 2008 to just 7.2 in January 2009. The manufacturing index recovered to 15.1 in February.

If there is a sliver of good news in this employment report, it is that the diffusion indices have inched up a little.

by Calculated Risk on 3/06/2009 08:54:00 AM

From the BLS:

Nonfarm payroll employment continued to fall sharply in February (-651,000), and the unemployment rate rose from 7.6 to 8.1 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Payroll employment has declined by 2.6 million in the past 4 months. In February, job losses were large and widespread across nearly all major industry sectors.

Click on graph for larger image.

This graph shows the unemployment rate and the year over year change in employment vs. recessions.

Nonfarm payrolls decreased by 651,000 in February. The economy has lost almost 2.6 million jobs over the last 4 months!

The unemployment rate rose to 8.1 percent; the highest level since June 1983.

Year over year employment is strongly negative (there were 4.2 million fewer Americans employed in Feb 2009 than in Feb 2008). This is another extremely weak employment report ...

by Calculated Risk on 3/05/2009 10:51:00 PM

From the WSJ: Bill Seeks $500 Billion for FDIC Fund

Senate Banking Committee Chairman Christopher Dodd is moving to allow the Federal Deposit Insurance Corp. to temporarily borrow as much as $500 billion from the Treasury Department.
...
The FDIC would be able to borrow as much as $500 billion until the end of 2010 if the FDIC, Fed, Treasury secretary and White House agree such money is warranted.
...
The FDIC's deposit-insurance fund has fallen precipitously with 25 bank failures in 2008 and 16 so far in 2009.

It was just last September that the FDIC disputed a story by David Evans at Bloomberg:

Bloomberg reporter David Evans' piece ("FDIC May Need $150 Billion Bailout as Local Bank Failures Mount," Sept. 25) does a serious disservice to your organization and your readers by painting a skewed picture of the FDIC insurance fund. Let me be clear: The insurance fund is in a strong financial position to weather a significant upsurge in bank failures. The FDIC has all the tools and resources necessary to meet our commitment to insured depositors, which we view as sacred. I do not foresee – as Mr. Evans suggests – that taxpayers may have to foot the bill for a "bailout."

I guess the proposed $500 billion is just a loan and not a bailout.

by Calculated Risk on 3/05/2009 07:33:00 PM

Another busy day. And I'm still struggling with the comments (I'm receiving many complaints). First the news, and then a chat room.

The MBA released their quarterly delinquency survey today. They reported that the delinquency rate was at a record 7.88 percent of all loans outstanding as of the end of the fourth quarter of 2008. "The percentage of loans in the foreclosure process at the end of the fourth quarter was 3.30 percent ... The combined percent of loans in foreclosure and at least one payment past due was 11.18 percent." Ouch.

American CoreLogic released their most recent report on households with negative equity. They reported 8.3 million mortgage holders are underwater, and using their data - and the scenarios from the Treasury department - I estimated the number of households with negative equity could rise to 17 to 23 million by the end of 2010. Another Ouch!

Paul Kiel at ProPublica has compiled a list of the Stress Test "19".

And the weekly initial unemployment claims showed a small decrease, but the 4-week average continued to increase.

Comment System

The comment system has problems. I'm receiving numerous complaints of lost comments, comments being reordered, slow loading and no comments appearing. I'm talking with JS-Kit about the problem. Unfortunately I need their help to switch back to Haloscan. For now, I've changed back to the inline version of JS-Kit (no pop-up). I apologize for the inconvenience, and I'm working to resolve the problem.

Meanwhile here is a chat room that might be fun to try for discussion.

NOTE: I've removed the chatroom for now. I think we overwhelmed them!