by Calculated Risk on 2/05/2011 11:21:00 AM

Commentary this week:
• Monday: QE2 Speculation and Summary
• Tuesday: Economic Outlook and Daily Summary
• Wednesday: Daily Color: D-List Data
• Thursday: Employment Situation: A Lighter Shade of Gray
• Friday: Daily Color: Two Employment Surveys, Different Results

Click on graph for larger image.

A repeat from yesterday ...

This graph shows the job losses from the start of the employment recession, in percentage terms - aligned at maximum job losses.

In terms of lost payroll jobs, the 2007 recession is by far the worst since WWII, and the "recovery" for payroll jobs is one of the slowest.

Here are the employment posts from yesterday (with graphs):
• January Employment Report: 36,000 Jobs, 9.0% Unemployment Rate
• Employment Summary and Part Time Workers, Unemployed over 26 Weeks
• Duration of Unemployment, Unemployment by Education, Diffusion Indexes
• Employment Graph Gallery

by Calculated Risk on 2/05/2011 08:29:00 AM

Note: this is an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for Feb 4, 2011.

Changes and comments from surferdude808:

Mergers, both unassisted and FDIC- assisted, contributed to a slight reduction in the number of institutions on the Unofficial Problem Bank List this week. There were five removals and two additions, which leaves the list with 946 institutions with assets of $411.1 compared with 948 institutions with $410.9 billion last week.

The removals include the three failures this week -- American Trust Bank, Roswell, GA ($249 million); North Georgia Bank, Watkinsville, GA ($166 million); and Community First Bank - Chicago, Chicago, IL ($57 million).

Since the on-set of this banking crisis, there have been 55 failures in the state of Georgia that have cost the FDIC approximately $8.06 billion or 33 percent of $24.4 billion of failed assets.

The other removals were unassisted acquisitions of Professional Business Bank, Pasadena, CA ($281 million) by California General Bank, which re-named itself Professional Business Bank; and Midwest Community Bank, Plainville, KS ($99 million) by The Wilson State Bank.

The additions were First Georgia Banking Company, Franklin, GA ($802 million) and Atlantic Bank and Trust, Charleston, SC ($268 million). Hat tip to reader Bill for noting the action against First Georgia Banking Company while perusing its 10-K filing. In an oddly worded statement, First Georgia Banking Company stated it had entered into a "Stipulation and Consent Order" with the Georgia State Banking Department in August 2010 that "was acknowledged by the FDIC." However, the action is not available through the FDIC enforcement action search engine. Similarly, the action against North Georgia Bank, which failed this week, was never available on the FDIC website. Perhaps these actions were like being on "double secret probation" with the FDIC.

by Calculated Risk on 2/04/2011 09:20:00 PM

Here are the earlier employment posts (with graphs):
• January Employment Report: 36,000 Jobs, 9.0% Unemployment Rate
• Employment Summary and Part Time Workers, Unemployed over 26 Weeks
• Daily Color: Two Employment Surveys, Different Results
• Duration of Unemployment, Unemployment by Education, Diffusion Indexes
• Employment Graph Gallery

Furious Winter
Cold hard cash assets frozen
Till White Knight appears.
by Soylent Green is People
From the FDIC: Northbrook Bank and Trust Company, Northbrook, Illinois, Assumes All of the Deposits of Community First Bank – Chicago, Chicago, Illinois

As of December 31, 2010, Community First Bank – Chicago had approximately $51.1 million in total assets and $49.5 million in total deposits.... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $11.7 million.

by Calculated Risk on 2/04/2011 06:30:00 PM

Here are the earlier employment posts (with graphs):
• January Employment Report: 36,000 Jobs, 9.0% Unemployment Rate
• Employment Summary and Part Time Workers, Unemployed over 26 Weeks
• Daily Color: Two Employment Surveys, Different Results
• Duration of Unemployment, Unemployment by Education, Diffusion Indexes
• Employment Graph Gallery

Note: I'm going to group bank failures (for fewer posts).

Men In Black arrive.
No UFO's in Roswell
"Take me to your bank"
by Soylent Green is People
From the FDIC: Renasant Bank, Tupelo, Mississippi, Assumes All of the Deposits of American Trust Bank, Roswell, Georgia

As of December 31, 2010, American Trust Bank had approximately $238.2 million in total assets and $222.2 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $71.5 million.

Unlucky thirteen.
Another Georgia failure.
Assimilated.
by Soylent Green is People
From the FDIC: BankSouth, Greensboro, Georgia, Assumes All of the Deposits of North Georgia Bank, Watkinsville, Georgia

As of December 31, 2010, North Georgia Bank had approximately $153.2 million in total assets and $139.7 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $35.2 million.

by Calculated Risk on 2/04/2011 04:12:00 PM

By request, here are three more graphs ...

Duration of Unemployment
Click on graph for larger image in graph gallery.

This graph shows the duration of unemployment as a percent of the civilian labor force. The graph shows the number of unemployed in four categories: less than 5 week, 6 to 14 weeks, 15 to 26 weeks, and 27 weeks or more.

Note: The BLS reports 15+ weeks, so the 15 to 26 weeks number was calculated.

In January 2011, the number of unemployed for 27 weeks or more declined to 6.21 million (seasonally adjusted). It appears the number of long term unemployed has peaked, but it is still very difficult for these people to find a job - and this is a very serious employment issue.

Both the 'less than 5 weeks', and the '5 to 14 weeks' categories declined in January - this followed the decline in initial weekly unemployment claims. The '15 to 26 weeks' category increased slightly in January, but the general trend appears to be down too.

Note: Even though these numbers are all seasonally adjusted, they can't be added together to calculate the unemployment rate.

Unemployment by Education
This graph shows the unemployment rate by four levels of education (all groups are 25 years and older).

Unfortunately this data only goes back to 1992 and only includes one previous recession (the stock / tech bust in 2001). Clearly education matters with regards to the unemployment rate - and it appears all four groups are now trending down (at least somewhat).

Early last year the group with "less than a high school diploma" recovered a little better than the more educated groups - possibly because of the tax credit related increase in construction - but that changed in September as the unemployment rate increased sharply.

Diffusion Indexes
This is a little more technical. The BLS diffusion index for total private employment was at 59.4 in January. For manufacturing, the diffusion index increased to 69.1.

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

Figures are the percent of industries with employment increasing plus one-half of the industries with unchanged employment, where 50 percent indicates an equal balance between industries with increasing and decreasing employment.

The decrease in these indexes during the summer of 2010 was a cause for concern, however the level of both indexes were a clear positive in the January employment report.

Best to all

Here are the earlier employment posts (with graphs):
• January Employment Report: 36,000 Jobs, 9.0% Unemployment Rate
• Employment Summary and Part Time Workers, Unemployed over 26 Weeks
• Daily Color: Two Employment Surveys, Different Results
• Employment Graph Gallery

by Calculated Risk on 2/04/2011 12:38:00 PM

FAQ: How can the unemployment rate fall sharply if the economy is adding so few jobs, especially since the population is growing?

This data comes from two separate surveys. The unemployment rate comes from the Current Population Survey (CPS: commonly called the household survey), a monthly survey of about 60,000 households. The payroll jobs number comes from Current Employment Statistics (CES: establishment survey), a sample of approximately “140,000 businesses and government agencies representing approximately 410,000 worksites”.

These are very different surveys: the CPS gives the total number of employed (and unemployed including the alternative measures), and the CES gives the total number of positions (excluding some categories like the self-employed, and a person working two jobs counts as two positions).

A couple of key concepts (from the BLS):

The CES employment series are estimates of nonfarm wage and salary jobs, not an estimate of employed persons; an individual with two jobs is counted twice by the payroll survey. The CES employment series excludes employees in agriculture and private households and the self-employed.

And the CPS:

The CPS estimate of employment is for the total number of employed persons. Included are categories of workers that are not covered by the Current Employment Statistics (CES) survey: self-employed persons, private household workers, agriculture workers, unpaid family workers, and workers on leave without pay during the reference period. Multiple jobholders are counted once in the estimate of total employed.

Unemployed persons include those who did not have a job during the reference week, had actively looked for work in the prior 4 weeks, and were available for work. Actively looking for work includes activities such as contacting a possible employer, contacting an employment agency or employment center, having a job interview, sending out resumes, filling out job applications, placing or answering job advertisements, and checking union or professional registers.

In January the headline CES number showed a gain of 36,000 non-farm jobs (by the definitions above). The CPS showed an increase of 117,000 employed people.

These two surveys are almost always different, and both are useful for understanding the employment situation.

Q: But the unemployment rate fell sharply even though the CPS only showed an increase of 117,000 employed people. How can that be?

The unemployment rate declined to 9.0% in January from 9.4% in December. The unemployment rate comes from directly from the CPS survey, but we can also think of it in terms of change in the labor force, and changes in the number of unemployed people. The unemployment rate is a ratio, with the numerator the number of unemployed, and the denominator the Civilian Labor Force - so the following changes lowered the unemployment rate to 9.0%.

The CPS also showed a decline in the Civilian Labor Force Level by 504,000. Some of this decline was due to a lower participation rate, and some of this decline was due a lower estimate of the Civilian noninstitutional population. In reality the working age population probably increased in January, but the updated population estimate showed a decrease of 185,000 people in the month.

The BLS provides some estimates with and without the change in population control (see Table C. at bottom of the release). Without the change in population control, the CPS would have shown an increase of 589,000 employed people. Also, without the change in population control, the number of unemployed would have fallen 590,000 (U-3). With the update population estimate, the number of unemployed declined 622,000.

So without the change in the population control - the change can be confusing - the CPS showed a surge in employment and a sharp decline in the unemployed, and that is the reason the unemployment rate declined sharply.

If you want more details, see Monthly Employment Situation Report: Quick Guide to Methods and Measurement Issues

Although the CPS showed the labor force declined in January, over time the labor force will continue to grow - probably around 1.5 to 2.0 million people per year on average, and the CES will probably need to show the addition of around 125,000 jobs per month just to keep the unemployment rate steady (estimates vary of this number).

Also weather usually has a bigger impact on the CES (establishment survey) than the CPS (household survey). We saw this last February when the CES showed a decline in payroll jobs and CPS showed an increase in the number employed and the unemployment rate held steady. Here is the archived February 2010 release. In the following month, March of 2010, the CES showed a relatively large increase in payroll jobs ex-Census (considering the weak labor market), and it was best to average the two reports together.

If the weak payroll report in January was due to the impact of weather we should expect a boost in the February payroll report and average the two together. If the underlying trend is around 150,000 payroll jobs per month, we'd expect to see 300,000 additional payroll jobs when we combine the January and February payroll reports next month.

So remember the jobs and unemployment rate come from two different surveys and they are different measurements of the employment situation (one for positions, the other for people). Some months the numbers may not seem to make sense (few payroll jobs and a sharp decline in the unemployment rate), but over time the numbers will work out.

Here are the earlier employment posts (with graphs):
• January Employment Report: 36,000 Jobs, 9.0% Unemployment Rate
• Employment Summary and Part Time Workers, Unemployed over 26 Weeks
• Employment Graph Gallery