Friday, November 13, 2009

One handed employment data

It may just possibly be that the worst of the unemployment situation in the US is peaked, as suggested by this chart at Calculated Risk. That peak may simply be a pig in a poke for anyone expecting any kind of near term return to "normalcy", though.

For those who try to discern a trend from one data point, they'd point to today's less than expected drop in weekly unemployment claims. But just how weakly those claims are is also debated.

As the WSJ has reported, Returning Workers Face Steep Pay Cuts as Wage Erosion Threatens to Slow Economic Recovery:
Wages and benefits paid by private companies increased just 1.2% -- adjusted for inflation -- for the year ended September 2009, the smallest change since the U.S. began measuring in 1975, the government reported last week. Some economists expect the figure to continue downward in coming months and to turn negative for the first time since such records have been kept.

Those returning to work are taking an average 40% pay cut from their old jobs, estimated Kenneth Couch, an economics professor at the University of Connecticut. He based the number on the experiences of Connecticut residents during the 2001 recession and similar studies elsewhere during the 1981 recession.

The decline in wages is affecting people in all sectors of the economy.

Another of those, "on the one hand ..." sort of things.

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