Unemployment rate worse than expected -- leaps to 7.2%

Posted Jan 9th 2009 9:05AM by Peter Cohan
Filed under: Employees, Economic Data, Recession

Today's markets are likely to move based on the higher-than-expected unemployment rate. At 8:30 a.m., the Labor Department announced a mixed employment picture: lower-than-expected job loss, yet higher-than-expected unemployment rate. But the more important questions for the economy are how many jobs were lost in 2008 and how many more will perish in the next few years.

Despite being better than expected, the numbers of jobs lost in December are still awful at 524,000. Not to mention, that the unemployment rate rose from 6.7% to 7.2%. Economists had forecast 550,000 lost jobs in December and an unemployment rate of 7%. The actual 7.2% unemployment rate is the highest in 26 years. Also, the 2.6 million jobs lost in 2008 marks the worst level since 1945. If things keep going along those lines, the unemployment rate could top 10%.

Regrettably, there's no legal remedy to provide justice to Americans who suffered from the incompetence of the last eight years' worth of "leadership." So it remains for President-elect Obama to fix the colossal mess Bush left for him. As I posted, Obama's proposed economic stimulus plan is generally the right thing to do, but there are not enough details to know whether that money will be allocated to expenses -- which send the money down the drain -- or to investments -- which create assets that yield future revenues and profits.

The higher the proportion of investments, the better the odds that Obama can eventually repair the broken economic system he inherits on January 20th.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book is You Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing.

Tags: employment, inthenews, nonfarm payroll, NonfarmPayroll, unemployment

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Reader Comments (Page 1 of 1)

1-09-2009 @ 9:42AM

rick said...

Remeber that probably not the real number dont forget its coming out of the govt.Wait till next month when not so many mkts are watching and they will revise it up about 200,000

1-09-2009 @ 10:58AM

Rodney said...

7.2% does not take into account the number of small businesses that failed or just gave up.The government never includes these people in there tally just in there tax rolls. Well fewer small businesses lower tax revenue maybe they should revise the way they do the estimates so they can be accurate.

1-09-2009 @ 11:00AM

BHarrison said...

There's a fine line between being "negative" versus being "realistic". Unfortunately, the reality of the situation is the unemployment rate is undoubtedly going to reach levels of 15% to 20%, if not more, before the economy truly "bottoms out".

The government statistics are ALWAYS overly "optimistic" due to the politics of the situation. The real unemployment is probably 50% to 100% higher than the "official" statistics.

Officially, there have reportedly been approximately 2.4 million "newly" unemployed people during 2008. Personally, based upon the flow of massive ongoing layoffs, I personally anticipate the number of the newly unemployed during 2009 to be somewhere in the neighborhood of 10 - 15 MILLION workers.

Now that we have more or less gotten through the initial beginning phase of this economic melt down, the domino impact is probably going to be 4or 5 times more than has happened. It could be even more.

Our economic system and basic infrastructure has been severely "broken", so there is no adequate infrastructure or reserves for implementation of "recovery". This is going to be a long process that will minimally take a decade at the very least.

Americans have become too ingrained with being too "politically correct" and to be overly "optimistic" . . . that is, in large part what helped to blindly lead the American people into this economic debacle.

To effectively expedite the implementation of "recovery" we need to purge our FIs and our corporations of the corrupt CEOs of the FIs and the corporations . . . these guys are no different than Madoff; they all "gamed" the corporations and markets with their BLATANTLY CORRUPT pyramid schemes, and other FRAUDS. These guys should be required to return their ill gotten gains to the corporations.

The government, starting with Congress, MUST instill INTEGRITY into the FIs, the corporations, and the markets. The American people are not going to invest into corrupt and manipulated markets, especially after their recent losses due to the FRAUDS that were orchestrated and perpetuated by the CEOs, market managers, etc.

It's time for the economic and social changes that substantially reduce the obscene, excessive and totally unwarranted compensations to CEO who are nothing more than "management employees" . . . and it is time that their compensation is adjusted to be reasonable commensurate with their performance as "employees".

1-09-2009 @ 2:32PM

Wendy said...

What I can't understand is oil is at $40.00 a barrel. Why is gasoline prices starting to rise. They should be lowering gas prices, but the complete opposite is happening. Obviously, something is not right!!!