U.S. unemployment rate jumps; will Missouri and Linn Co. jobless rates rise or fall?
The nationwide unemployment rate set a record high last month, and when the May jobless rates for Missouri and Linn County are finally released, they may very well mirror what is happening to the job market elsewhere in America.
According to the Associated Press (AP), “The nation’s unemployment rate jumped to 5.5 percent in May—the biggest monthly rise since 1986—as nervous employers cut 49,000 jobs.“
Dramatic changes in unemployment rates usually signal that an economic recession is either immanent or already in progress.
The National Bureau of Economic Research defines a recession as “a significant decline in economic activity spread across the economy, normally visible in real GDP [gross domestic product], real income, employment, industrial production, and wholesale-retail sales.”
A severe or long recession accompanied by a GDP decline of more than 10 percent is referred to as an economic depression.
According to a recent report from the Joint Economic Committee of the U.S. Congress, while five percent unemployment is widely interpreted as full employment, “the level of the unemployment rate does not seem to matter as much as its change in terms of correlating with a recession.”
The Missouri Department of Economic Development (MDED) under the administration of Governor Matt Blunt has been typically tardy in its release of last month’s unemployment statistics, but the U.S. Department of Labor’s tracking of unemployment claims filed both nationally and in Missouri give an indication of the developing trend nevertheless.
Nationwide, the week ending on May 24 bore witness to an increase of 4,000 (seasonally adjusted) and 4,430 (seasonally unadjusted) unemployment claims filed over the previous week, and Missouri had the second largest jump in the number of such claims in the U.S.
During the week of May 18 to May 24, there were 1,192 additional unemployment claims filed in Missouri, just behind Pennsylvania where those claims increased by 1,695.
According to a report issued in January by the Joint Economic Committee of the U.S. Congress, the number of weekly unemployment claims filed provide the “most useful indicator of economic recession.”
Linn County had mirrored the significant statewide decrease in unemployment for April.
Like the unemployment rates in Missouri, the jobless rate in Linn County had held steady at 6 percent over the months of January through March. Then in April, the local as well as state unemployment rate dropped to 4.9 percent. Linn County’s unemployment rate was 4.7 percent in April, 2007.
Again, dramatic changes in the rate of unemployment are typical during a recession, and local employment levels in the coming months should signal whether the economy is truly slowing enough for concern.
In March, Linn County’s labor force stood at 6,365, with 5,938 employed and 427 unemployed. In April, the county’s labor force grew to 6,405, with 6,092 employed and 313 unemployed.
But if Missouri—a “bellwether state” so-called for the way its demography and voting results mimic those of the nation—remains true to its history of mirroring nationwide trends, don’t be surprised if local consumer spending and employment patterns fall into step behind the pace being set by the country as a whole.
Although oil investors continue to attempt to create their own pie in the sky, they were unceremoniously brought back to earth Friday as the stock market plummeted due to record jumps in oil prices and unemployment.
Until last week, according to the Associated Press, flagging demand for gasoline by American consumers had caused the price of oil to drop.
Then the price of crude oil shot up by $5 to $139 a barrel last week after a Morgan Stanley shipping analyst predicted the black gold would be selling for $150 a barrel by Independence Day.
But self-fulfilling prophesies have their own consequences.
AP reports that the upward surge of oil prices and an increase in the nation’s unemployment rate that was much larger than the market anticipated caused the Dow Jones Industrial average to fall more than 300 points in a single day (last Friday).
Fearing that an increase in the pain at the pump coupled with joblessness will curtail consumer spending on nonessentials, investors transferred their money to more secure bonds.
Speculators may believe they can wait out the current volatility in the stock market, but American consumers already know they are paying more for less, making tough spending choices on a regular basis, and will be doing so for the long term.
Moody’s Economy.com Chief Economist Mark Zandi observes, “For the average American there is not debate that the economy is in a recession. That’s because their net worth is lower, their purchasing power is lower, and it is tough to find a job.”
Commenting on the disastrous effects of becoming unemployed during a recession, Zandi adds, “If you lose a job, it’s tough to get back in.”
Linn County Leader