Thursday, February 11, 2010

Bank of Tokyo Mitsubishi's US Economist on the Unemployment Picture

On February 5th, Bloomberg interviewed Ellen Zentner, Senior US economist at Bank of Tokyo-Mitsubishi UFJ Ltd. to discuss the January unemployment rate and the outlook for the US Labor Market.

Ellen's views include:
  • "the labor market is definitely improving, we got a bigger downward revision to payroll data, leading up to today... No we lost 8.4 million jobs vs over 7 million... And this contraction in jobs correlates more to the decline in consumer spending."
  • In january's report the comments are suspicious because jobs aren't being created, yet the unemployment rate drops. Looking at labor force participation, you see that household employment has increased. But you also need to know how many people dropped out of the labor market all together.
  • We have record numbers of discouraged workers and many of them are permanently lost---but thousands will come back into the labor market.
  • The data is showing some job gains in some areas---but it isn't happening in all sectors of the economy. January saw the first increase in manufacturing jobs in over 3 years.
  • Forward looking indicators show that part-time and contract jobs should improve in the next few months---This isn't as good as landing higher paying full time jobs.
  • The labor market will wadddle along for a little bit, because you have create jobs for the previously displaced and the teenagers that are becoming working aged adults---this isn't going to happen for some time.

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