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Lower four week average shows signs of improvement

Initial unemployment claims are tracked very closely by the Labor Department and analysts. These numbers are gathered and analyzed weekly, but to smooth out statistical highs and lows a four week average is used. The latest average shows a drop in claims to 460,250 compared to the recession high 674,000 recorded last spring. Additionally, the number of people already receiving benefits dropped by 57,000 to 4.9 million. This drop was also better than what analysts had anticipated. The pace of layoffs is more telling to analysts than the actual numbers. The number of people on unemployment remains relatively high, but the pace at which jobs are being cut is definitely slowing.

Federal claims curb some of the enthusiasm

The number of initial claims falling does not tell the whole story, however. States pay for 26 weeks of unemployment typically and the extended benefits beyond that come from the federal government. Some of the drop in the number of people receiving benefits represents a shift from the initial 26 week claims to the federally funded extended benefits. The number of people receiving extended benefits rose by approximately 200,000 in the second week of December compared to the previous week. This was in part due to Congress extending benefits in November. President Obama extended federal unemployment benefits through February, 2010. This move prevents 2 million people from running out of benefits in January, but a total of 3 million people will now run out of federal benefits by March of next year. It is not certain if benefits will be extended beyond March. The state and pace of the economic recovery at that time will have a lot to do with the fed’s decision.

Recovery not happening for everyone

The country is experiencing its worst recession in the past quarter century. The recovery is beginning to happen in general but not everywhere. For example, employers cut the fewest number of jobs in November in more than a year: 11,000. However, the number of new claims rose in Michigan by 8,362 primarily due to continued problems in the auto sector and Michigan’s difficulty diversifying its economy. Michigan is not alone. California, Missouri, Florida, and Iowa also saw increases. Tennessee had the largest decrease in initial claims, 2,972. Several other states experienced decreases as well. The unemployment statistics for December are due out January 08, 2010. Continued strong improvement will bolster confidence for the coming year.

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The Numbers Paint a Grim Picture

We are all aware that money is tight for a lot of people these days, but somehow when the actual statistics come out it can still be quite shocking. A recent Associated Press article (See: http://finance.yahoo.com/news/20-millionplus-collect-apf-2239818806.html?x=0) is reporting that more than 20 million Americans received unemployment payments over the course of 2009. The unemployment rate for the year reached a whopping 10 percent. It is easy to see why sales of many products are way down when one in every 10 people is out of a job.

It has been a Drawn Out Struggle for Some

While there are not as many workers being laid off or let go as there were in recent months, many employers are still reluctant to re-hire until they see a dramatic upturn in the economy. Some of the people who have lost their jobs have been fortunate enough to find work elsewhere, even if their new jobs are not optimal. While lifestyle adjustments are often required, those who have had to take on casual jobs to remain employed should count themselves lucky to have found some work. Among those without a job, 5.8 million have been unemployed for over six months. This circumstance can take a toll not only on the pocketbook, but also on a person’s pride.

The Vicious Cycle

With so many people out of work or working low paying jobs, there is little money being spent. Businesses that rely on sales of some sort are still struggling to bring in customers. They cannot take on extra employees because they are not making enough money to keep them, or at the very least, they are wary of what the economy has in store for us in the upcoming months and years. Also, government stimulus programs are beginning to wane, meaning there is even less money for businesses to work with. So with consumers unable to spend and companies powerless to hire, the economic crisis seems to be here for the long haul.

Just how Long will the Crisis Last?

The unemployment rate is showing signs of declining, but not at a speed that most of us would like to see. Experts are estimating that within a year’s time the rate will be above 9 percent, slightly down from the current 10 percent. With such a scarce job market the government has been forced to extend the term of unemployment benefits beyond the usual 26 weeks several times in 2009 and will likely have to continue to do so, otherwise millions of people will be left with even less to spend.

Job Competition is Fierce

If you are one of the many Americans who is unemployed and looking for work the odds are definitely not great. It is estimated that for every open job there are six unemployed candidates. Of course, there are also many other people to consider. This number does not include the many employed people who are searching for full time or higher paying opportunities.

Try to Remain Positive

It can be tough to stay optimistic is such trying times. Taking a casual job can be humbling, but you can take pride in the fact that you have beaten the odds. Also, try thinking outside the box. If you have skills that would allow you to take on freelance work, this can be a great time to use them. Companies are far more likely to take on freelancers than regular employees right now. The internet has opened up a wide range of online opportunities too.

New statistics on the U.S. unemployment rate were released today, and things haven’t been worse for 26 years. The October unemployment rate was 10.2 percent, more than double normal levels. It’s also the highest unemployment rate the country has seen since 1983, when it hit 10.5 percent.

I have read a lot of things lately that say “economic indicators” say we are in recovery from the recession. I am also familiar with the fact that unemployment rates are “lagging indicators,” and in fact might be the last thing to improve during economic recovery. However, several other current conditions indicate to me that people might have to stay in debt survival mode for a while longer.

Good news before bad

The president signed a bill today that extends unemployment benefits for people whose unemployment insurance is set to expire before the end of the year. People who fit the bill will get an additional 14 weeks of unemployment benefits, and those who live in states with unemployment rates higher than 8.5 percent can get an additional 20 weeks, almost five months, of benefits.

The fact that 8.5 percent is considered a high unemployment rate, and the national unemployment rate is nearly 2 percent higher than that, shows how bad things really are right now. The unemployment rate isn’t the only thing that got worse last month.

More economic indicators

Bloomberg.com reports that payrolls fell 190,000 in October. Factory payrolls fell 61,000, compared to 45,000 the month before. Furthermore, the underemployment rate has hit a staggering 17.5 percent. Underemployment includes people who are working part time but would prefer to work full time.

That number also includes people who want work but have given up looking. Remember, the unemployment rate only includes people who are actively looking for jobs and collecting unemployment insurance. It doesn’t include those whose benefits have already run out. So those who are not collecting unemployment but still jobless and seeking work are included in the underemployment rate.

In short, 27.7 percent of Americans are unemployed or underemployed.

Still trying to help

The bill that extended unemployment benefits also extended the homebuyer tax credit. First time homebuyers can still receive $8,000 if they sign a sales agreement before April 30, 2012.

People who have owned their current house for five years or more can qualify for a $6,500 credit. The tax credit only applies to purchases of primary residences that cost less than $800,000. Also, only individuals with incomes less than $125,000 or couples with incomes less than $225,000 can qualify.

Who says things are getting better?

The consensus that the economy is recovering from the recession comes from the fact that the economy grew in the third quarter, which ended at the end of October. That means the gross domestic product grew over the three month period preceding that.

Economists are referring to the period we’re going through now as a “jobless recovery,” but some experts, including CNN columnist Colin Barr, say a jobless recovery is no recovery at all. Barr writes:

But so far there is no sign of an employment turnaround — and without one, and soon, all the other gains could prove fleeting. … But so far there is no sign of an employment turnaround — and without one, and soon, all the other gains could prove fleeting.