The May unemployment figures are now out. The U-3 unemployment rate rose from 8.9 in April to 9.4 percent. The U-6 unemployment rate (which includes discouraged and involuntary part-time workers) rose from 15.8 to 16.4 percent. Moreover, the average length of unemployment now stands at a record 21.4 weeks.
The US economy has lost some 6 million jobs since the recession began in December 2007. Is the worst behind us? Not likely.
The main areas of employment growth in May were in education and health services. These can be expected to take a big hit when state governments are forced to balance their budgets through massive cuts in social spending. Oh yes, and then there is GM which will soon be slashing its payroll by tens of thousands.
The US and the Euro area are locked in fierce competition for unemployment leader, with workers in both regions the big losers. The seasonally adjusted unemployment rate for the 16 Euro using countries was 9.2 percent in April, having risen from 8.9 percent in March. The US and the Euro area use slightly different definitions for calculating unemployment. Internationally comparable data will be published later in June and it is likely that the US rate will remain higher.
US problems also extend to earnings. The employment cost index, which includes both wages and benefits, was basically flat in the first quarter of 2009, after having grown by almost 3 percent in 2008.
It is hard to imagine a real recovery ahead with unemployment still growing and earnings flat.