Economy Watch: More Hiring, Same Unemployment Rate

According to the U.S. Bureau of Labor Statistics, the number of unemployed persons nationwide remained about the same--14.8 million--in October as in September.

November 8, 2010
By Dees Stribling, Contributing Editor

Courtesy Flickr Creative Commons user Seabarmirum

According to the U.S. Bureau of Labor Statistics, the number of unemployed persons nationwide remained about the same–14.8 million–in October as in September. At 9.6 percent, the unemployment rate was unchanged as well. Unchanged not only since September, but since May.

Still, that means the U.S. economy has been creating some jobs, since the work force is slowly but steadily expanding as the population does. Private-sector payroll employment rose by 159,000 over the month, the largest increase since May. Since December 2009, employment in the private sector has risen by 1.1 million.

Who’s been hiring? Not construction, wholesale trade, transportation, information or financial activities, or at least not in October, when employment in those sectors was flat. Retail trade employment rose by 28,000 in October, part of its expansion of 128,000 since reaching a trough in December 2009. The food services industry has likewise added 143,000 jobs since a recent low in December 2009, and health care continued to add jobs in October (a gain of 24,000). That gain was in line with the average monthly increase of 20,000 jobs over the prior 12 months.

Pending Homes Sales See Decline

Pending U.S. home sales dropped in September, according to the National Association of Realtors on Friday. Its Pending Home Sales Index, a forward-looking indicator, slipped 1.8 percent to 80.9 based on contracts signed in September, from an upwardly revised 82.4 in August. In September 2009 the index stood at 107.8, but that was inflated by the homebuyers tax credit.

Is it the effect of the foreclosure paperwork fiasco kicking in? Could be, noted NAR chief economist Lawrence Yun: “The foreclosure moratorium is likely to cause some disruption and contribute to an uneven sales performance in the months ahead,” he noted in a statement. Or possibly an understatement, depending on how much the foreclosure fiasco chills foreclosed home sales.

Still, the optimistic Yun predicts that 2011 will see more than 5.1 million existing-home sales, up from about 4.8 million this year. Housing starts, he thinks, will also rise to 716,000 in 2011 from 598,000 this year. “We’ve added 30 million people to the U.S. population over the past 10 years, but sales are where they were in 2000, so there appears to be a sizable pent-up demand that could come to the market once the economy gathers momentum,” he said.

Bernanke and the Ghost of Milton Friedman

Federal Reserve Chairman Ben Bernanke invoked the ghost of Milton Friedman (d. 2006) in his defense of QE2 on Friday at a conference in Georgia. Not quite literally, but he did mention the famed economist in answering criticism of the QE2 stimulus, which was promulgated by the central bank last week.

“We are doing everything Milton Friedman would have us do,” Bernanke said. “What Milton Friedman would say is that the Federal Reserve is responsible for the stability of nominal aggregates including prices, and that means that particularly with respect to inflation, you don’t want inflation to be too high but you also don’t want it to be too low.” (The “Goldilocks” theory of inflation, one might call it.)

Wall Street saw tepid gains on Friday after a volatile day. The Dow Jones Industrial Average eked out a 9.24-point rise, or 0.08 percent. The S&P 500 experienced a 0.39 percent advance and the Nasdaq was up 0.06 percent.