Friday, May 8, 2009

Unemployment Rises to 8.9 percent

The Bureau of Labor Statistics released the unemployment rate for April today. It's estimated at 8.9 percent of the labor force, an increase from 8.5 percent in March. This is moth a slower job loss than last month and not much of a surprise. I wanted to point out two quick things.

1. The "rosey" assumptions in the Obama FY2010 Budget look more unrealistic with time. Below I've charted the US unemployment rate so far this year along with projections needed to match the average unemployment rates predicted in the budget (8.1 percent) and by CBO (8.3) back in January.

The figure assumes that unemployment declines at a constant rate each month to reach the average. Already unemployment would have to decline by .2 percentage points a month to 7.3 percent by year's end to meet the budget's annual average. Yet the administration projects an average of 7.9 percent unemployment in 2010. So it's going to take some wild gyrations in unemployment to get these results. I've dismissed these assumptions before but the numbers, for unemployment at least, continue to underscore just how off they were.

2. I'm glad to see that BLS gave attention to something I've blogged about previously, the growth of discouraged workers. The chart below from BLS show that discouraged and marginally attached workers have grown during this recession.

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