Eye on Friday's Employment Report
Friday's Employment Situation report is the big economic indicator this week, especially in the context of the presidential election and the Democratic National Convention, which ends the night before the August employment numbers are release. The most recent unemployment rate, through July is 8.3%, up from 8.2% the month before. The best post-recession number was 8.1% in April. The Briefing.com consensus is for the August report to show 130K new jobs, down from 163K last month, and for the unemployment to rate to remain unchanged. A better-than-expected report could give the Democrats a post-convention bounce in the polls. A weak report would no doubt have the opposite effect and bolster Republican attacks on the current administration's policies.
The Post-Recession Unemployment Situation by Age Groups
Earlier this year my friend Francois Gadenne, the Chairman and Executive Director of the Retirement Income Industry Association (RIIA), sent me an interesting commentary on historical unemployment rates by age cohorts, which prompted me to chart four Bureau of Labor Statistics (BLS) unemployment rate series. These series provide us a crude demographic breakdown of unemployment. The categories are Age 20 and over, Age 20-24, Age 25-54, Age 55 and over.
Here is my latest update of the four with special focus on the three subcomponents.
Unemployment among the youngest cohort has always been the highest. The other two cohorts had similar unemployment levels until the late 1960s, when the Age 55 and over group took the coveted position of the lowest unemployment rate.
The Twin Peaks
Those of us who follow long-term economic trends understand the twin peaks of unemployment. The first associated with the double-dip recession in the early 1980s and the second with the Great Recession of 2007-2009. What's particularly interesting is the behavior of the three cohorts during these periods. As the adjacent table illustrates, these are fraternal twin peaks, not identical. The 1980s event was worse (9.8% versus 9.3% for the combined cohorts), although the successively lower unemployment peaks in the intervening years probably lowered the threshold of pain and thus increased the sense of unemployment pain going into the Great Recession.
Of particular interest in the statistics is that the Age 25-54 cohort had the same percentage rate at the twin peaks. The youngest cohort saw a 4.3% increase from peak-to-peak unemployment. But most striking of all is significantly higher rate of unemployment for the Age 55 and over cohort — a 25.9% increase from the April 1983 peak to the August 2010 peak.
Thanks again, Francois, for bringing this topic to my attention. Incidentally, registration is now open for the 2012 RIIA Fall Conference in Boston (October 4-5). The conference theme is What Does it Take to be a Top Retirement Income Advisor?
Note: Here are links to the BLS age cohort data series at the FRED repository: Age 20 and over is series LNS14000024, Age 20-24 is LNS14000036, Age 25-54 is LNS14000060, Age 55 is LNS14024230.
Here is a link to the even broader civilian unemployment rate, UNRATE, which peaked in November and December 1982 at 10.8% and in October 2009 at 10.0%.