The Morning Report
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The California Employment Development Department released the latest job estimates today. According to these estimates, July saw San Diego hit its highest year-over-year rate of job loss in the downturn to date. Between July 2008 and July 2009, the region lost 55,100 jobs, a decrease of 4.2 percent.
The following graph shows how many jobs were gained or lost in the three housing bubble-related sectors I like to highlight — construction, finance, and retail — along with all other sectors. While the trouble started in the housing-beneficiary sectors, the growth of that green bar shows that losses have mounted outside those sectors over the past year.
Next up are a couple of somewhat homely graphs showing which industries lost (or, in a couple cases, gained) the most. This time around I’ve separated out education and health care, which for some reason have always been lumped together by the agencies that compile these statistics. Health care and government were the only year-over-year gainers last month.
Here’s a look at the same sectors but terms of percent of the sector’s size instead of the number of jobs gained or loss.
Boy, that financial sector doesn’t seem to be doing so badly. You know, the same financial industry that was at the heart of the crisis, and later got bailed out with massive infusions of taxpayer money? Yeah, that one.
Finally, here is a graph of the unemployment rate over this recession and the last two recessions for comparison. Unemployment nudged up last month and also hit a new high for the downturn to date (not to mention the prior two as well).
Remember, unemployment is not a leading indicator. At least, it never has been, and that’s been true even at higher unemployment rates than we are experiencing right now. As I showed in a graph a couple months back, unemployment has never peaked until recessions either had ended or were just about to. This was even true for the Great Depression (yes, I checked… and while it was tougher to tell because I only found yearly instead of monthly data, it did appear that unemployment peaked right around the very end of the Depression).
So it really doesn’t fit with historical precedent to cite the high rate of unemployment as a justification that the economic downturn is going to get worse (even though I hear exactly that reasoning all the time). Of course, this doesn’t mean that the downturn won’t get worse. It just means that the unemployment rate is not a reliable leading indicator as to what will happen next with the economy.