Unemployment Reaches Record Levels, But Rate of Increase Slows

Here’s a chart to help put the latest local unemployment statistics in perspective:

King / Snohomish Unemployment Rate

You can see that yes, unemployment reached yet another record high in March. However, the good news is that the rate of increase in the unemployment rate has slowed significantly.

For the last six months or so the unemployment rate had been jumping by an average of 0.7 percentage points every month. In contrast, from February to March, the Seattle area’s unemployment rate increased by only 0.1 percentage points.

Could this be the first sign that things are starting to level off, or is this just a temporary blip on the way to fifteen or even twenty percent unemployment in Seattle? The next few months should shed light on the situation either way.

Related coverage elsewhere:

Seattle Times: 9.2% unemployment “troubling” for state
Seattle P-I: Washington unemployment rate tops 9 percent
Seattle P-I: UW to eliminate about 1,000 jobs by May 1

0.00 avg. rating (0% score) - 0 votes

About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.

36 comments:

  1. 1
    Ray Pepper says:

    20% unemployment in Seattle Tim? In my home town of Reno possibly but are we shutting down the ports? GOOD GOD! If you believe this better load up on SKF!

  2. 2
    Mama says:

    What was interesting to me was that per the Seattle Times article the Bellevue-Everett-Seattle are is actually below national average…Yet the state as a whole was way above it. Did WA have higher exposure to construction jobs? I wonder what type of jobs were lost that
    1) Pull WA above the nat’l average
    2) Were outside of the main metro area

  3. 3
    BubbleBuyer says:

    What I struggle with in determining my future investment and lifestyle path is whether to focus on short to intermediate term economic economic outlook or whether to focus more on the long term.

    In the former case you could convince me that economic activity may pick up and that things will go back to “normal”

    However the longer term prospects for the USA are dire. We have massive current account deficits that will more than double with the total deficit exceeding the total GDP of the USA by 2015 or so. Less than 50% of the US population will pay income taxes. The USA doesn’t produce much of value anymore and we generate $59 billion plus a month in trade deficits primarily with Japan, China and Germany. China, Japan and Germany are financing our outlandish lifestyles and as the USA tries to inflate it’s way out of its obligations the dollar will collapse. It is uncertain how much longer our creditors will continue to loan us money to keep the ponzi scheme going. At minimum, they will demand higher interest rates to provide them with a real return on their investments. This will dramatically curtail economic activity by significantly raising interest rates.

    So what do you do? Continue to live your life or prepare for the coming economic Armageddon? On the upside, it is nice having a president that knows how to use a prompter and sound half intelligent. On the downside, our new leader is not proposing anything that will right the structural flaws in our trade, environmental and workplace policies and bring the intermediate portion of the economic value chain back to the USA, creating opportunity for the middle class.

    I guess personally, I play it conservatively and will continue to pay down my debt – mortgage and car – with the intent of being debt free within 7 years. At the same time you only get to live once so I will try to balance that in a way that provides me with some enjoyment although that probably means downgrading from Napa Cabernet to the Costco blend.

  4. 4
    deejayoh says:

    Important to keep in perspective that unemployment is typically a lagging indicator for economic activity. In almost every modern recession by the time unemployment peaks, the economy has usually turned around and is growing again.

    I suspect we haven’t peaked yet but it is probably close.

    PI layoff tracker hasn’t updated in about 2 months so I guess that has died with most of the rest of the paper.

  5. 5
    Magnolia44 says:

    News this morning had seattle at 8%, that’s the number I will focus on.

  6. 6
    Lake Hills Landlord says:

    @BubbleBuyer

    I’m trying to do both. Prepare for the worst. Hope for the best. And include plans for a nominal future. This means stocking up on survival skills and supplies, enjoying day-to-day life, and continuing to fund my 401k (even though the government will probably confiscate these if things get much worse). If things go bad, I’ll be prepared. Meanwhile I’m having fun day-to-day. And if we continue to see normal ups and downs for 30+ years, my 401k might actually be worth something.

  7. 7
    Peckhammer says:

    “Could this be the first sign that things are starting to level off?”

    I doubt it. The University of Washington will be laying off a whole bunch of it’s work force, and I expect many more layoffs to be announced at other Seattle/Washington agencies and businesses.

  8. 8
    BillE says:

    The numbers reported last month already had Snohomish County at 9.9%.
    http://www.heraldnet.com/article/20090317/BIZ/903179989

  9. 9

    THE ECONOMY HAS LOST ALL ITS BLOOD AND THE BLEEDING HAS SUBSIDED; SO WHAT?

    If you’re looking for “good news” on the economy, re: unemployment, you need not look no farther than The Tim’s horrifying spike on his chart.

    You will hear later today that the banks all passed the phony [Dr Roubini states] government stress tests, with phony unemployment rates, etc inserted in the math S./W. Lipstick on the pig, that doesn’t mean a thing.

    Read the Beige Book account of the economy through early April, as is states in part:

    “…Almost all sectors were contracting or slowing in almost all regions, the Beige Books said. Manufacturing weakened, retail spending was “sluggish,” the housing markets were “weak” and banks reported rising delinquencies and deteriorating loan quality….”

    The rest of the URL:

    http://www.marketwatch.com/news/story/us-economy-still-contracting-everywhere/story.aspx?guid=%7B33DD5B9D%2D0C0E%2D4E4A%2D8D68%2D7D2ECE8687FE%7D&siteid=bnbh

    P.S., Dr Roubini allegedly turned down a cabinet job with Obama; because he likes being as clear, pragmatic and honest as he can [even he uses lipstick on the pig too], as an almost free man on his RGE website.

  10. 10
    Plastic Bags says:

    I don’t think we’re in the clear yet. Just on the news a few mins ago I heard Russel Investments (Tacoma) is laying off 400 and UW is laying off 1000.

  11. 11
    PhinneyDawg says:

    Considering how many people work at UW, and how much they are cutting the budget (at least 30%) 1000 jobs isn’t that much in total (but very distressing to everyone who works at the university).

    And, 500 of those jobs may just be jobs that go unfilled, so its not as bad as the initial news.

    I imagine that this economy will be weak for years because of the current recession. There’s only so much consumers can cut spending and I think people have found very few places left to do it in their budget (and still live the lifestyle they can tolerate).

    At the same time businesses are downsizing and becoming ultra-efficient to absorb the lack of consumer spending. At some point we’ll hit a bottom and begin to grow very slowly, in my opinion. There’s always the chance that the society falls apart and we all turn into savage beasts, but there are far better chances that we go through a prolongated recession and come out okay in 5-7 years.

  12. 12
    Sniglet says:

    A few months of data don’t make a “trend”. As I have long posited, there will likely be a significant recovery in both stocks and the broader economy through the spring and summer (e.g. the Dow could make it back to the 10,000 range again). The statistics will likely look rosier and rosier every month. Unemployment filings could even drop significantly for a few months. Real estate sales might spike.

    Unfortunately, I believe that the recovery will be short-lived, and come the winter, and early 2010, we will see all the gains lost, and begin to explore even deeper troughs for everything from stocks to real-estate and unemployment.

    In the meantime (i.e. while the recovery lasts), there will be plenty of people who proclaim the “bottom” has been reached, and that now is the time to jump back into real-estate before prices go to the moon again…

  13. 13
    NimChimpsky says:

    While UW will be cutting 1,000 jobs due to the legislative budget cuts, it will likely be hiring a significant number over the next year or so as a result of ARRA money in the form of research grants through NIH and NSF. The shift would be from jobs that support general operations and academics to jobs that specifically support research,. The offset could be a decent amount. Based on previous percentages of federal grant money received by the UW, the estimate of ARRA research grant money to the UW somewhere around $300 mil. All of this money comes with unprecedented reporting requirements and projects have to be completed/money has to be spent within 2 years. I would predict that in the short term, more staff will have to be hired than normally would for research studies in order to meet both the 2 year deadline and the reporting requirements.

  14. 14
    Slumlord says:

    It does appear that the economy is stabilizing, but I doubt that it is the sign of an imminent return to growth. If anything, it is as if we fell into an open elevator shaft after the Lehman bankruptcy and have landed on a downward escalator. Our situation is improved, but we are still going in a negative direction. Looking ahead, I see the escalator ride ending with another open shaft called GM.

    In my opinion, taking the short-term pain of a corporate bankruptcy is like a broken leg; it hurts like crazy but gets better soon. Bailouts for insolvent companies are like treating a slow moving cancer; you get addicted to all kinds of medications with strange side effects and never get better.

    To anyone who has recently become one of the statistics on unemployment: Remember, you are not your job, you are not your house, and you are not the things you own. You are a capable human being who is adaptive and resilient. The economy may get worse, but the worst for you has already passed.

  15. 15
    deejayoh says:

    Of the ~100k jobs lost in Washington in the last year – here is the breakdown by industry:

    Trade, Transportation and Utilities -29%
    Construction -27%
    Manufacturing -22%
    Professional and Business Services -16%
    Financial Activities -9%
    Leisure and Hosptiality -4%
    Natural Resources and Minng -1%
    Information -1%
    Other Services 0%
    Government 5%
    Education and Health Services 5%

    Top job loss industries are not too surprising: Retail, Construction, and Manufacturing are over 3/4 of the total.

  16. 16
    Scotsman says:

    An effective expansion of the national debt from $9 trillion to $17 trillion by 2011.

    Social Security’s cash flow will go negative by the end of this year, not 2011 as budgeted.

    $60 trillion in unfunded federal commitments over the next 25 years.

    Interest rates headed for zero, and so are the returns. It’s hard to see how a slowdown in the
    unemployment numbers turns this whole mess around.

    http://market-ticker.org/uploads/debt-contribution.jpg

  17. 17
    Scotsman says:

    This chart has been around for a while too, and shows why unemployment will not be dropping anytime soon. In short, the consumer, 70% of GNP, needs to start buying again before demand can push up production and cut into unemployment. As the chart shows, the consumer segment of the economy is dealing with record debt. It isn’t that the money isn’t available to lend, and never really has been. It’s that the consumer is maxed out and needs to recover before making significant new purchases. Unemployment will continue to climb, and any recovery is well off in the future, and is likely to be slow in gaining momentum.

    http://paul.kedrosky.com/WindowsLiveWriter/U.S.TotalCreditMarketDebtbySector1929200_93C7/debt-trend-breakdown_2.jpg

    P.S.- If you think government spending is going to save us, see my post above this one and check out that graph again…

  18. 18
    Slumlord says:

    RE: Scotsman @ 17

    Thank you for those links to the charts. The first one was new to me but makes perfect sense and the second is very important for understanding where we are today.

    I hope I’m not parsing words too much by agreeing that government spending will not save us but I also think that government investment can help. The distinction in my mind is that money is gone once it is spent: whereas with investment you are getting some kind of productive asset in return.

    To illustrate, the auto industry has capacity to build 18 million cars a year but is only selling 8 million, hence subsidies to GM brings zero long-term benefit. There is too much capacity and some car companies need to shut down. Alternatively, the billions spent on GM could have invested in building commuter rail. This second choice would have reduced traffic and outflows of cash to the Middle East. I think our leaders have chosen poorly, moreover, we let them do it.

  19. 19
    Amir says:

    “In contrast, from February to March, the Seattle area’s unemployment rate increased by only 0.1 percentage points.”

    Huh? The article says it went up from 7.6% to 8.1% … which is actually worse than the national increase.

  20. 20
    Graham says:

    RE: Sniglet @ 12

    And what do you base your projections on?

  21. 21
    Scotsman says:

    RE: Slumlord @ 18

    Agreed that government investment is better than just more spending, but both pale in comparison to private investment, as a higher percentage of the dollar total for government investment goes to non productive administration. The government must first collect the money (taxes) and then decide how to administer and distribute the collected funds. All entail non productive administrative costs.

    If the government really wanted to get the economy going, it would cut taxes. Tax cuts put money in both consumer and corporate pockets where it can be immediately spent on a wide variety of goods and services, as well as invested in projects with potential future returns. It is one of the great ironies of our age that although it is well proven that tax cuts lead to greater revenue and more productive investment, our political structure and common understanding emphasize just the opposite. I firmly believe the current administration is much more interested in expanding government power and dependency than it is in curring the economy’s ills. Unfortunately, they chose to make their move (or more accurately got the opportunity) too late in the current cycle. The economy, and the political strategies of the current office holders are both doomed to fail for reasons beyond their control.

  22. 22
    David Losh says:

    I belong to a group called biznik at http://www.biznik.com

    There is an article there that i will try to link here:
    http://biznik.com/articles/why-entrepreneurs-rule-the-world

    Long story short it talks about how there used to be small business everywhere and that the industrial revolution made more employees than employers.

    I see a shift coming. How many of you are really going to trust your employer to know what they are doing? Why are people shovelling money into banks that just nickle and dime you to death? The stock market is a joke if you really consider that rumor, or good news boosts the market place more than solid economic realities. Am I really reading that profit projections are the basis of good news? How about profits in the first quarter after write downs in the last quarter?

    I see a shift coming from a global market wary of feel good economics.

  23. 23
    Jonnny says:

    Yeah, yeah. But how does this compare with the 80’s? The 70’s?

  24. 24
    pfft says:

    “the economy has usually turned around and is growing again.”

    I say to that though, who cares about GDP figures if people don’t have jobs? for me the economy is about people not about GDP figures.

    NOTE: this post is in know way meant to disparage the awesomemess of “the tim.”

  25. 25
    Jonness says:

    “Could this be the first sign that things are starting to level off”

    WA dropped 9/10’s of a point in March after February’s adjustment. This is in line with the massive bleeding We’ve been seeing all along.

    Unemployment in OR is 12.1% matching it’s record peak set in the 80’s. WA topped out at 12.2% in 1982, and we are steadily heading back to that point at the rate of just under a 1% increase per month.

    Month………WA………OR………National
    Oct08………5.9……….7.2………6.6
    Nov08………6.1……….7.8………6.8
    Dec08…… ..6.5……….8.3………7.2
    Jan09………7.8……….9.8………7.6
    Feb09………8.4………10.8……..8.1
    Mar 09……..9.2………12.1……..8.5

    WA job losses are not slowing down.

    “Washington’s seasonally adjusted unemployment rate increased to 9.2 percent in March 2009, up from February’s revised rate of 8.3 percent, according to the state Employment Security Department.”

  26. 26
    Jonness says:

    RE: Amir @ 19

    “The jobless rate also rose in the Seattle metro area, to a seasonally adjusted 8.1 percent, from a revised 7.6 percent in February.”

    I’m guessing Tim’s chart shows what analysts predicted prior to counting all the data. You are referring to the real-world rate of what happend when the real-world data was analyzed and counted. Clearly, you are correct, and the Seattle rate is not slowing nor is WA state as a whole. We are bleeding jobs at a rate not seen since the 80’s, which was a back breaker. Looking at the data, it’s my opinion that there is no slowdown in sight. If April turns out to be another month like last month, we’ll be over 10% and set a 4-month streak not even seen in the 80’s.

    The data is bad. It’s really, really bad. I’m surprised people are judging these numbers as favorable. They’re terrible. I see absolutely nothing in this data that shows we’ve even slightly slowed from the prior record tying months.

  27. 27
    Keith says:

    I’m starting to worry about people getting wiped out by Bird Flu. I wonder what That would do to the housing market?

  28. 28
    Scott Weitz says:

    Sniglet is right on. He may have his own reasons, but this is why I agree:

    1. we are a nation built and dependant upon credit. Credit may not be gone, but it will NEVER be as attainable as it was in the boom ever again (at least not in our lifetime) as the banks have certainly learned their lesson.

    2. Real Estate will not bottom until significant numbers of people realize they are better off renting than owning as their payments would be significantly lower, there would be no taxes, and no upkeep expense. This will lead to foreclosures and bankruptcies that are unprecendented. Right now, many are still holding out for a ‘rebound’. We may (doubtful in real estate) get a small one, but I don’t expect it to last long or be substantial.

    3. Where are the jobs going to be created from? Solar (who can afford huge expenditures on solar??) The govt? Good luck basing an economy on govt jobs/ spending.

    4. Stock market earnings are a joke right now. The ‘rebound’ has been based primarily on bank earnings. No other industries have posted positive numbers this Quarter. If you follow the market, you know these earnings are a joke due to the TARP, TALF, and repeal of mark to market. These banks would all be insolvent without these tools that are pulling the wool over the eyes of the tax payor.

    5. Bottom line: the lifestyles of Americans will be forever altered by this crisis. I still don’t belive that many grasp the enormity of some of the underlying problems from the commercial real estate collapse that is imminent to the collapse of retail. Many business owners are holding on to a thread right now. In time, they will have to let go when they realize that the ‘rebound’ is not coming.

    6. I won’t even go into the municipality struggles as a result of diminished tax collections, the social security problems (to put it nicely), and the printing of money that is going to eventually kill the dollar.

    I hate to sound outrageously pessimistic, but that is the bed we have made for ourselves. On the bright side, people will care more about friends and family…and value the truly important things in life once again. …in a socialist America.

  29. 29
    what goes up must come down says:

    hey just cut taxes and everything will be fine — whoops I guess we tried that before

  30. 30
    Jonness says:

    “and the printing of money that is going to eventually kill the dollar.”

    What’s your prediction on how this will affect asset prices and wages in the short, mid, and long terms?

    Thanks :)

  31. 31
    EconE says:

    One more thing to add. Not to be a doom-n-gloomer…but shouldn’t we also consider the fact that some of the people who were once part of the unemployment statistics (6 months ago), are now re-employed but at substantially lower wages?

    I think it will be interesting to follow median incomes over the next couple years.

  32. 32
    Scott Weitz says:

    Jonness-

    Good question. The answer to that question could make a person very rich person. Personally, I think that while the intense inflationary policies enacted will provide a parachute to the economy, it will not be enough to overcome the gravitational forces that are pulling it down. At the end of the day, fundamentals always prevail.

    In fact, I have serious doubts as to the effectiveness of the ‘stimulus’. Wasn’t education not a huge portion of the bill?…yet colleges across the country are facing enormous budget deficits….doesn’t seem to add up.

  33. 33
    The Tim says:

    RE: Amir @ 19 & Jonness @ 26 – I think the difference is that I am posting the non “seasonally adjusted” figures, and other sources are reporting the “seasonally adjusted” data. You can view the data directly by downloading the Residential Civilian Labor Force Historical Rates spreadsheet from the Workforce Explorer site.

  34. 34
    dancingeek says:

    RE: Scott Weitz @ 32 – “In fact, I have serious doubts as to the effectiveness of the ’stimulus’. Wasn’t education not a huge portion of the bill?”

    Looks like education wasn’t in fact a huge portion of the bill. Here is the breakdown. There is also the fact that educational institutions move slowly. Money that hasn’t really been distributed yet can’t really be used yet. It will still be some time before we see the effects of the stimulus in education.

  35. 35
    Jonness says:

    Thanks Tim. That makes sense.

  36. 36
    matthew says:

    Is unemployment really a lagging indicator in a consumer based economy? Probably not nearly as lagging as it is in a manufacturing economy. Decreased spending = decreased service based jobs = more unemployment

    I don’t know what gets us out of this hole, but something tells me we aren’t going to see the massive surge in manufacturing like we did in the 1940’s that got us out of the Great Depression.

Leave a Reply

Use your email address to sign up with Gravatar for a custom avatar.
Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Please read the rules before posting a comment.