The following report is an overview by Don Schunk, research economist at Coastal Carolina University, of employment/unemployment data for December 2009 released today by the South Carolina Employment Security Commission and the U.S. Bureau of Labor Statistics.
Highlights from December 2009 data:
- South Carolina's unemployment rate surged to 12.6% in December from 12.3% in November. The state's unemployment rate has risen from 12.0% to 12.6% since October 2009 while the national unemployment rate actually dipped slightly from 10.1% to 10.0% over the same period. December's increase is particularly troublesome for this reason: the unemployment rate rose despite a decrease in the size of the labor force. What does this mean? We saw the labor force fall by 6,720 in December, reflecting discouraged workers dropping out of the labor force. Often, a drop in the labor force takes pressure off the unemployment rate as previously unemployed individuals drop out of the statistics and are no longer counted as unemployed. For a labor force decline to be accompanied by an increase in the unemployment rate indicates a sharp drop in the number of employed individuals. This suggests the state's labor markets remain incredibly weak with a combination of more discouraged workers and an apparent acceleration of job losses. These recent trends are consistent with my continued expectation for further increases in the unemployment rate, with a peak of between 13% and 14% now apparently within easy reach.
- Total employment is down about 2.0% versus December 2008. There are many ways to analyze the total employment numbers. When searching for a turning point in the business cycle, it is helpful to look at the month-to-month changes in total employment. South Carolina's job count decreased by 9,900 in December, but this isn't necessarily unusual for the time of year. However, even on a seasonally-adjusted basis, employment fell sharply in December. Yes, job losses have moderated substantially since late 2008/early 2009, but we have not yet seen signs of employment stability.
The December labor market data indicate ongoing weakness that highlights the precarious nature of this economy. The fragile recovery will need a return of consumer confidence and spending to be sustainable, but the fact that labor markets continue to deteriorate weakens the chances of improvement for confidence and spending. The economy needs a spark in terms of job and income creation. Historically, this spark has come from a rebound in home construction or business investment. However, both of these sectors are dealing with excess capacity: inventory of unsold homes working against construction and idle productive capacity working against business investment. The light at the end of the tunnel continues to flicker.
For additional information, contact Don Schunk, Coastal Carolina University research economist, at email@example.com, 843-655-0995 or 843-349-2485.