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The Week Ahead: Looking at the share of long-term unemployment

By Tom Hudson, Miami Herald on

Published in Business News

The penultimate jobs report of the Trump Administration will be released on Friday. Any drop in the headline unemployment rate for November will be heralded by the president as proof that the economy is healing. He will take credit where very little is due. Don't be shocked if he uses it as an anvil to hammer imaginary threats of economic ruin with the incoming administration.

Instead of focusing on the change of the monthly unemployment rate, millions of American workers are counting their time going without work by the month. The share of long-term unemployment has quadrupled since July. A third of officially out-of-work Americans in October had gone more than six months without a job. That's the highest share of unemployment since the middle of 2014.

Certainly, a falling monthly unemployment rate is something worth cheering. Investors need not worry that improving labor markets will spur the Federal Reserve to reverse course on its easy money strategy. More working Americans is more evidence of business returning even as the pandemic rages and COVID-19 cases were surging in November in many places across the country.

 

While the share of jobless Americans making up the long-term unemployed has not hit Great Recession proportions when nearly half of jobless Americans went at least six months between jobs, it took a decade for its share to fall back to pre-housing collapse levels, and only early in 2020 dropped below 10% of the unemployed for the first time in a generation. If this portion of the jobless market remains elevated for long, the sustainability and propagation of any post-pandemic economic recovery will be vulnerable. And investors may be leery.

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