Temporary layoffs and other mysteries

Unemployment did rise, but not in the very bad way

• unemployment continues to rise, but it’s not the very bad kind of unemployment

• the weather did it?

• mysteries of temporary layoffs

• unsuccessful unretirement? native-born unemployment among white and black men especially, leading the way

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Temporary layoffs and other mysteries

Brief this morning, but also cheerful (and also late, because I scheduled the release for PM, instead of AM…rookie mistake).

• Yes, as expected, the job numbers disappointed on Friday.

• Yes, the selloff continued apace, and “panic” measures are blaring everywhere.

• No, technically, the Sahm rule was not actually triggered (although it was close).

But unemployment is rising, and that’s very bad, right?

Well, yes, sort of, but it’s not really as bad as people seem to think (or who knows what people are thinking, but it’s a different sort of rising unemployment than what usually causes big downturns).

Here’s the thing: the US labor market is secularly tight. The prime-age participation rate is still extremely high. That’s what getting old will do—we just have fewer workers around to do the work that needs doing.

That being the case, people really aren’t getting fired.

So where is all the unemployment coming from?

It’s new re-entrants and temporary layoffs driving most of the unemployment:

Overshoot

The really bad kind of unemployment—“permanent job losers” i.e. getting fired—is relatively flat.

Here’s another look:

Guy Berger

The blackline (i.e. getting fired) is pretty much where it was at the beginning of the year.

So it’s not firings that’s causing unemployment to rise. What’s driving unemployment are (a) temp layoffs (blue), which really jumped, and (b) reentrants (orange), which continued to climb.

OK, not doomsday, then what?