The Bureau of Labor Statistics reported this morning that employers added fewer jobs than forecast in November and the unemployment rate unexpectedly increased. Dr. David Krause, AIM program director said, "Maybe this vindicates QE2, the Fed’s decision to pump more money into the economy to spur growth."
Payrolls increased 39,000, less than the most pessimistic projection of economists surveyed by Bloomberg News, after a revised 172,000 increase for October. The jobless rate rose to 9.8 percent, the highest since April, while hours worked and earnings stagnated. The following graph is from CalculatedRisk.com:
The second graph from CalculatedRisk.com shows the job losses from the start of the employment recession, in percentage terms aligned at maximum job losses.The dotted line is ex-Census hiring. The two lines have joined since the decennial Census is over. CalcualtedRisk reported that for the current employment recession, employment peaked in December 2007, and this recession is by far the worst recession since WWII in percentage terms, and 2nd worst in terms of the unemployment rate (only the early '80s recession with a peak of 10.8 percent was worse).
Dr. Krause added, "This is a much weaker number than economists thought they'd observe - it is well below expectations. The yield on the 10 year Treasury dropped from about 3.00% to 2.90% shortly after the news was released. Looks like maybe the Fed knew what they were doing with QE2 afterall!"