Depression Level Unemployment: 40 Percent Unemployment in the U.S.? Top 12 MSA Unemployment Regions Located in California. The Only 2 MSA Regions with 20 Percent Unemployment Exist in California.

Statistics have a way of being cold and unsympathetic to the plight of the numbers they represent.  That is why when we hear that our national unemployment rate is 8.9 percent, there is little cause for alarm from the headline.  Yet when we parse the data we realize that 25,000,000 Americans are unemployed or underemployed with half a million more coming our way this Friday.  The employment situation on an aggregate basis simply does not reflect the devastation of this current recession.  A recession that can destroy $11.2 trillion in American household wealth is not a common recession.

It is the case that there are many MSA (metropolitan statistical areas) measured by the BLS that show some regions of our country are already in a deep and profound depression.  Out of the top 20 MSAs with high unemployment rates we find that 12 are in California:

top-20-msa

Now why does this matter?  First, there is a misconception with California.  What is portrayed on the media is this all powerful and extremely wealthy state (well, maybe before our budget flew off a cliff at least).  Yet the reality is more akin to a banana republic run by a small ruling elite.  The next two groups are those struggling to remain in the middle class while the other half of the state barely makes ends meet.  That is why we find that 12 of the 20 top unemployment rates come from California.  California now has the highest unemployment rate since World War II coming in at 11 percent.  Yet as you can see from the charts above, many areas are already seeing depression level unemployment.  Let us take a look at a few samples:

el-centro

The El Centro MSA has always had high unemployment rate.  In fact, there was a month in the early 1990s where the unemployment rate was higher than 40 percent!  Imagine that.  A rate that is usually on par with a war torn country.  Keep in mind that this is for the headline unemployment rate and not the U-6 rate which is approximately twice as high for many areas.  The chart above shows that El Centro has faced some tough times before.  You will see this pattern emerge again with Merced California:

merced-ca

Why the ups and downs?  These areas have a large group of migrant seasonal workers so the up and down trend is typical.  What isn’t typical is the blasting through the 20 percent mark.  As you can see, during the 1990s unemployment remained high, fell for the most part of the decade and has shot up due to our current recession.  In fact, for Merced the rate went from 10 percent to 20 percent all within a year.  That is astounding.

The early 1990s recession hit California hard.  Ironically this recession also had a housing bubble component but nothing coming close to the current housing bubble.  Yet what we are seeing with this current recession is other parts of the country hitting depression level unemployment rates and these areas braced tough times in the past much better.  Let us look at the Bend Oregon MSA:

bend-or

With the chart above you can see that the 1990s recession pushed unemployment slightly above 10 percent.  The 2001 recession didn’t even get unemployment into the double-digits.  But just look at how quickly and severely the unemployment rate has gone up.  No time since World War II has the unemployment rate shot up so fast.  In the Bend MSA for example, the unemployment rate was 4.8 percent in October of 2007 and now stands at a stunning 17 percent, more than 3 times the rate from 17 months ago.  Some areas have never seen double-digit unemployment in a generation and are now seeing it for the first time.  Take the Elkhart Indiana MSA:

elkhart-in

You see the same pattern as the Bend Oregon chart.  You see the early 1990s recession take rates up near the 10 percent mark.  And after 1992, the unemployment rate remained stable for 15 years.  In fact, over this 15 year time frame the average rate came in at 3.8 percent, a stunningly low rate.  Even as early as April of 2008, one year ago the unemployment rate stood at 5.1 percent.  Today the unemployment rate is at a whopping 18.8 percent.  The unemployment rate surged over 13 percent in one year!  Now what happened here?  First in Elkhart County a large number of people have been struck hard by the rise in fuel cost.  Many jobs that were lost came from the recreational vehicle industry.  Of course the RV is a symbol of an old America.  An America with access to cheap fuel and easy money.  This is not the kind of America that is ready to adjust to the new austerity being experienced by millions.

These areas are going to need to retool and gear up for a new world.  As we are now seeing, oil prices are once again on the rise nearing $70 a barrel.  Home prices are still too expensive for most Americans who are seeing wage cuts or losing their jobs.  The reality is, the market volatility or green shoot talk is good for headlines, but until we see a stabilization in the unemployment rate there is no reason to talk about a bottom.  The Elkhart example is a perfect illustration of a community that was based on an industry that will no longer cut it in the U.S.  What industry will fill its place?  Apply this same situation to a Detroit for example and you see a tough situation for the next few months.  More job losses are coming in areas where many people feel they are living in depression level situations.

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1 Comments on this post

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  1. rom said:

    it is all about the fudging of the numbers by the banking elite. This article shows hard statistical numbers that are contrary to what is reported by the lame-stream media, aka msLSD, cnn with wolfy. You see we are all being lied to by our leaders at all levels of government fed/state/county/municipal levels. WE THE PEOPLE must stand up to this all out power grab going on in AMERICA. Don’t count on the government run media to let us know, hell I’ll even go out on a limb and predict another false-flag attack of some kind happening before the end of the year. It is an all or nothing power grab at our liberty and freedom by corporate elitist who’s plans are a one world system/infrastructure. The American Citizens are asleep at the wheel, luuled there by apathy, carelessness and a general wonton disregard for their own Constitution. No one else is going to clean up this mess and our saviours are only gonna grab more of our tax dollars and eventually our freedoms. Americans are walking zombies and are under a state of control by use of fear. Facism does not just happen, it is allowed by the willing accomplises, the Citizens. Banksters and the military industrial complex want it all. And so far, WE ARE GIVING IT AL TO THEM LOCK, STOCK AND BARREL.

    June 4th, 2009 at 1:28 am

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