www.jobberz.com
2008 Job Losses: Bad News, But Hardly 1945
Comparing last year's job losses to those of more than 60 years ago isn't quite fair. That said, there's still room for things to get worse
By Peter Coy
The U.S. is in the grip of a bad recession, but let's not scare ourselves silly by making things seem worse than they really are. Headlines blared "worst since 1945" on Jan. 9 after the Bureau of Labor Statistics announced the U.S. economy lost 524,000 jobs in December and 2.6 million for 2008 as a whole. Fact is, it's ridiculous to compare job losses in 2008 to ones more than 60 years earlier, when the U.S. population and economy were much smaller.
In percentage terms, the U.S. lost 1.9% of its payroll employment in 2008, according to data released Jan. 9. That's bad, all right. But it was only the fifth-worst on the list behind 1945 (6.6%), 1949 (3.4%), 1982 (2.3%), and 1944 (2.1%). That's according to calculations by Harm Bandholz, an economist at UniCredit Group in New York. Bandholz, by the way, was one of the people who highlighted the "worst since 1945" in his research report headline.
In a note before the government report came out, financial blogger Barry Ritholtz warned against the temptation to exaggerate the significance of the December job loss. Ritholtz is bearish on the economy and said, "I do not expect to see any sort of jobs recovery until deep into 2010 at the earliest." But he said monthly numbers don't reveal too much because they fluctuate. Noted Ritholtz: "A 500k job loss is still less than a third of a percent of the labor force."
If you want to make long-term historical comparisons of recessions, a better measure to use is the unemployment rate. The Labor Dept. says it reached 7.2% in December, up from 6.7% in November. That's bad. But it's still not as bad as in the early 1990s, when it hit 7.6%, let alone the early 1980s, when it topped out at 10.8%.
How Bad, How Fast?
Is it good news that things aren't quite as awful as the headlines say? Not exactly. It could just mean that, as bad as things seem now, the economy has room to get even worse. In fact, the U.S. economy almost certainly will lose more jobs this year. The only thing economists disagree on is whether the economy will get worse at a faster or a slower pace in the months ahead.
Certainly December was a gloomy month. The only sectors that posted gains were education and health care, and government. The economy suffered big losses in retail, manufacturing, construction, temporary help, and finance, among other sectors. Swiss Re's Chief U.S. Economist Kurt Karl wrote on Jan. 9 that one key indicator says the current recession will be at least as bad as the one at the beginning of the 1980s. Capital Economics Senior Economist Paul Ashworth said on Jan. 9 he expects the U.S. unemployment rate to peak at 9.5%—and not reach that level until the second half of 2010, nearly three years after the recession began.
On the relatively optimistic side of the economic outlook, Ellen Zentner, senior U.S. economist at Bank of Tokyo-Mitsubishi UFJ, said before the report that December 2008 might end up being the worst month of the recession in terms of job losses. Zentner was the most accurate forecaster of November payroll losses in Bloomberg's monthly survey. She underestimated the loss, which turned out to be 533,000 jobs, but others were even further off. (The November job loss was revised upward on Jan. 9 to 584,000.)
Zentner thinks things will start looking up in the new year. "The buzz is that December's numbers are abysmal, shocking even. But the general hope, or the feeling really, is that December could be the worst of those dismal numbers," she says. "The losses will not be as great going forward."
Employers Front-Loading Job Cuts
Jessica Hoverson of MF Global (MF) in Chicago is gloomier than Zentner about the 2009 outlook. Before the report, Hoverson, who is a fixed-income and foreign-exchange futures analyst, said: "We see the next couple of months as exceptionally poor. I wouldn't be surprised if we moved into down 700,000 or 800,000 jobs [per month] in this environment."
Tig Gilliam, CEO of the North American group of temporary-help giant Adecco, says job losses in December and January are being amplified by employers who want to cut a lot now so they won't have to dribble out smaller cuts in the months to come. Says Gilliam: "I've had more and more conversations where companies are saying it's clear now that this economic turnaround isn't coming quickly. They're saying we've got to get in front of this."
Coy is BusinessWeek's Economics editor.
Sunday, January 11, 2009
U.S. Job Losses in Dec. Could Be Worst in 60 Years
www.jobberz.com
WASHINGTON — U.S. job losses in December could be the worst in almost 60 years as companies scramble to cut costs even deeper to survive the country's economic and financial storms.
A barometer on layoffs is expected to show Thursday that the number of newly laid off people signing up for state unemployment insurance last week rose to 540,000, up from 492,000 in the previous week, according to economists' projections.
Just days into the new year, managed care provider Cigna Corp., aluminum producer Alcoa Inc., data-storage company EMC Corp. and computer products maker Logitech International were among those announcing layoffs to cope with a recession that has just entered its second year. The flurry of job cuts suggest the employment picture will remain grim this year.
U.S. private employers shed close to 700,000 jobs in December, far more than economists had estimated, a report by ADP Employer Services said on Wednesday, suggesting a more comprehensive government report on Friday will be dismal as well.
"This is shockingly awful," Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York told Reuters.
"If the recent relationship between the ADP numbers — after their recent revisions — and the official payroll data holds, then we should expect a number of about minus-700,000 on Friday, the biggest drop in 59 years."
The number of people continuing to draw jobless benefits is projected to stay near 4.5 million, demonstrating the troubles the unemployed are having in finding new jobs.
Electronic unemployment filing systems have crashed in at least three states in recent days due to the crush of newly jobless Americans seeking benefits.
"Businesses were panicked at the end of the year and those that had been holding off on layoffs are now capitulating," said Mark Zandi, chief economist at Moody's Economy.com.
With jobs disappearing, shoppers held tight to their wallets and pocketbooks last month.
Michael P. Niemira, chief economist at the International Council of Shopping Centers, predicts retail sales out Thursday will show a drop for December and the worst holiday shopping season since at least 1969.
For all of 2008, employers likely slashed payrolls by at least 2.4 million. That's based on economists' forecasts for a net loss of 500,000 additional jobs in December, as well as the job losses already reported every month last year by the government. Some, however, think the number of jobs cut last month will be higher — around 600,000 or 700,000. The Labor Department will release that report Friday.
If the conservative, 2.4 million estimate of payroll reductions for 2008 proves correct, it would mark the first annual job loss since the previous recession in 2001. It also would be the worst year of job losses since 1945, when employers slashed nearly 2.8 million jobs. Though the number of jobs in the United States has more than tripled since then, job losses of that magnitude would be sober testimony to the nation's economic woes.
With employers throttling back hiring, the unemployment rate is expected to jump from 6.7 percent in November to 7 percent in December, which would be the highest in 15-1/2 years. That figure also will be released Friday.
President-elect Barack Obama, who takes over Jan. 20, is proposing a mammoth $775 billion package of tax cuts and government spending over two years to revive the moribund economy. With add-ons by lawmakers, the package could swell to $850 billion, his advisers say.
Even with a big government stimulus, economists still believe the unemployment rate will keep climbing, hitting 8 or 10 percent by the end of this year. Obama's economic advisers estimate that a $850 billion recovery package would lower the jobless rate to about 7.4 percent and create 3.2 million jobs by the first quarter of 2011.
Vanishing jobs, tanking home values and shriveled investments have forced consumers to cut back sharply on their spending. In turn, businesses have retrenched as well.
Consumers and companies are folding under the negative forces of the collapsed housing market, a global credit crunch and the worst financial crisis since the 1930s. The recession, which started in December 2007, already is the longest in a quarter-century.
The expectation of more job losses ahead "will only perpetuate the vicious downward cycle propelling the economy," said Bernard Baumohl, chief global economic at the Economic Outlook Group.
The Associated Press and Reuters contributed to this report.
WASHINGTON — U.S. job losses in December could be the worst in almost 60 years as companies scramble to cut costs even deeper to survive the country's economic and financial storms.
A barometer on layoffs is expected to show Thursday that the number of newly laid off people signing up for state unemployment insurance last week rose to 540,000, up from 492,000 in the previous week, according to economists' projections.
Just days into the new year, managed care provider Cigna Corp., aluminum producer Alcoa Inc., data-storage company EMC Corp. and computer products maker Logitech International were among those announcing layoffs to cope with a recession that has just entered its second year. The flurry of job cuts suggest the employment picture will remain grim this year.
U.S. private employers shed close to 700,000 jobs in December, far more than economists had estimated, a report by ADP Employer Services said on Wednesday, suggesting a more comprehensive government report on Friday will be dismal as well.
"This is shockingly awful," Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York told Reuters.
"If the recent relationship between the ADP numbers — after their recent revisions — and the official payroll data holds, then we should expect a number of about minus-700,000 on Friday, the biggest drop in 59 years."
The number of people continuing to draw jobless benefits is projected to stay near 4.5 million, demonstrating the troubles the unemployed are having in finding new jobs.
Electronic unemployment filing systems have crashed in at least three states in recent days due to the crush of newly jobless Americans seeking benefits.
"Businesses were panicked at the end of the year and those that had been holding off on layoffs are now capitulating," said Mark Zandi, chief economist at Moody's Economy.com.
With jobs disappearing, shoppers held tight to their wallets and pocketbooks last month.
Michael P. Niemira, chief economist at the International Council of Shopping Centers, predicts retail sales out Thursday will show a drop for December and the worst holiday shopping season since at least 1969.
For all of 2008, employers likely slashed payrolls by at least 2.4 million. That's based on economists' forecasts for a net loss of 500,000 additional jobs in December, as well as the job losses already reported every month last year by the government. Some, however, think the number of jobs cut last month will be higher — around 600,000 or 700,000. The Labor Department will release that report Friday.
If the conservative, 2.4 million estimate of payroll reductions for 2008 proves correct, it would mark the first annual job loss since the previous recession in 2001. It also would be the worst year of job losses since 1945, when employers slashed nearly 2.8 million jobs. Though the number of jobs in the United States has more than tripled since then, job losses of that magnitude would be sober testimony to the nation's economic woes.
With employers throttling back hiring, the unemployment rate is expected to jump from 6.7 percent in November to 7 percent in December, which would be the highest in 15-1/2 years. That figure also will be released Friday.
President-elect Barack Obama, who takes over Jan. 20, is proposing a mammoth $775 billion package of tax cuts and government spending over two years to revive the moribund economy. With add-ons by lawmakers, the package could swell to $850 billion, his advisers say.
Even with a big government stimulus, economists still believe the unemployment rate will keep climbing, hitting 8 or 10 percent by the end of this year. Obama's economic advisers estimate that a $850 billion recovery package would lower the jobless rate to about 7.4 percent and create 3.2 million jobs by the first quarter of 2011.
Vanishing jobs, tanking home values and shriveled investments have forced consumers to cut back sharply on their spending. In turn, businesses have retrenched as well.
Consumers and companies are folding under the negative forces of the collapsed housing market, a global credit crunch and the worst financial crisis since the 1930s. The recession, which started in December 2007, already is the longest in a quarter-century.
The expectation of more job losses ahead "will only perpetuate the vicious downward cycle propelling the economy," said Bernard Baumohl, chief global economic at the Economic Outlook Group.
The Associated Press and Reuters contributed to this report.
December's job losses push unemployment rate to 7.2 percent
www.jobberz.com
BY CARRIE MASON-DRAFFEN | carrie.mason-draffen@newsday.com; PATRICIA KITCHEN
January 10, 2009
The U.S. economy continued its employment free fall in December with a loss of 524,000 jobs, fewer than some market experts had predicted but staggering nonetheless.
The Bureau of Labor Statistics, which released the jobs data Friday, characterized the losses as "large" and "widespread" across the economy.
The unemployment rate rose to 7.2 percent last month, the highest in almost 16 years, according to Bloomberg News. That compares with 4.9 percent in December 2007, when the current recession officially began.
Manufacturing lost the most jobs in December - 149,000. The professional and business-service category, which includes temporary staffing companies, came in second, with 113,000 jobs lost. Health care continued to post the highest gains, adding 32,000 jobs.
All told for 2008, the economy racked up a 2.6-million job loss, the most since 1945, Bloomberg said.
"The latest numbers are more evidence that we are in big trouble and that we need a dramatic change in economic policy," said Gregory DeFreitas, professor of economics at Hofstra University in Hempstead and director of the school's labor studies program.
Indeed, in a news conference Friday, President-elect Barack Obama underscored the need for an economic stimulus plan.
"Clearly the situation is dire," he said. "It is deteriorating and it demands urgent and immediate action."
Revised numbers in the latest report show that the hemorrhaging was worse in November and October than the original data showed. October's loss was revised to 423,000 from 320,000. And November was revised to 584,000, from 533,000.
As bleak as the job numbers are for the general population, they are downright dire for teens and minorities. Teens have a 21 percent jobless rate. African-Americans, with 12 percent unemployment, have the highest rate among minorities. Hispanics had the second highest, 9.2 percent. By contrast, Asians have a 5.1 percent jobless rate.
The reasons for the higher unemployment rates for teens and minorities, which are historically higher, are myriad, jobs experts said.
DeFreitas attributes teens' higher jobless rate in part to a trickle-down effect in an anemic job market. "If adults can't get decent-paying jobs, it's that much harder for young people to get jobs," he said.
He also noted the federal government has been cutting back on programs that provide job training for non-college-bound young people. "These folks have been really hurting," he said.
For minorities he noted that discrimination and fewer college graduates among them play a role.
James Parrott, chief economist for the Fiscal Policy Institute, an Albany-based economic-policy think tank, noted that the discrimination in part explained why blacks disproportionately work in more volatile sectors of the economy.
"Blacks are concentrated in industries that are seasonal and cyclically volatile," he said, "and so they are the among the first to lose their jobs."
Job losses
423,000 October*
584,000 November*
524,000 December
http://www.newsday.com/services/newspaper/printedition/saturday/news/ny-bzjobs105993713jan10,0,7495063.story
BY CARRIE MASON-DRAFFEN | carrie.mason-draffen@newsday.com; PATRICIA KITCHEN
January 10, 2009
The U.S. economy continued its employment free fall in December with a loss of 524,000 jobs, fewer than some market experts had predicted but staggering nonetheless.
The Bureau of Labor Statistics, which released the jobs data Friday, characterized the losses as "large" and "widespread" across the economy.
The unemployment rate rose to 7.2 percent last month, the highest in almost 16 years, according to Bloomberg News. That compares with 4.9 percent in December 2007, when the current recession officially began.
Manufacturing lost the most jobs in December - 149,000. The professional and business-service category, which includes temporary staffing companies, came in second, with 113,000 jobs lost. Health care continued to post the highest gains, adding 32,000 jobs.
All told for 2008, the economy racked up a 2.6-million job loss, the most since 1945, Bloomberg said.
"The latest numbers are more evidence that we are in big trouble and that we need a dramatic change in economic policy," said Gregory DeFreitas, professor of economics at Hofstra University in Hempstead and director of the school's labor studies program.
Indeed, in a news conference Friday, President-elect Barack Obama underscored the need for an economic stimulus plan.
"Clearly the situation is dire," he said. "It is deteriorating and it demands urgent and immediate action."
Revised numbers in the latest report show that the hemorrhaging was worse in November and October than the original data showed. October's loss was revised to 423,000 from 320,000. And November was revised to 584,000, from 533,000.
As bleak as the job numbers are for the general population, they are downright dire for teens and minorities. Teens have a 21 percent jobless rate. African-Americans, with 12 percent unemployment, have the highest rate among minorities. Hispanics had the second highest, 9.2 percent. By contrast, Asians have a 5.1 percent jobless rate.
The reasons for the higher unemployment rates for teens and minorities, which are historically higher, are myriad, jobs experts said.
DeFreitas attributes teens' higher jobless rate in part to a trickle-down effect in an anemic job market. "If adults can't get decent-paying jobs, it's that much harder for young people to get jobs," he said.
He also noted the federal government has been cutting back on programs that provide job training for non-college-bound young people. "These folks have been really hurting," he said.
For minorities he noted that discrimination and fewer college graduates among them play a role.
James Parrott, chief economist for the Fiscal Policy Institute, an Albany-based economic-policy think tank, noted that the discrimination in part explained why blacks disproportionately work in more volatile sectors of the economy.
"Blacks are concentrated in industries that are seasonal and cyclically volatile," he said, "and so they are the among the first to lose their jobs."
Job losses
423,000 October*
584,000 November*
524,000 December
http://www.newsday.com/services/newspaper/printedition/saturday/news/ny-bzjobs105993713jan10,0,7495063.story
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