Friday, December 05, 2008

U.S. job losses at 533,000 in November

Graph showing the U.S. economy losing 533,000 jobs in November, with the unemployment rate rising to 6.7 percent. From The New York Times.

This is from The New York Times:

With the economy deteriorating rapidly, the nation’s employers shed 533,000 jobs in November, the 11th consecutive monthly decline, the government reported Friday morning, and the unemployment rate rose to 6.7 percent.

The decline, the largest one-month loss since December 1974, was fresh evidence that the economic contraction accelerated in November, promising to make the current recession, already 12 months old, the longest since the Great Depression. The previous record was 16 months, in the severe recessions of the mid-1970s and early 1980s.

The alarming job decline suggests that consumers and businesses have pulled back sharply on spending in response to the worsening credit crisis. That has put pressure on Congress and the White House to come up with a stimulus package that would substitute for the missing private sector outlays.

Over all, the losses since the recession began now total about 1.9 million, with most coming in the last three months.

“We have gone from recession into something that looks more like collapse,” said Ian Shepherdson, chief domestic economist at High Frequency Economics, referring to the accelerating job losses in recent months.

The losses in November far exceeded the 350,000 figure that was the consensus expectation of economists.

“Business shut down in November,” said Mark Zandi, chief economist at Moody’s “Businesses are in survival mode and are slashing jobs and investment to conserve cash. Unless credit starts flowing again soon, big job losses will continue well into next year.”

Economists were expecting 350,000 job losses for November--183,000 jobs less than the 533,000 that actually occurred. It is no wonder that economists are shocked by this huge job loss. We now have a total of 1.9 million jobs lost, with unemployment rising up to 6.7 percent. And the revised job loss figures for the past two months are even worst. For October, the revised job-loss figures went up to 320,000 from a previously reported 240,000 jobs lost, and September revisions were 403,000 from 284,000. Unemployment rose to 6.7 percent from October's 6.5 percent. The underemployment rate jumped to 12.5 percent, from 8 percent in October. This 12.5 percent underemployment is the highest level since the statistic was first compiled in 1994. The NY Times also reports that more than 420,000, who had been working or seeking work in October, left the job market in November. These people are not counted in the unemployment rolls. Had they continued seeking work in November, the unemployment rate would have risen to 7 percent. The numbers are just awful.

The Bureau of Labor Statistics report can be found here.

And there is even more bad news. According to the BLS report:

The number of persons who worked part time for economic reasons (sometimes referred to as involuntary part-time workers) continued to increase, reaching 7.3 million. The number of such workers rose by 2.8 million over the past 12 months. This category includes persons who would like to work full time but were working part time because their hours had been cut back or because they were unable to find full-time jobs.

So those people who have been able to find work are now working part-time, rather than full time. That number has increased by 2.8 million to a total 7.3 million part-time jobs. Those businesses that are hiring, are only hiring part-time. And these part-time jobs are more likely low-wage jobs with no benefits. You can bet that these part-time workers are not going to be spending much for the Christmas shopping season--especially if they are working for rent, mortgage, or grocery money.

The BLS report also provides this startling statistic:

About 1.9 million persons (not seasonally adjusted) were marginally attached to the labor force in November, 584,000 more than 12 months earlier. These individuals wanted and were available for work and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. Among the marginally attached, there were 608,000 discouraged workers in November, up by 259,000 from a year earlier. Discouraged workers are persons not currently looking for work specifically because they believe no jobs are available for them. The other 1.3 million persons marginally attached to the labor force in November had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities.

What this means is that there are a lot of Americans jumping in and out of the labor force. Those Americans who are "marginally attached to the labor force" had more than tripled from 584,000 a year ago, to the current 1.9 million in November. And of that number, there were 608,000 discouraged workers in November, up from 259,000 a year earlier (also tripled in a year). These discouraged workers have stopped looking for a job, and, when they stop drawing unemployment benefits, they are dropped from the unemployment rolls.

I really do not know what else to say. The numbers are just god-awful. We're looking at a very weak Christmas shopping season, where retailers are cutting prices just to clear inventory off the shelves. Consumer confidence has fallen. We've been in a recession for the past year, and we'll probably see a major contraction in the U.S. economy for this fourth quarter. We've spent hundreds of billions of dollars bailing out the financial industry, and now the auto industry is asking for another $30-$40 billion--or General Motors goes bankrupt. And now the November jobs report was even worst than what economists were expecting. I'm starting to wonder if we're heading into an economic collapse, or even an economic depression here.

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