Post by Chase on Dec 5, 2008 23:08:39 GMT -5
December 6, 2008
Jobless Rate Rises to 6.7% as 533,000 Jobs Are Lost
By LOUIS UCHITELLE
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.
“We have recorded the largest decline in consumer confidence in our history,” said Richard T. Curtin, director of the Reuters/University of Michigan Survey of Consumers, which started its polling in the 1950s. “It is being driven down by a host of factors: falling home and stock prices, fewer work hours, smaller bonuses, less overtime and disappearing jobs.”
The job losses far exceeded the 350,000 figure that was the consensus expectation of economists.
Over all, the job losses since January now total more than 1.9 million, with most coming in the last three months as consumers and businesses cut back sharply in response to the worsening credit crisis.
“Business shut down in November,” said Mark Zandi, chief economist at Moody’s Economy.com. “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.”
The report on Friday by the Bureau of Labor Statistics included sharp upward revisions in job-loss figures for October (to 320,000 from the previously reported 240,000) and for September (to 403,000 from 284,000).
A mass departure from the labor force helped to hold down the unemployment rate in November, which was up only two-tenths of a percentage point from October’s 6.5 percent.
More than 420,000 men and women who had been working or seeking work in October, left the labor force in November. Most presumably gave up looking for a job, the bureau’s report suggests. If they had continued that search, the unemployment rate in November would have been closer to 7 percent.
In addition, 70 percent of the job loss was in the service sector, particularly in retailing, temporary work and hotel and restaurant employment. Indeed, the only sectors adding jobs in November were health care and education.
“The service sector had been holding up relatively well into this downturn, but now the service sector is just imploding,” said Michael T. Darda, chief economist at the research firm MKM Partners. “As goes the service sector, so goes the U.S. economy."
The employment report increased the likelihood that Congress, with the support of President-elect Barack Obama, will enact a stimulus package by late January that could exceed $500 billion over two years.
Mr. Obama issued a statement on Friday morning that called the employment report “a dramatic reflection of the growing economic crisis we face,” saying it was further evidence that “we need an economic recovery plan that will save or create at least 2.5 million more jobs over two years while we act decisively to maintain the flows of credit on which so many American families and American businesses depend.”
Under the stimulus plan, more than half the money would probably be channeled into public infrastructure spending. Many economists consider such investments an effective way to counteract, through federally financed employment, the layoffs and hiring freezes spreading through the private sector.
“Basically $100 billion of public investment in such things as roads, bridges and levees would generate two million jobs,” Robert N. Pollin, an economist at the University of Massachusetts, said. “That would offset the two million jobs that we are now on track to lose by early next year.”
The manufacturing sector has been particularly hard hit, losing more than half a million jobs this year. That is nearly half the 1.2 million jobs lost since employment peaked in December and, in January, began its uninterrupted decline. The cutbacks seem likely to accelerate as the three Detroit automakers close more factories and shrink payrolls even more as they try to qualify for the federal loans they asked Congress this week to approve.
While manufacturing has led the way, the job cuts are rising in nearly every sector of the economy. “My sense is there is just a collapse in demand,” said Marc Levinson, research director for the union Unite Here, whose 450,000 members are spread across apparel manufacturing, hotels, casinos, industrial laundries, airport concessions and restaurants. “Our members are being laid off big time,” Mr. Levinson said.
The latest jobs report came during a week of compelling evidence that the American economy is falling precipitously. On Monday, the National Bureau of Economic Research ruled that a recession — the 12th since the Depression — had begun last December, even earlier than many people had thought.
That news was followed by fresh reports of cutbacks or declines in construction spending, home sales, consumer spending, business investment and exports. And companies in every industry sector announced layoffs this week, including AT&T, the telecommunications company, with 12,000 job cuts; DuPont, the chemical company, 2,500; and Viacom, the media company, 850.
Even retail sales in the Christmas season were off sharply. The International Council of Shopping Centers on Thursday described November sales at stores open at least a year as the weakest in more than 30 years.
With all this in mind, and particularly the shrinking employment rolls, economists are estimating that the gross domestic product is contracting at an annual rate of 4 percent or more in the fourth quarter, after a decline of 0.3 percent in the third quarter.
“Our G.D.P. forecast for 2009 is now minus 1.8 percent, rather than minus 1 percent,” HIS Global Insight, a forecasting and data gathering service, informed its clients in an e-mail message this week, explaining that all the latest bad news left it no choice but to issue a sharp downward revision.
“We see the unemployment rate at 8.6 percent by the end of 2009,” Global Insight said.
John E. Silvia, chief economist at Wachovia, said the new unemployment data suggested that economic growth is falling at a rate of 5 percent in the fourth quarter. “There’s no quick fix here," he said. “There’s no quick rebound.”
Jack Healy contributed reporting.
Jobless Rate Rises to 6.7% as 533,000 Jobs Are Lost
By LOUIS UCHITELLE
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.
“We have recorded the largest decline in consumer confidence in our history,” said Richard T. Curtin, director of the Reuters/University of Michigan Survey of Consumers, which started its polling in the 1950s. “It is being driven down by a host of factors: falling home and stock prices, fewer work hours, smaller bonuses, less overtime and disappearing jobs.”
The job losses far exceeded the 350,000 figure that was the consensus expectation of economists.
Over all, the job losses since January now total more than 1.9 million, with most coming in the last three months as consumers and businesses cut back sharply in response to the worsening credit crisis.
“Business shut down in November,” said Mark Zandi, chief economist at Moody’s Economy.com. “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.”
The report on Friday by the Bureau of Labor Statistics included sharp upward revisions in job-loss figures for October (to 320,000 from the previously reported 240,000) and for September (to 403,000 from 284,000).
A mass departure from the labor force helped to hold down the unemployment rate in November, which was up only two-tenths of a percentage point from October’s 6.5 percent.
More than 420,000 men and women who had been working or seeking work in October, left the labor force in November. Most presumably gave up looking for a job, the bureau’s report suggests. If they had continued that search, the unemployment rate in November would have been closer to 7 percent.
In addition, 70 percent of the job loss was in the service sector, particularly in retailing, temporary work and hotel and restaurant employment. Indeed, the only sectors adding jobs in November were health care and education.
“The service sector had been holding up relatively well into this downturn, but now the service sector is just imploding,” said Michael T. Darda, chief economist at the research firm MKM Partners. “As goes the service sector, so goes the U.S. economy."
The employment report increased the likelihood that Congress, with the support of President-elect Barack Obama, will enact a stimulus package by late January that could exceed $500 billion over two years.
Mr. Obama issued a statement on Friday morning that called the employment report “a dramatic reflection of the growing economic crisis we face,” saying it was further evidence that “we need an economic recovery plan that will save or create at least 2.5 million more jobs over two years while we act decisively to maintain the flows of credit on which so many American families and American businesses depend.”
Under the stimulus plan, more than half the money would probably be channeled into public infrastructure spending. Many economists consider such investments an effective way to counteract, through federally financed employment, the layoffs and hiring freezes spreading through the private sector.
“Basically $100 billion of public investment in such things as roads, bridges and levees would generate two million jobs,” Robert N. Pollin, an economist at the University of Massachusetts, said. “That would offset the two million jobs that we are now on track to lose by early next year.”
The manufacturing sector has been particularly hard hit, losing more than half a million jobs this year. That is nearly half the 1.2 million jobs lost since employment peaked in December and, in January, began its uninterrupted decline. The cutbacks seem likely to accelerate as the three Detroit automakers close more factories and shrink payrolls even more as they try to qualify for the federal loans they asked Congress this week to approve.
While manufacturing has led the way, the job cuts are rising in nearly every sector of the economy. “My sense is there is just a collapse in demand,” said Marc Levinson, research director for the union Unite Here, whose 450,000 members are spread across apparel manufacturing, hotels, casinos, industrial laundries, airport concessions and restaurants. “Our members are being laid off big time,” Mr. Levinson said.
The latest jobs report came during a week of compelling evidence that the American economy is falling precipitously. On Monday, the National Bureau of Economic Research ruled that a recession — the 12th since the Depression — had begun last December, even earlier than many people had thought.
That news was followed by fresh reports of cutbacks or declines in construction spending, home sales, consumer spending, business investment and exports. And companies in every industry sector announced layoffs this week, including AT&T, the telecommunications company, with 12,000 job cuts; DuPont, the chemical company, 2,500; and Viacom, the media company, 850.
Even retail sales in the Christmas season were off sharply. The International Council of Shopping Centers on Thursday described November sales at stores open at least a year as the weakest in more than 30 years.
With all this in mind, and particularly the shrinking employment rolls, economists are estimating that the gross domestic product is contracting at an annual rate of 4 percent or more in the fourth quarter, after a decline of 0.3 percent in the third quarter.
“Our G.D.P. forecast for 2009 is now minus 1.8 percent, rather than minus 1 percent,” HIS Global Insight, a forecasting and data gathering service, informed its clients in an e-mail message this week, explaining that all the latest bad news left it no choice but to issue a sharp downward revision.
“We see the unemployment rate at 8.6 percent by the end of 2009,” Global Insight said.
John E. Silvia, chief economist at Wachovia, said the new unemployment data suggested that economic growth is falling at a rate of 5 percent in the fourth quarter. “There’s no quick fix here," he said. “There’s no quick rebound.”
Jack Healy contributed reporting.
Merry Christmas, folks!