Economists React: Jobs Report Shows ‘Slow Motion Train Wreck’
Economists and others weigh in on the January employment report, which showed a loss of nearly 600,000 jobs and a rise in the unemployment rate to 7.6%.
Another horrific report, showing job losses across the economy. Manufacturing jobs down a huge 207,000 — that’s a 1.6% drop in one month — construction down 111,000, retail down 45,000, business services down 121,000. The only private sector gain was in education and health. Household survey employment fell 1.239 million, the worst since records began in 1948. Only a dip in participation prevented an even bigger rise in the unemployment rate… If ever there were an economy in need of stimulus, this is it. –Ian Shepherdson, High Frequency Economics
There can be no sugar-coating this report. As suggested by the initial jobless claims data, the labor market remains in the grip of the worst jobs market since the 1981-82 recession, the rate of job losses massively intensified in November and there has been no change in trend since then… As for the seasonal distortion in January retail payrolls, it turns out that the retail payrolls declined despite an adjustment factor that added 687,000 to the retail employment change in January. –RDQ Economics
The January payroll report and the accompanying annual benchmark reinforced the impression of the slow motion train wreck that has become the U.S. economy… As one might expect the burden of the current increase in the rate of unemployment is disproportionately placed among young people and minorities. The unemployment rate among teenagers remained elevated at 20.8% while that among African-Americans jumped to 12.6% and Hispanics increased to 9.7%. Given the evolution of the employment data it does seem clear that the current expectation of a 9.0% rate of unemployment on the part of the Congressional Budget Office and the $43.0 billion in outlays on unemployment insurance in the stimulus, which may be voted on later today seems a bit on the optimistic side. –Joseph Brusuelas, Moody’s Economy.com
Massive hemorrhage is occurring from sea to shining sea in America and the recession is deepening. The loss of 3.6 million jobs in this recession has eliminated $360 billion in buying power in the economy. More and more businesses are cutting jobs in anticipation of tougher times. They want to trim fats and stay lean and mean for the tough times ahead. –Sung Won Sohn, Smith School of Business and Economics
Job losses are not only deepening but are becoming more broad-based, with the diffusion indexes of employment change, which show the net percentage of private sector industries adding to payrolls, at their lowest levels since the inception of the data… The reality is that, with the recession having intensified over the past few months, the credit markets still in a dysfunctional state, and business and investor confidence at rock bottom levels, even with the passage of a large fiscal stimulus package, whatever its merits may be, labor market conditions will continue to deteriorate through 2009, though the pace of decline will moderate as the year progresses, with the jobless rate likely rising into early 2010. –Richard F. Moody,
Mission Residential
The employment report indicated that the labor market continues to deteriorate at a rapid clip… The latest unemployment claims data suggest that the pace of job loss may be accelerating in February. We look for the unemployment rate to continue to rise to about 9.75% by the end of 2009.–David Greenlaw, Morgan Stanley
There is no end in sight to the huge payroll declines, as high-profile lay-off announcements keep coming, and initial unemployment insurance claims have moved above 600,000 for the first time in this cycle. February might be even worse than January. We have now lost 3.6 million jobs since the cycle peak in December 2007, with 1.8 million lost in the last three months alone. We are heading for total job losses in the 6-7 million range and an unemployment rate well above 9%. –Nigel Gault, IHS Global Insight
The decline in payrolls flirted with the psychologically important 600,000 number for the third consecutive month. Based on the rising number of “real” (as opposed to liquidity-driven) bankruptcies in the retail sector, we see job losses accelerating for at least the next several months to the point where that 600,000 mark will soon be a dot in the distance behind us –Guy LeBas, Janney Montgomery Scott
Only about 12.7 million workers are employed by U.S. manufacturers, the fewest since February 1946. While this structural downtrend in manufacturing employment is likely to continue even after the recession ends, the steep job cuts accompanied by reductions in hours and overtime, indicate manufacturers are wasting no time cutting production in response to the sharp drop in total demand. That sort of adaptation makes it more likely that the overhang of inventories can be drawn down more quickly leaving the economy better poised to boost production if and when demand begins to improve. –David Resler, Nomura Securities
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