Friday, January 9, 2009

Largest annual loss of jobs since 1946

This morning's report by the U.S. Department of Labor on the December jobless rate is as bad as was expected. More than half a million jobs were lost on net in December according to the payroll figures, and national unemployment rose to 7.2 percent, the highest since January 1993.

The payroll figures indicate that 2.6 million jobs were lost on net for all of 2008, with 1.9 million of these losses occurring in the last four months. In absolute terms, the December to December loss in payroll employment is the largest 12-month loss since February 1946 during the demobilization from World War II. In percentage terms, the loss is the largest since December 1982.

Household data indicate that the percent of the U.S. population that is employed has fallen from 62.7 percent to 61.0 percent over the last year.

The median duration of unemployment spells is up to just past 10 weeks, meaning that half of all spells are lasting more than two and a half months. The mean duration is nearly five months.

In a separate study issued last month, the Department of Labor also reported that involuntary part-time employment has nearly doubled in the last year and a half. We typically conceptualize employment as either being with or without a job but overlook that there is a continuous dimension. People sometimes aren't able to work the number of hours that they would like, and this problem, along with unemployment, gets worse in recessions.

6 comments:

Anonymous said...

Largest annual loss of jobs since 1946
This morning's report by the U.S. Department of Labor on the December jobless rate is as bad as was expected. More than half a million jobs were lost on net in December according to the payroll figures, and national unemployment rose to 7.2 percent, the highest since January 1993.

I'm sure you'll agree that ther 7.2% is an indicator number based solely on unemployment claims filed with the unemployment folks, and actually the number pof people idle is much higher. However, at 67 the ole memory isn't as sharp as it once was but it seems to me the reported unemployment figure under the Carter debacle of a regime was even higher. Beau

Dave Ribar said...

Dear Beau:

Actually, the 7.2 percent figure is based on a survey of households and not on the unemployment insurance claims data.

Your memory is pretty sharp. Unemployment was higher during the first six and last eight months of the Carter administration. It was also higher during the 1981-82 recession under Reagan (when it reached a post-war high of 10.8 percent) and in the early 1990s following the recession that happened under the first President Bush (when it reached a high of 7.8 percent).

pino said...

In absolute terms, the December to December loss in payroll employment is the largest 12-month loss since February 1946 during the demobilization from World War II. In percentage terms, the loss is the largest since December 1982.

Why wouldn't your headline read 1982 instead of 1946?

Dave Ribar said...

Pino:

If it comforts you to think about the job losses so far as only rivaling our deepest recession since the Great Depression and only being the worst job losses in a quarter century, that's okay.

Let's hope that things don't get much worse than they already are.

pino said...

I only as because I have been struck by over the top rhetoric associated with this current recession. It started with Paulson, moved Obama and even included Dubya.

The bubble that burst is the housing bubble. This, because of a change in accounting rules, moved to the banking sector. Everything else should be, and by checking out the Federal Reserve Bank of Minneapolis , seems to be moving about relatively well.

Are we being sold a bill of goods on how bad this really is?

Dave Ribar said...

Pino:

In my opinion, the National Bureau of Economic Research (NBER) jumped the gun in declaring that the recession started at the beginning of this year. If we use the more traditional definition of two or more negative quarters of GDP, the recession would have only started in Oct.

Regardless, some pretty bad things are already happening in the economy, including a rapid loss of jobs and unemployment quickly rising to 7.2 percent. It's important to remember that we are still just starting this process; things are likely to get substantially worse before they get better. Even so, the Minneapolis Fed numbers show that the employment response already puts us in the range of a more severe recession. My guess is that the output numbers will show this in another quarter or so.

It's also worth noting that several tools that were available in the last recession won't be available in this recession. Most importantly, we won't be able to rely on a huge increase in consumer debt to push the economy forward. We also began this recession with the budget far into the red (that is, with a sizeable fiscal stimulus); this limits what the government can do without causing other problems.

We just won't know how bad it is until we've reached the bottom of the output and employment troughs. We're not at either of those troughs yet.