2008: Steep Job Losses

The news is bad, even a little worse than we expected:

NEW YORK (CNNMoney.com) — Another sobering government labor report released Friday showed the economy lost 524,000 jobs in December, bringing 2008’s total job loss to just below 2.6 million.

Last year’s steep drop in employment marked the highest yearly job-loss total since 1945, the year in which World War II ended.

Economists surveyed by Briefing.com had forecast a loss of 525,000 jobs in the month.

According to the Labor Department’s monthly jobs report, the unemployment rate rose to 7.2% last month from 6.7% in November and higher than economists’ forecasts of 7%.

And with October and November job numbers revised downward by 320,000 and 51,000, respectively, we’ve effectively lost 895,000 more jobs with just the new news in today’s report (524K + 320K + 51K).

That 2.6 million jobs have been lost in all of 2008 for all of the economy is startling, but that’s a reduction in total jobs (private plus government) of “just” 1.9 percent. It’s a much more distressing story when you dial down to what’s happened to private-sector jobs, manufacturing jobs, and auto industry jobs:

• Total private-sector jobs fell by 2.77 million in 2008, or a decline of 2.4 percent;
• total manufacturing jobs fell by 791,000 in 2008, or a decline of 5.7 percent;
• total production jobs in manufacturing fell by 712,000 in 2008, or a decline of 7.2 percent;
• and total auto manufacturing jobs (motor vehicles and parts) fell by 161,500 in 2008–a 16.8 percent decline (from 962,600 jobs in December 2007 to just 801,100 jobs in December 2008).

Here a link to the December 2008 employment report from the Bureau of Labor Statistics, and to the historical data I used for the above calculations.

Comments

[John Lounsbury:]

What happens in 1Q/2009 for new unemployment claims will be very prescient for what happens in the economy for the rest of the year. If new claims plus 4Q/2008 adjustments total more than 1.5 million, reaching the bottom of the recession in 2009 becomes much less likely. If the second quarter is similar we can start speculating whether the recession will bottom in the first half or the second half of 2010. My opinion is that it will take these claims to fall below 1.2 million for a quarter to give high probability that the bottom of the recession is near (or just passed).

Jan 09 04:41 PM

[MarvinMBA:]

We have to reverse the outsourcing of US jobs. Every new technology should start here with the R and D and end here with the factory and American workers. After this downdraft is over, technology will have improved sufficiantly in manufacturing so that our competitors overseas will have obsolete manufacturing equipment and we can beat them on the rebound by going high tech in manufactureing...incid... R and D and engineering tend to follow manufacturing so we have a strong case to keep the whole ball of way here in the good old USA STARTING NOW...this is where our investment bucks from Uncle should go into right now...permanent job formation along with the r and d and engineering to innovate and support a permanant job base...MarvinMBA

Jan 09 08:30 PM

[Moon Kil Woong:]

I'm amazed the market hasn't factored this in. Q1 09 will be closer to 600-700k losses per month. has the market factored that in?

Of course the pull back is also the end of end of the year window dressing and rebalancing. I surmise, an Obama stimulus can only slow the jobless declines not reverse them. The market must find its own balance. So far, little has been done to quell the uncertainty and increase transparency the market so very badly needs.

Jan 10 05:30 AM