The Payroll Plunge

The Labor Department reported a net job loss of 651,000 during the month of February and an unemployment rate of 8.1 percent, the highest in 25 years. Payrolls were also revised downward for the prior two months, the December total adjusted from -577,000 to -681,000 and the January figure revised from -598,000 to -655,000 for a combined downward revision of 161,000.

The revised job loss in December was the largest monthly decline since 1949 and, over just the last four months, more than 2.5 million jobs have vanished.

By category, the story remains largely the same as it has been for many months with manufacturing, construction, and trade losing jobs at a fast pace. But, professional and business services led the way down in February with a decline of 180,000 paced by a net decline of 78,000 in temporary help, a key indicator for economic activity which points to further weakness in the economy.
Stalwarts health care and government were the only groups to add jobs as, surprisingly, local governments added 12,000 positions last month.

Comments

[Mad Hedge Fund Trader]

This may be the darkness before the dawn. February nonfarm payroll came in at -651,000, taking the unemployment rate up to 8.1%, a 25 year high. The unemployment rate in California is now well over 10%. There were huge revisions up in the December and January figures. Remember when the market used to have a heart attack over a job loss of 100,000? Those were the days! More than 4.4 million workers have lost their jobs since December, 2007, taking the total unemployed to a record 12.5 million. It may be only a matter of months before we surpass the 1981 peak unemployment rate of 10.8%. These figures suggest that the current quarter GDP could be as low as -8%, the worst since the thirties.

2009 Mar 06 03:54 PM

[patio]

This may be whistling through the graveyard, but it occurs to me everything is happening at warp speed. I rather doubt the recessions of '73 and '82-84 unfolded so rapidly, information flow was so much slower then.
Is it not possible that anyone who needed to reduce the workforce has done so, and other contractions as well? We might be approaching a leveling off.
Of course, one other alternative ( there are many possible paths ) is that we are indeed in a global deflationary spiral that will just keep gathering momentum like an avalanche. We can hope for the former.

2009 Mar 07 07:55 AM

[TeresaE]

See all the shrinkage before 2004's housing boom employed everyone?

Those were manufacturing and "high tech" (primarily Y2K or dotcom) losses that the corporations, government and clueless told us were good for us.

Housing and the associated credit, WAS the BULK of our employment. Now with that over, what are we going to do now?

And why are we still importing foreign, entry level IT workers when Americans with student loan debt cannot get a job?

We have been sold out and our public and/or uber liberal or uber corporate educations keep us from adding 2+2 together.

2009 Mar 07 09:15 AM

[Dave Wrixon]

If you study how the previous months have been revised upwards I think that is extremely unlikely. You can pretty much count on 250K outstanding under-estimates from January and February before you start counting March. Although on the surface of things it looks as though things are levelling off, beware not to compare Apples with Oranges. The intial estimates for this months should be compared with initial estimates for previous months. If you do this you will see things are still getting worse in terms of the rate of decline.

Dec 524K, Jan 598K and Feb 651K

If you make the adjustment for December figure to the February figure then real number would seem to be 846K.

Even when the rate of decline starts to ease back that is probably only an indication that you are about half way down. It will take at least another year before the total numbers of unemployed start to come down. And frankly even that is being optimistic.


On Mar 06 03:54 PM The Mad Hedge Fund Trader wrote:

> This may be the darkness before the dawn. February nonfarm payroll
> came in at -651,000, taking the unemployment rate up to 8.1%, a 25
> year high. The unemployment rate in California is now well over 10%.
> There were huge revisions up in the December and January figures.
> Remember when the market used to have a heart attack over a job loss
> of 100,000? Those were the days! More than 4.4 million workers have
> lost their jobs since December, 2007, taking the total unemployed
> to a record 12.5 million. It may be only a matter of months before
> we surpass the 1981 peak unemployment rate of 10.8%. These figures
> suggest that the current quarter GDP could be as low as -8%, the
> worst since the thirties.

2009 Mar 07 01:20 PM

[Al-USA]

So government and healthcare are the only ones adding jobs right? Well, why could that be? Maybe because they primarily hire people for work that needs to be done and not for profits?

That's what all this is about, the capitalist bosses are just not making as much profits as they would like, so, they cut and cut... But, as they do so, they also get rid of the higher consumption that those laid off workers would otherwise do and they scare the remaining workers who then consume even less.

Obviously, this is a potentially fatal flaw in the economic system this country is using and, aside from a massive external shock, perhaps a World War, it seems destined for an extended L shaped recession/depression scenario.

Or, one could start all over with a better economic system. Why not? What's the point of an economic system if the majority of the people derive no benefit?

2009 Mar 07 02:50 PM

[Rob Viglione]

Government does not operate within the realm of reality. They perpetually hire and grow, irrespective of productivity and true operating requirements. Downturn or not they will spend more...heck, it's even considered GOOD to borrow, spend, and print during downturns, according to macroeconomics!

Whereas most individuals have the sense to scale back during tough times, government has no such prerogative.

2009 Mar 07 02:58 PM