According to the BLS report yesterday, the latest job market numbers show a recession that's deepening. A total of 1.9 million jobs have been lost so far this year, with two-thirds of that in the past three months.
The Labor Department’s jobs data showed that the economy shed 533,000 jobs in November, the worst one month decline since December 1974 (though the number in 1974 represented a greater percentage of total workers, so the impact isn’t directly comparable). However, the composition of the declines was very different in the two periods. In December 1974, the drop in employment was almost two-thirds concentrated in the manufacturing sector, and less than a quarter in the services industry. The economy has changed drastically since then. Last month’s decline was less than a sixth in manufacturing, and more than two-thirds in services.
A loss this year of about 2.3 million looks likely, and losses in 2009 could total 3 million. The unemployment rate, which rose in November to 6.7% from 6.5% the previous month, is headed close to 9% in 2009. The losses are widespread, with gains only in education, health care and government.
As layoffs increase, incomes shrink and so does consumer spending, inducing firms to continue cutting payrolls. Making conditions worse are tighter lending standards by banks that hurt companies and their customers. While the rising unemployment rate is disturbing, it's still nearly four percentage points below the 10.8% peak hit at the end of the 1981-82 recession.
Expect the economy to possibly show some signs of improvement by summer of 2009, but remember that job losses typically continue for a while after a recession ends.