The Employment Situation and the Future

The economy is clearly experencing major shifting as a result of the Fed money printing slowdown during the Summer of 2008. We fully expect this trend to reverse itself much sooner than most expect. But for those who think we are some how off on a wrong track with our analytical senses given the current downturn and our optimistic outlook (of sorts). Please keep in mind that we warned about the severity of this downturn all summer, here,here, here, here, here, here, here and here. Go back and try to find others who in the summer were as clear about the current problems as we were. There were a few, but not many. Anyway the worst is about over (Sort of). Here are the details on how messy it did get.

Nonfarm payroll employment declined sharply in December, and the unemployment rate rose from 6.8 to 7.2 percent, according to the Bureau of Labor Statistics. Payroll employment fell by 524,000 over the month and by 1.9 million over the last 4 months of 2008.

In December, the number of unemployed persons increased by 632,000 to 11.1 million and the unemployment rate rose to 7.2 percent.

The unemployment rates for adult men (7.2 percent), adult women (5.9 percent), and whites (6.6 percent) increased in December. The jobless rates for teenagers (20.8 percent), blacks (11.9 percent), and Hispanics (9.2 percent) were little changed over the month. The unemployment rate for Asians was 5.1 percent in December (BLS did not provide comparison numbers for Asians).

Among the unemployed, the number of job losers and persons who completed temporary jobs rose by 315,000 to 6.5 million in December. Over the past 12 months, the size of this group has increased by 2.7 million.

As would be expected, the capital goods industry continues to be heavily impacted by the downturn.

Manufacturing employment fell by 149,000 in December, the largest over-the-month decline since August 2001. Factory job losses totaled 791,000 in 2008, with nearly half of the decrease occurring in the fourth quarter. In December, declines were widespread among the component industries. The largest job losses occurred in fabricated metal products (-28,000) and motor vehicles and parts (-21,000).

Employment in construction continued to decline (-101,000) in December and has fallen by 899,000 since peaking in September 2006. Over the month, job losses occurred throughout the industry.

Within professional and business services, the temporary help industry lost 81,000 jobs in December, bringing job losses in 2008 to 490,000. In December, employment also fell in the management of companies and enterprises (-8,000) and in architectural and engineering services (-7,000).

Indeed, even in the retail sector, job loss was focused on what I would consider capital goods, i.e. consumer durables. Employment in retail trade declined by 67,000 in December and by 522,000 for all of 2008. In December, employment decreased in automobile dealerships (-22,000), furniture and home furnishing stores (-8,000), and electronics and appliance stores (-5,000).

Health care and education sectors together rose by 45,000 jobs. Not surprisingly government employment also rose, by 7,000.