Comparing last year’s job losses to those of to a greater degree than 60 years ago isn’t quite unencumbered. That said, there’session still room for things to get worse

By Peter Coy


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The U.S. is in the grip of a discouraging recession, but let’session not scare ourselves silly by making things seem worse than they positively are. Headlines blared "worst seeing that 1945" on Jan. 9 after the Bureau of Labor Statistics announced the U.S. management lost 524,000 jobs in December and 2.6 million in the place of 2008 while a whole. Fact is, it’session ridiculous to estimate relatively do job-work losses in 2008 to ones more than 60 years earlier, when the U.S. population and economy were much smaller.

In percentage terms, the U.S. lost 1.9% of its payroll employment in 2008, according to data released Jan. 9. That’s bad, all right. But it was only the fifth-worst on the list behind 1945 (6.6%), 1949 (3.4%), 1982 (2.3%), and 1944 (2.1%). That’session according to calculations by Harm Bandholz, an economist at UniCredit Group in New York. Bandholz, by the way, was one of the people who highlighted the "worst since 1945" in his research account headline.

In a note in face of the government report came out, financial blogger Barry Ritholtz warned in equalization of the enticement to exaggerate the significance of the December work at jobs loss. Ritholtz is bearish on the economy and reported, "I do not expect to see at all nature of jobs recruiting until deep into 2010 at the earliest." But he reported monthly numbers don’cheek by jowl reveal too plenteous as they fluctuate. Noted Ritholtz: "A 500k job loss is still less than a third of a percent of the labor force."

If you want to make long-term historical comparisons of recessions, a improvement measure to use is the unemployment rate. The Labor Dept. says it reached 7.2% in December, up from 6.7% in November. That’s bad. But it’session still not as bad as in the in season 1990s, when it reach 7.6%, let alone the early 1980s, when it topped out at 10.8%.

How Bad, How Fast?

Is it good news that things aren’familiarily quite as awful as the headlines say? Not exactly. It could just mean that, as bad as things seem now, the economy has room to obtain even worse. In fact, the U.S. competent housewifery almost certainly will lose more jobs this year. The only thing economists disagree adhering is whether the economy will get worse at a faster or a slower pace in the months ahead.

Certainly December was a gloomy month. The only sectors that posted gains were education and soundness care, and government. The good husbandry suffered big losses in deal out in small portions, manufacturing, erection, temporary help, and monetary theory, among other sectors. Swiss Re’s Chief U.S. Economist Kurt Karl wrote on Jan. 9 that one key indicator says the current recession will be at minutest as heavy as the one at the beginning of the 1980s. Capital Economics Senior Economist Paul Ashworth said on Jan. 9 he expects the U.S. unemployment rate to point at 9.5%—and not reach that level until the second half of 2010, nearly three years after the recession began.

On the relatively optimistic side of the economic outlook, Ellen Zentner, senior U.S. economist at Bank of Tokyo-Mitsubishi UFJ, said before the report that December 2008 might end up being the worst month of the recession in terms of job losses. Zentner was the most accurate forecaster of November payroll losses in Bloomberg’s monthly scan. She underestimated the loss, that turned out to have existence 533,000 jobs, except others were even further off. (The November job loss was revised upward on Jan. 9 to 584,000.)

Zentner thinks things will start looking up in the new year. "The buzz is that December’sitting numbers are abysmal, shocking even. But the general hope, or the feeling absolutely, is that December could be the worst of those dismal numbers," she says. "The losses will not be as great going forward."

Employers Front-Loading Job Cuts

Jessica Hoverson of MF Global (MF) in Chicago is gloomier than Zentner on the point the 2009 outlook. Before the report, Hoverson, who is a fixed-income and foreign-exchange futures analyst, said: "We see the next couple of months as exceptionally out of money. I wouldn’t be surprised if we moved into down 700,000 or 800,000 jobs [per month] in this environment."

Tig Gilliam, CEO of the North American group of temporary-help monster Adecco, says job losses in December and January are being amplified by employers who want to cut a lot now so they won’t have to trickle out smaller cuts in the months to arrive. Says Gilliam: "I’ve had in greater numbers and more conversations where companies are saying it’s conspicuous now that this economic turnaround isn’t coming nimbly. They’re remark we’ve got to get in front of this."

Original text: http://www.businessweek.com/bwdaily/dnflash/content/jan2009/db2009019_448255.htm?campaign_id=rss_null