Some Reflections on U.S. Job Losses And Unemployment

March 6, 2009

In the five reported months to February since the engineered bankruptcy of Lehman Brothers, the U.S. economy shed 2.964 million jobs, and the unemployment rate climbed 1.9 percentage points to 8.1%.  The monthly pace of job destruction was 662K in December-February, the greatest three-month drop since the 1930’s.  The six-month erosion rate of employment was 548K per month, up from 147K per month in the previous six months to August 2008.  Employment had increased weakly at a rate of 64K per month during the six months to February 2008.  The three factors that grease personal consumption — income and job security, asset wealth, and credit availability — are each deeply in trouble.  Consumption has to stop bleeding for the recession to flatten.  Instead, escalating deterioration in the factors that determine consumption suggest that the decline of household spending could intensify, not abate.  A $787 billion fiscal stimulus, which faces a huge battle in the senate, is going to be no match for these headwinds.  Without a stabilized U.S. economy, the global recession could easily worsen, too.  China is important but not big enough for Beijing’s deficit spending plans to offset everything else that’s moving negatively. 

Copyright 2009 Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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