The nation’s jobless problem is getting worse.
Layoffs are spreading to almost every sector of the economy as businesses cope with falling orders and rising losses. The economy has lost 4.4 million jobs since the recession began in 2007, more than in any other postwar recession. Most economists say they don’t expect to see much improvement over the short term.
The unemployment rate in February hit 8.1 percent, the government reported on Friday. That's the highest level since 1983 when the rate was 8.3 percent. At the same time, there was a net loss of 651,000 jobs in February, about on par with January and December, whose losses were more severe by a revised total of 161,000 jobs.
“We knew it would get worse before it gets better and this is worse,” says Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh. “There has been an amazing sharp and steady decline in jobs for the last four months and there is almost no place to hide.”
Even temp jobs cut
The economy last month experienced job losses in construction (104,000 jobs), manufacturing (168,000), retailers (40,000), and professional services (188,000). Companies also cut 80,000 temporary jobs.
The only sectors adding jobs were education, health services. and government. This has been the case for the last several months.
A broader measure of the jobs picture, which includes people who have stopped looking for work and people who are involuntarily working part-time, also deteriorated last month, jumping nearly a full percentage point to 14.8 percent from 13.9 percent. The economy has now lost 4.4 million jobs since December 2007, considered the start of the recession.
“We are heading for total job losses of at least 7 million and an unemployment rate peaking above 10 percent,” wrote Nigel Gault, chief US economist for IHS/Global Insight, in a research note on Friday.
Note of optimism?
“December was the worst month and February was a little less bad than January,” he says. “It’s small good news but it’s good news.”
Mr. Brusca says the slight improvement fits in with some other small improvement in economic data, such as the Institute for Supply Management surveys and the weekly jobless claims. “We may see an up phase coming soon,” he says.
Wall Street still glum
However, Mr. Hoffman says one of the normal leading indicators of a turnaround in the economy is the stock market. The stock market has been hitting new lows recently. “If it were to turn up, that might be a sign that maybe the worst is over,” he says.
The sharp loss in jobs is likely to mean that gross domestic product, the output of the nation's economy, will shrink again in the first quarter of this year. Hoffman estimates it will be close to the 6.2 percent decline in the fourth quarter of last year.
“That would make it the biggest back-to-back decline experienced since 1982,” he says.