If you thought the job market has been a tougher nut to crack than anyone thought, you were right.
From March 2008 to April 2009, about 1 million more jobs were lost than were previously estimated, according to the Bureau of Labor Statistics, in an annual benchmark revision released Friday. This means that instead of shedding 7.2 million jobs, the economy actually lost 8.4 million jobs during that time period.
“The revision is more than any other revision I can recall,” says Sung Won Sohn, a professor at the Smith School of Business & Economics, California State University at Channel Islands. “We’ve now lost more jobs than any other time since the Great Depression.”
The revision was included in a report on employment numbers for January, which showed that the economy lost 20,000 jobs during the month. This was somewhat worse than expected.
However, the unemployment rate, which is determined by a different survey, fell to 9.7 percent in January from 10 percent in December, according to the Bureau of Labor Statistics.
Despite the loss of jobs, which was mainly in the construction sector, the January numbers indicate that the tone of the job market has been improving, economists say. Average hourly earnings rose, the average length of the workweek increased slightly, and more firms hired temporary workers, which is sometimes a prelude to permanent hiring.
The White House likewise viewed the report as an improvement. In a statement, Christina Romer, chair of the Council of Economic Advisers, said she saw “encouraging signs of gradual labor market healing.” But, she added, “Obviously, the unemployment rate remains unacceptably high, and is even worse for certain demographic groups such as teenagers and black or African American workers.”
Republicans, meanwhile, tried to throw some cold water on the report. “Today’s report confirms that the US economy has lost nearly 3.3 million jobs since President Obama signed the trillion-dollar ‘stimulus’ into law,” said House Republican leader John Boehner of Ohio in a statement. “Americans are asking ‘where are the jobs?’ ”
Still, one encouraging sign for economists was a gain in jobs in the manufacturing sector. It added 11,000 jobs, mainly because of better employment in the auto and rubber and plastic industries.
“Auto workers were recalled to build back inventories depleted by incentive programs,” says Daniel Meckstroth, chief economist for the Manufacturers Alliance/MAPI in Arlington, Va. “If it were not for that, we would have seen a small decline.”
Mr. Meckstroth expects that manufacturers still have some room to push their current workforce with longer hours before they have to start large-scale hiring. “We’re past the point where we will see major job losses in manufacturing, but we are not at the point where it starts to consistently add jobs,” he says.
If the statistical gains in the length of the workweek continue, some economists might start to raise their estimates for gross domestic product in the first quarter. “It feels like it’s tracking at 3 to 3. 5 percent,” says Mr. Zandi, who had previously estimated that the economy would grow at a rate under 3 percent.
However, if the economy does grow at the higher rate, Zandi worries that it will slow later in the year. He also cautions that if the recent turmoil in the stock market continues, it could undermine business and consumer confidence.
On Friday morning, the stock market was basically flat – an improvement from Thursday, when the Dow Jones Industrial Average dropped 268.37, closing just above 10000.
According to Zandi’s estimate, it will take the economy about five to six years to get back to prerecession levels in terms of jobs. “This assumes very modest job growth this year and an average of 2 million jobs [gained] annually after that,” he says. “Two million a year is doable if history is a guide.”
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