Page last updated at 00:40 GMT, Saturday, 6 December 2008

Putting the job losses in context

US unemployment rate

Karen Nye
Business Reporter, BBC News, New York

The United States economy shed 533,000 jobs in November, marking the largest monthly job loss since 1974, during the recession triggered by the first oil shock in 1973.

Downward revisions to the September and October employment reports pushed the tally of job cuts to 1.2 million over the three-month period, so the pace of job losses has accelerated since the beginning of 2008.

This is a dramatic development, indicating that the US economy has lurched badly during the last few months.

It's not just the number of job losses, but the sectors hit by layoffs.

During the first part of the year, construction and manufacturing dominated the monthly employment survey, so optimists could write-off the construction jobs losses as part of a natural "correction".

This followed the burst housing bubble, and the manufacturing job losses were seen as part of a long-term, structural change in the US economy, with manufacturing done more efficiently overseas.

In November though, 82,000 construction job losses and 85,000 manufacturing job losses were joined by a steep 370,000 fall in service-related jobs.

We are looking at a series of economic figures that are the worst since the early 1990s recession, the worst since the early 80s, and even the early 70s
Karen Nye

The services sector accounts for as much as 85% of the US economy, so even if a group of elite economists hadn't conceded this week that the American economy is officially in recession, the November employment report would have given us a very strong indication: the recession is real.

A big red light flashing in November's jobs report is the contraction, rather than expansion in seasonal jobs, like retail and hospitality. Normally, employers staff-up to meet demand for holiday shopping and Christmas parties.

Unhappy holidays

But employers are clearly not anticipating a happy holiday, so they have actually reduced the total number of retail jobs by 91,000 and the total number of leisure and hospitality jobs by 76,000.

Retailers now are putting up signs touting sales, and "value," a big change from the usual holiday season initiated by "Black Friday".

This is the term coined to describe the first shopping day after the American Thanksgiving holiday, when retailers traditionally crossed over into the "black," or profitability.

One persistent source of job creation, government, has also shown signs of waning; government jobs increased by just 7,000 last month, which economists attribute to constraints in state and local government budgets.

Here's hoping the incoming President, Barack Obama, will include government jobs in his ambitious, 2.5 million job creation plan.

Jobseekers at a jobs fair in California
Even government jobs are being hit

Even right-leaning financial types are calling for hundreds of billions in stimulus, not unlike the public works programmes for highways and bridges, during the 1930s.

We also saw the number of involuntary part-time workers increase to 7.3 million. These individuals would have preferred to work full-time, but either had their hours cut back, or couldn't find full-time work.

Those people won't be able to afford the Christmas they'd like.

At the same time, the unemployment rate rose to 6.7% from 6.5% in November.

The last time it climbed to 6.7% was in September 1993. By comparison, during the post-war period, US unemployment peaked in November and December of 1982 at 10.8%.

As a further historical comparison, one in four Americans did not have jobs during the Great Depression in the 1930s, so the unemployment rate then hit 25%.

A month ago, with many pundits crying doom and gloom, I cautioned that the economic figures didn't back up the forecast.

Now, we are looking at a series of economic figures that are the worst since the early 1990s recession, the worst since the early 80s, and even the early 70s.

Let's hope we don't move on to comparing things to the worst since the 1930s; that really would be dramatic.



Print Sponsor


RELATED INTERNET LINKS
The BBC is not responsible for the content of external internet sites


FEATURES, VIEWS, ANALYSIS
Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit

BBC navigation

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.

Americas Africa Europe Middle East South Asia Asia Pacific