Academic journal article ABA Banking Journal

Employment Has Not Bottomed

Academic journal article ABA Banking Journal

Employment Has Not Bottomed

Article excerpt

THE U.S. UNEMPLOYMENT rate rose to 8.5% in March. By comparison, the rate topped out at 7.8% following the 1990-1991 recession and at 6.3% after the 2001 recession. Considering that the unemployment peak normally comes some time after a recession ends--15 months after 1990-1991 and 19 months after 2001--and because there is no evidence yet that the current downturn is nearing an end, a disturbingly higher unemployment rate appears inevitable.

Payroll employment has now declined for 11 straight months. Job losses began to accelerate last summer, to an average pace of over 800,000 monthly since December. A total of 5.8 million jobs have been eliminated since the current downturn began in late 2007--3.3 million this year. Again in comparison, 1.8 million jobs were lost in the 1990-1991 recession and 1.4 million in the 2001 recession. Weekly unemployment claims have also trended upward since the beginning of 2009, to around 675,000 per week. This level also exceeds that of the past two recessions.

Service industries (aside from mortgage finance) had shown modest employment growth through most of the past year. Since October, however, service sector employment has also deteriorated. In banking, employment is down 3.2% over the last year and a half. The only sectors that have continued to add jobs are health and education and government, but the latter is weakening dramatically with growing state and local government budget shortfalls. …

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