Recovering Economy Still Sheds Jobs, but at Slower Pace; Pattern Follows Two Previous Recessions
Byline: David M. Dickson, THE WASHINGTON TIMES
Despite Thursday's Labor Department report that first-time claims for jobless benefits tumbled by 22,000 last week, the good news did little to dispel fears that the U.S. economy is enmeshed in its third consecutive jobless recovery.
Although layoffs have declined significantly from their peak, hiring has yet to pick up substantially, said Andrew Gledhill of Moody's Economy.com.
Most economists say that America's longest, deepest post-World War II recession ended in July or August.
U.S. gross domestic product, which represents the value of all goods and services produced in the United States, increased at an annual rate of 2.2 percent during the July-to-September period, prompting most economists to tentatively declare that the downturn ended during the first two months of the third quarter.
However, the U.S. economy continued to suffer net job losses through November, when payrolls declined by 11,000 jobs. During December, according to Thursday's Labor Department report, a weekly average of 460,250 workers filed initial claims for unemployment benefits.
To be sure, the monthly pace of net job losses has clearly moderated.
During the first quarter of 2009, when U.S. GDP plunged at an annual rate of 6.4 percent, the economy lost nearly 700,000 jobs per month, according to payroll information supplied by firms. During the third quarter, as the economy resumed growth, U.S. employment fell by an average of 199,000 jobs per month. (The unemployment report for December will be issued Jan. 8.)
During October and November, job losses totaled 111,000 and 11,000, respectively. But the unemployment rate, which is determined by a survey of U.S. households, jumped from 9.8 percent in September to 10.2 percent in October and remained in double digits (10 percent) last month.
After starting the year with the heaviest downsizing in nearly a decade, the number of job cuts declined dramatically in the second half of 2009, providing hope for an eventual job-market turnaround, according to an outlook report recently released by Challenger, Gray & Christmas, a global outplacement firm. The turnaround should become more evident in 2010, as job creation finally begins to outpace job losses.
The report warned, however, that the unemployment rate could remain stubbornly high, as millions of Americans who abandoned the job search out of frustration - and, therefore, [were] not counted among the unemployed - re-enter the labor pool.
Since the recession began in December 2007, the private sector has lost more than 8.1 million jobs, including 1.7 million in construction and 2.2 million in manufacturing. Meanwhile, the government sector has added 163,000 workers to its taxpayer-funded payrolls since December 2007. The unemployment rate has more than doubled since the recession erupted, jumping from 4.9 percent in December 2007 to 10 percent in November 2009.
Private forecasters expect the economy will continue to jettison jobs well into next year.
We see private employment turning higher in the second quarter of 2010, IHS Global Insight economists Nariman Behravesh and Nigel Gault said in their December forecast. Overall, payroll job gains will probably return by March 2010, given the extra kick from census hiring. The forecasting firm expects average monthly payroll employment to decline by 0.9 percent in 2010 compared with 2009.
The 2010 unemployment rate will jump to 10.2 percent from 9.3 percent for 2009, according to the IHS Global Insight forecast. …