Employers Slashed 80,000 Jobs in March(unemployment rate: from 4.8 to 5.1%)

AP ^ | 04/04/08 | Jeannine Aversa

[TigerLikesRooster]

Employers Slashed 80,000 Jobs in March

Friday April 4, 10:10 am ET

By Jeannine Aversa, AP Economics Writer

Employers Chopped 80,000 Jobs Last Month; Unemployment Rate Rose to 5.1 Percent

WASHINGTON (AP) -- Employers buffeted by talk of recession slashed 80,000 jobs in March, the most in five years and the third straight month of losses. At the same time, the national unemployment rate rose from 4.8 percent to 5.1 percent, the clearest signal yet that the economy might already be shrinking.

The new snapshot of the job market, released by the Labor Department Friday, underscored the damage that a trio of crises --in the housing, credit and financial sectors -- has inflicted on companies, jobseekers and the economy as a whole.

"The labor market has indeed turned south," said Joel Naroff, president of Naroff Economic Advisors. "That was the one last bastion of hope to stay out of a recession. Now the question is how deep and how long will it last?"

The unemployment rate was the highest since September 2005, when significant job losses followed the devastating blows of Gulf Coast hurricanes.

Job losses were widespread in March. Construction, manufacturing, retailing, financial services and various business services all racked up losses. That overwhelmed gains elsewhere, including in education and health care, leisure and hospitality as well as in government.

The new employment figures were much weaker than economists were expecting. They were anticipating a drop of 50,000 payroll jobs and the unemployment rate to rise to 5 percent.

The 5.1 percent rate is relatively modest by historical standards, but was nonetheless the highest in 2 1/2 years.

Job cuts in both January and February turned out to be even deeper. Employers got rid of 76,000 in each month. The elimination of 80,000 jobs in March was the most since March 2003, when the labor market was still struggling to recover from the 2001 recession.

The economy is suffering the effects of a housing collapse, a credit crunch and a financial system in turmoil. That's causing people and businesses to hunker down, crimping spending, capital investment and hiring. Those things in turn further weaken the economy in what has become a vicious cycle.

For the first time, Federal Reserve Chairman Ben Bernanke acknowledged Wednesday that the country could be heading toward a recession, saying federal policymakers are "fighting against the wind" in combating it. Many other economists and the public believe the recession already has arrived.

Bernanke wouldn't tip his hand about the Fed's next move. However, many economists believe the central bank will lower interest rates again when they meet later this month.

The Fed has taken a number of extraordinary actions recently -- slashing interest rates, providing financial backing to JP Morgan's takeover of troubled Bear Stearns and opening an emergency lending program for big investment houses. All the actions are ultimately aimed at limiting damage to the national economy.

With a public on edge, Congress, the White House and presidential contenders are scrambling to come up with their own relief plans even as they engage in a political blame game.

With the pace of hiring slowing down, the number of unemployed people increased to 7.8 million in March; workers with jobs saw only modest wage gains at the same time.

Average hourly earnings for jobholders rose to $17.86 in March, a 0.3 percent increase from the previous month. That matched economists' forecasts. Over the past 12 months, wages grew 3.6 percent. With lofty energy and food prices, workers may feel like their paychecks are shrinking.

Many analysts believe the economy shrank in the first three months of this year and could still be ebbing now. The government will release its estimate of first-quarter economic growth later this month. Under one rough rule, if the economy contracts for six straight months it is considered in a recession.

Bernanke, however, has said he is hopeful the economy will improve in the second half of this year, helped by the government's $168 billion stimulus package of tax rebates for people and tax breaks for businesses, as well as the Fed's rate reductions.

Still, even Bernanke predicted this week that the unemployment rate would rise in the months ahead. Some analysts say it could climb to 5.5 percent or higher by year's end.

[jamese777]

The UE rate was hovering near 8% when Bubba took office.”

I was trying to find some statistics about unemployment rates in 2000-2001 but everything I ran across sounded like it was a Clinton press release:

“http://money.cnn.com/2000/05/05/economy/employ/ May 5, 2000

NEW YORK (CNNfn) - The U.S. unemployment rate tumbled to a 30-year low of 3.9 percent in April, the government reported Friday, as worker-starved companies raised wages and went on a hiring spree that created 340,000 new jobs.

A sizzling economy in its record ninth year of expansion added 340,000 jobs outside the farm sector last month, the Labor Department said. That’s well above Wall Street expectations of 325,000, but below the upwardly revised 458,000 the month before.
________________________________

http://www.ded.mo.gov/researchandplanning/indicators/unemp/unemp-nov2000.stm

The national unemployment rate for November 2000 was 4.0%, a slight increase from last month’s rate of 3.9%.

---

Here’s a link to the unemployment rate by month for every President from Truman to George W. Bush in February of this year: http://www.miseryindex.us/urbymonth.asp

[RightWhale]

They say unemployment is 5%, but that counts those who are drawing unemployment. Those who have dropped out and are living in their parent’s basement are growing in number.

[remember]

Here’s a link to the unemployment rate by month for every President from Truman to George W. Bush in February of this year:
http://www.miseryindex.us/urbymonth.asp

I likewise looked at the employment data at the beginning of each presidential term since Truman and compiled the following table:

CHANGE IN POPULATION, LABOR FORCE, AND EMPLOYMENT BY PRESIDENTIAL TERM (in thousands)                                 

                     Monthly Average Change (in thousands)
                     --------------------------------------------          Unemploy-
                        Popu-    Labor Househld  Nonfarm  Private   No. of      ment
President    Mo Year   lation    Force   Survey Employed Employed   Months      Rate
----------- --- ---- -------- -------- -------- -------- -------- -------- ---------                                                                                                                     
Roosevelt   Jan 1941                               154.6    117.4       48      
Truman      Jan 1945                                57.8     65.3       48      
  "         Jan 1949     63.9     55.6     71.4    114.0     95.2       48       4.3
Eisenhower  Jan 1953    104.8     62.3     42.3     57.1     39.9       48       2.9
  "         Jan 1957    136.0     83.7     44.7     16.6     -3.1       48       4.2
Kennedy     Jan 1961    156.1     65.0     87.9    122.9     94.3       48       6.6
Johnson     Jan 1965    159.9    124.0    141.8    205.3    158.0       48       4.9
Nixon       Jan 1969    258.3    165.9    132.4    128.8     97.9       48       3.4
Nixon/Ford  Jan 1973    249.3    202.5    141.0    105.7     77.2       48       4.9
Carter      Jan 1977    237.8    225.4    208.9    215.4    188.2       48       7.5
Reagan      Jan 1981    172.5    139.6    132.2    110.9    111.4       48       7.5
  "         Jan 1985    172.1    180.5    216.8    224.6    194.6       48       7.3
G.H. Bush   Jan 1989    173.3    104.4     49.3     54.0     30.5       48       5.4
Clinton     Jan 1993    173.4    147.0    192.1    239.7    225.3       48       7.3
  "         Jan 1997    241.7    173.8    197.5    234.1    208.3       48       5.3
G.W. Bush   Jan 2001    228.1     87.1     51.0      0.1    -18.8       48       4.2
  "         Jan 2005    215.5    145.8    155.9    149.1    132.1       37       5.2
            Feb 2008                                                             4.8

In the process, I noticed a disturbing fact. Counting Bush's 2nd term up until now, there have been 15 presidential terms since 1949. The table shows that the unemployment rate went down during almost every term of a Democratic president and up during almost every term of a Republican president over that period. The only exceptions were Carter (when the unemployment rate stayed about the same) and both terms of Reagan and the second term of G.W. Bush (when the unemployment rate dropped). And with the unemployment rate rising to 5.1 percent now, nearly equal to the 5.2 percent at the start of this term, the exception of G.W. Bush's second term may not hold. Of course, the unemployment rate is doubtlessly affected by the majorities of both houses and many other factors. Still, it is good to be aware of this fact so as to be able to deal with it if it should come up.

There is further discussion of the job numbers at http://usbudget.blogspot.com/2008/03/job-growth-under-bush-and-prior.html. Also, following is a graph created from numbers in the above table:

[onguard]

Thanks. That’s a lot to digest. Some helpful sites there.

[nicmarlo]

More on Unemployment Rates
March 7, 2008

Over the past few days, we've been discussing job creation and the various ways to think about unemployment. This has been a long standing theme around here (Augmented unemployment rate, as well as the NILF issue -- Not In Labor Force).

See the list at bottom of BLS Alternative Measures of Labor Underutilization.

Since a picture is worth a 1,000 words, I'd like to point to some recent work by Prof Andrew A. Samwick of Dartmouth. Over at Vox, Baby, the good professor posted a terrific chart showing these different measures of unemployment:

I see two significant factors about these collectively measures of Unemployment:

First, the official (U3) measure, so favored by politicians, understates "real world" unemployment by about a third.

Second, and perhaps most important, since late 2006/early 2007, unemployment levels have bottomed and are now trending higher. And, we appear to be in the early parts of that cycle . . .

Table A-12. Alternative measures of labor underutilization (percent)

[Freedom_Is_Not_Free]

Of course, the way unemployment is calculated is DIFFERENT from the way it was calculated 50 years ago. So maybe the textbooks need to be updated...

[G Larry]

And what about 40 years ago?
And 30 years ago?
And 20 years ago?
And 10 years ago?

[Freedom_Is_Not_Free]

You are right. The economy has never been better. It is all just a lie by the VLWC to elect Hitlery...

And like the government says, the inflation rate is only 2%. Never mind it took $80 to fill my gas tank. Never mind that I spent $100 for groceries that used to cost me $80.

Never mind that Subway just killed their sandwich special after all these years. The economy has never been better. It’s all a big left-wing lie...

DOW 20,000 coming soon...

[G Larry]

What’s the matter?

Can’t stick to the subject and address unemployment rates?

[Freedom_Is_Not_Free]

This explains the differences in the way employment is country better than I could explain it.

http://www.nytimes.com/2008/03/05/business/05leonhardt.html?_r=1&oref=slogin

[Freedom_Is_Not_Free]

“counted” not “country”

[M. Espinola]

This is a sample of what’s coming.

[anglian]

http://newsbusters.org/blogs/tom-blumer/2008/04/05/ap-it-recession-no-longer-question-or-widening-agreement

[anglian]

The average unemployment rate during President Clinton was 5.2 percent. The average under President George W. Bush is just slightly below 5.2.

Seasonally adjusted civilian employment is 650,000 people greater than it was a year ago. Personal income grew at a strong half of one percent in just February. The economy slowed down significantly during the end of last year, but that was after a sizzling annual GDP growth rate of 4.9 percent in the third quarter.

Housing has obviously been a big drag on the economy, but many other sectors of the economy, such as exports, have been doing well, some extremely well. For example, aerospace exports increased by over 13 percent last year. http://www.bizzyblog.com/2008/04/04/the-march-employment-report/

[anglian]

http://www.bizzyblog.com/2008/04/04/the-march-employment-report/