The U.S. economy lost 524,000 jobs in December, boosting the unemployment rate from a revised 6.8 percent in November to 7.2 percent—a level most economists did not expect to see until 2009.
While December's job losses were not as steep as the revised 584,000 jobs cut in November, the overall employment picture indicated by the Labor Department's report was rather ugly. The country lost 154,000 more jobs during October and November than had previously been reported. That means 1.9 million jobs have been lost in the last four months. The grand total for job losses since the start of the recession in December 2007 stands at 3.6 million. According to official statistics, there are now 11.1 million Americans unemployed and searching for work. The job cuts in 2008 were the most in a single year since 1945, although it's important to note that the workforce has nearly tripled since then.
Is anyone hiring? The breadth of the job losses has widened as the recession has progressed. In December, employers in nearly every industry trimmed payrolls. But government and healthcare have continued to add jobs.
Which industries were hardest hit? In December, manufacturing saw its steepest one-month cut in more than seven years, with nearly 150,000 jobs lost. The biggest slices were in fabricated metal products and, no surprise, motor vehicles and parts. Construction took another big hit, losing 101,000 jobs in the month—the 18th consecutive month of losses. The retail sector lost 67,000 jobs, bringing its total loss for the year to more than a half-million.
What about all the part-timers? The number of workers in part-time jobs who want full-time work reached 8 million last month—3.4 million higher than a year ago. Many experts look at the government's U-6 employment measure, which is a better gauge of underemployment. It includes the number of unemployed and the number of marginally attached workers and part-time workers who want full-time jobs. U-6 has risen to 13.5 percent of the workforce, from 8.7 in December 2007.
What are the experts saying?
Richard Moody, chief economist at Mission Residential: "The speed and the breadth of the deterioration in the U.S. economy since September are staggering. With the credit markets still in a dysfunctional state and any fiscal stimulus package months away from being agreed upon, let alone implemented, the outlook for the U.S. economy over coming months is growing increasingly bleak. Even with passage of a large fiscal stimulus package, labor market conditions will continue to deteriorate through 2009, though the pace of decline will moderate, with the jobless rate likely rising into early 2010."
David Greenlaw and Ted Wieseman, economists at Morgan Stanley Research: "The employment report confirmed that the labor market is deteriorating at a rapid clip. The overall tone of the report was somewhat weaker than economists' expectation but probably not as bad as the markets had feared.... The biggest surprise in the data was the magnitude of the jump in the unemployment rate (from an upwardly revised 6.8 percent in Nov to 7.2 percent in Dec). The swing occurred despite a decline in the labor force, as the household survey measure of employment plunged 806,000. Also, the average workweek posted an unusually large dip—from 33.5 hrs to 33.3 hrs. The swing was broadly based across almost all of the major industry groups. A decline in the workweek tends to be a precursor of future job loss.... We look for several more months of sharp payroll declines and rising unemployment. Indeed, we now expect the unemployment rate to reach 9.5% by the end of 2009."
Joshua Shapiro, chief U.S. economist at MFR: "All in all, another terrible job market report. For 2008 as a whole, nonfarm payrolls fell by almost 2.6 million (about 75% of which occurred in the final four months of the year), which was the most in absolute terms since 1945."