US Loses 2.6 Million Jobs in 2008 - What"s Next?
Including december job losses the US economy lost nearly 2.
6 million jobs in 2008.
Of those, 1.
9 million vanished in just the final four months of the year (524,000 jobs were cut last month).
That's the highest annual decline since the end of World War 2.
The key question now is "Will 2009 be as bad?" Is it possible that 2009 will be worse? We know that the jobs lag the cycle because employers don't want prematurely to fire someone, but it's clearly nasty recession and there is no choise for them.
Employers start doing the math and they see that there is no way to reduce expenses than to fire emplayees.
That's what we've seen during the last few months, and, probably, what we'll see during next several months.
In August 2008 jobless rate equaled 6,2%, in December 2008 it reached 7,2%.
Average work week plunged to the all-time low 33.
3 hours a week, well below the expectations.
It's a leading signal of the future job cuts.
We have more pending job guts set up for the first quarter and in January 2009 we can see higher job declines than in December 2008.
John Herrmann of Herrmann Forecasting predicts that next month number of job cuts can be twice as high as in December 2008.
However, we have to say that stock indices may start to rise before the unemployment rate reaches its peak.
For example, in October of 2002 S&P500 reached its bottom after falling down during several years.
Unemployment rate continued to rise at the same time continued to rise till the middle of 2003, when it peaked and started to come down.
So there was 6-8 months lag when stocks were going up while unemployment was still going up.
It's possible to explain such situation by suggestion that a lot of people came back to labour force after recession period of 2000-2002 ended.
While they were looking for jobs they were counted as unemployed.
But it's too early consider such situation to be repeated, because it's pretty long time to wait for those times when current economic slowdown reaches its bottom.
6 million jobs in 2008.
Of those, 1.
9 million vanished in just the final four months of the year (524,000 jobs were cut last month).
That's the highest annual decline since the end of World War 2.
The key question now is "Will 2009 be as bad?" Is it possible that 2009 will be worse? We know that the jobs lag the cycle because employers don't want prematurely to fire someone, but it's clearly nasty recession and there is no choise for them.
Employers start doing the math and they see that there is no way to reduce expenses than to fire emplayees.
That's what we've seen during the last few months, and, probably, what we'll see during next several months.
In August 2008 jobless rate equaled 6,2%, in December 2008 it reached 7,2%.
Average work week plunged to the all-time low 33.
3 hours a week, well below the expectations.
It's a leading signal of the future job cuts.
We have more pending job guts set up for the first quarter and in January 2009 we can see higher job declines than in December 2008.
John Herrmann of Herrmann Forecasting predicts that next month number of job cuts can be twice as high as in December 2008.
However, we have to say that stock indices may start to rise before the unemployment rate reaches its peak.
For example, in October of 2002 S&P500 reached its bottom after falling down during several years.
Unemployment rate continued to rise at the same time continued to rise till the middle of 2003, when it peaked and started to come down.
So there was 6-8 months lag when stocks were going up while unemployment was still going up.
It's possible to explain such situation by suggestion that a lot of people came back to labour force after recession period of 2000-2002 ended.
While they were looking for jobs they were counted as unemployed.
But it's too early consider such situation to be repeated, because it's pretty long time to wait for those times when current economic slowdown reaches its bottom.