The Bureau of Labor Statistics September non-farm payroll report showed that the economy lost 159,000 private sector jobs in September. This is the ninth straight month of losses, putting the year-to-date job loss toll at 760,000 and the 12-month toll through September at 724,000. BLS also reported that 9.5 million people are unemployed. This is a 6.1% unemployment rate, up almost 1% from three months ago and up 1.4%—or 2.2 million net unemployed workers—from a year ago. Once again, many are calling this a “jobs recession” but not a technical recession defined by two consecutive quarters of negative GDP growth.
It’s critical to note that that employed workers include 6.1 million workers who would like to work full time but are working part time because their hours had been cut back or they were unable to find full-time jobs. This forced-into-part-time-work category is up 1.6 million since last September. This is the fine print of the jobs report—the headline statistics shows that 6.1 million people are employed, but this statistic shows that these 6.1 million workers are just hanging on. For these workers the recession is real, not technical.
Recession technicians argue the economy is not in a recession because 2Q2008 GDP released last week showed a 2.8% gain, and backing up two quarters, 4Q2007 GDP was -0.2%, 1Q2008 was +0.9%. The NBER officially calls a recession if there are two consecutive quarters of GDP growth. But as we discussed when the last 2Q GDP came out, it’s very difficult to call a recession because GDP numbers are constantly revised. The dismal jobs data leads to weaker consumers who account for at least two-thirds of GDP. That means more downward pressure on housing and markets in general.
Like we said after last month’s jobs report, by any practical definition, we’re experiencing at least a certain level of recession.
Chart 1 below shows the jobs growth trend since January 2007 to present. Chart 2 below shows which industries jobs were lost or gained in August. Here is the full September 2008 employment report.
CHART 1: MONTHLY JOB GAIN/LOSS JANUARY 2007 TO SEPTEMBER 2008
CHART 2: SEPTEMBER 2008 JOBS BY SECTOR