The Bureau of Labor Statistics October non-farm payroll report showed that the economy lost 240,000 private sector jobs in October. This is the tenth straight month of losses, putting the year-to-date job loss toll at 1,179,000. More than half of this decrease has occurred in the last 3 months. BLS also reported that 10.1 million people are unemployed, an increase of 2.8 million over the past 12 months. This is a 6.5% unemployment rate, up 1.7% from a year ago and a 14-year high. This is often referred to as a “jobs recession” but not a technical recession defined by two consecutive quarters of negative GDP growth.
Making these numbers all the more serious is the fact that there are now 6.7 million people who would like to work full time but are working part time because their hours have been cut back or they were unable to find full-time jobs. This forced-into-part-time-work category is up 645,000 in October alone, and up 2.3 million over the last 12 months. This is the fine print of the jobs report—the headline statistics shows that these 6.7 million people are employed and therefore not in the job loss category, but these 6.7 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 3Q2008 GDP released last week was the first negative number (-0.3%) in three quarters. The NBER officially calls a recession only if there are two consecutive quarters of GDP growth. But 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.
To reiterate our position for the past few months: 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 last month. Here is the full October 2008 employment report.
CHART 1: MONTHLY JOB GAIN/LOSS JANUARY 2007 TO OCTOBER 2008
CHART 2: OCTOBER 2008 JOBS BY SECTOR