The Bureau of Labor Statistics August non-farm payroll report showed that the economy lost 84,000 jobs in August. This is the eighth straight month of losses and, after June and July job losses were revised worse by 58,000 more than previously reported, the economy has lost 605,000 so far this year. BLS also reported that 9.4 million people are unemployed. This is a 6.1% unemployment rate, up .9% from three months ago and up 1.4%—or 2.2 million net unemployed workers—from a year ago. Many are calling this a “jobs recession” but not a technical recession defined by two consecutive quarters of negative GDP growth.
It’s important to note that employed workers include 5.7 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 1.2 million since last August. For these workers the recession is real, not technical.
Recession technicians argue the economy is fine because 2Q2008 GDP released last week showed a 3.3% gain, but those numbers are preliminary. Q42007 GDP was -0.2%, and next month we’ll find out if Q12008 GDP of 0.9% and Q22008 GDP of 3.3% will be revised and push Q1 into negative territory. If so, we’d have two consecutive negative quarters, and the NBER would declare an official recession. But like Fed Chairman Ben Bernanke has said: this call is often “subjective” and usually “after the fact.” 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.
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 August 2008 employment report.
CHART 1: MONTHLY JOB GAIN/LOSS JANUARY 2007 TO AUGUST 2008
CHART 2: AUGUST 2008 JOBS BY SECTOR