Australia’s unemployment rate could reach 5% in figures due out this Thursday, but that would be a long way short of America’s rate which could be double that by midyear, according to projections from US analysts made after Friday night’s terrible February jobs numbers.
In fact there’s every chance the American unemployment rate could reach 10% from June-August onwards, with the under employment rate soaring past 18%.
The job losses and the way it is happening have all the hallmarks of a long, nasty slump in employment. More people are dropping out of the workforce, more people are on short hours, more are people looking for work for much longer periods of time.
The rate of job loss in the last four months to the end of February has been so great that the 8.1% rate reached in February was the highest since late 1983. And since the recession started in December 2007, the economy has shed 4.4 million jobs, with more than half that number lost in the last four months.
The 25 year high was reached after 651,000 jobs were lost last month, and a further 161,000 job losses were added to the December and January figures.
On top of this an increasing number of the jobless are not bothering to look for work: Friday’s report showed that the number of people who would like work but have not looked in the last month reached 2.1 million, a rise of more than 450,000 in the past year.
The unemployment rate including discouraged workers was 11.3%, up from 10.8 per cent in January; a total of 12.5 million people were unemployed last month, according to the Labor Department report. More worrying was the level of under-employment, a measure of the unemployed, people working part-time for economic reasons and those who have given up looking for work, surged to 14.8% — the highest on record since the figure was included in the report in 1994 — from 13.9% in January.
The Labor Department also recorded a sharp rise in the number of people experiencing long periods of unemployment, with 2.9 million people having been unemployed for 27 weeks or longer in February, compared to 1.3 million in January.
“We’ve only had maybe 10 months where we’ve lost 500,000 jobs in the history of our series. This is four of the 10, all in a row. We’ve never had four straight months of job losses in excess of 600,000,” said Bureau of Labor Statistics Commissioner Keith Hall.
Adding in the revisions to December and January, there are more than 800,000 fewer jobs in February than were previously reported for January, while the unemployment rate is higher than at any time since December 1983. Unfortunately, the weekly jobless claims data suggest more of the same is coming for March. It appears that the economy is contracting at a 6% or so pace in the first quarter, following a 6.2% drop in the fourth quarter. It is unlikely to be long before we hear calls for more stimulus in Washington.
Losses in February were broad based, with only government, education and health services hiring.
The manufacturing sector shed 168,000 jobs, after 257,000 were dropped in January, while the construction sector lost 104,000 jobs after losing 118,000 in January. The service sector — grouping industries such as airlines, hotels, banks and restaurants — slashed 375,000 positions after shedding 276,000 in January.