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U.S. Loses 533,000 Jobs in November; Joblessness at 6.7%

Posted by lawman2 on December 6, 2008

unemployment600_1

The government’s report of vast job losses in November, the largest monthly decline in a generation, puts more pressure on Congress and the administration to move quickly on a fiscal stimulus package, mortgage relief and perhaps financial aid for Detroit’s big automakers.

Multimedia

Job Losses in NovemberInteractive Graphic

Job Losses in November

The Labor Picture in NovemberGraphic

The Labor Picture in November

The Faces of the UnemployedSlide Show

The Faces of the Unemployed

 

The nation’s employers shed 533,000 jobs in November, the 11th consecutive monthly decline, the Bureau of Labor Statistics reported Friday. Not since December 1974, toward the end of a severe recession, have so many jobs disappeared in a single month, and the current recession appears to be just gathering steam.

“We are caught in a downward spiral in which employment, incomes and spending are collapsing together,” said Nigel Gault, chief domestic economist for HIS Global Insight. “With private spending frozen, we have no choice but to rely on a stimulus package to revive the economy.”

The unemployment rate rose to 6.7 percent, up just two-tenths of a percentage point from October, but six-tenths over the last three months. More significantly, the unemployment rate does not include all those too discouraged to look for work any longer or those working fewer hours than they would like. That “underutilization” rate, as the bureau calls it, rose to a record 12.5 percent in November, up 1.5 percentage points since September.

Noting that 1.9 million jobs have been lost since the start of the current recession a year ago, President-elect Barack Obama invoked public spending as the best way to get a dead-in-the-water economy moving again. “This painful crisis,” he said in a statement, is an opportunity “to improve the lives of ordinary people by rebuilding roads and modernizing schools for our children,” and investing in clean energy solutions.

The latest job numbers were stark evidence of the breakdown in consumer spending and business investment. Jobs disappeared from every sector of the economy except health care and state government, which mainly hired more educators.

“We have gone from recession into something that looks more like collapse,” said Ian Shepherdson, chief domestic economist at High Frequency Economics, referring to the accelerating job losses in recent months.

The job losses in November far exceeded the 350,000 figure that was the consensus expectation of economists.

“Business shut down in November,” said Mark Zandi, chief economist at Moody’s Economy.com. “Businesses are in survival mode and are slashing jobs and investment to conserve cash. Unless credit starts flowing again soon, big job losses will continue well into next year.”

The report on Friday by the Bureau of Labor Statistics included sharp upward revisions in job-loss figures for October (to 320,000, from the previously reported 240,000) and for September (to 403,000, from 284,000).

In addition, more than 420,000 men and women who had been working or seeking work in October left the labor force in November. Most presumably gave up looking for a job, the bureau’s report suggests. If they had continued that search, the unemployment rate in November would have been closer to 7 percent.

Seventy percent of the job loss was in the service sector, particularly in retailing, temporary work and hotel and restaurant employment. “The service sector had been holding up relatively well into this downturn, but now the service sector is just imploding,” said Michael T. Darda, chief economist at the research firm MKM Partners. “As goes the service sector, so goes the U.S. economy.”

The employment report increased the likelihood that Congress, with the support of Mr. Obama, will enact a stimulus package by late January that could exceed $500 billion over two years.

Mr. Obama issued a statement on Friday morning that called the employment report “a dramatic reflection of the growing economic crisis we face,” saying it was further evidence that “we need an economic recovery plan that will save or create at least 2.5 million more jobs over two years while we act decisively to maintain the flows of credit on which so many American families and American businesses depend.”

Under the stimulus plan, more than half the money would probably be channeled into public infrastructure spending. Many economists consider such investments an effective way to counteract, through federally financed employment, the layoffs and hiring freezes spreading through the private sector.

“Basically $100 billion of public investment in such things as roads, bridges and levees would generate two million jobs,” Robert N. Pollin, an economist at the University of Massachusetts, said. “That would offset the two million jobs that we are now on track to lose by early next year.”

The manufacturing sector has been particularly hard hit, losing about 600,000 jobs this year. That is roughly a third of the jobs lost since employment peaked in December and, in January, began its uninterrupted decline. Manufacturing layoffs seem likely to accelerate as the three Detroit automakers close more factories and shrink payrolls even more as they try to qualify for the federal loans they asked Congress this week to approve.

While manufacturing has led the way, the job cuts are rising in nearly every sector of the economy. “My sense is there is just a collapse in demand,” said Mark Levinson, chief economist for the union Unite Here, whose 450,000 members are spread across apparel manufacturing, hotels, casinos, industrial laundries, airport concessions and restaurants. “Our members are being laid off big time,” Mr. Levinson said.

The latest jobs report came during a week of compelling evidence that the American economy was falling precipitously. On Monday, the National Bureau of Economic Research ruled that a recession — the 12th since the Depression — had begun last December, even earlier than many people had thought.

That news was followed by fresh reports of cutbacks in construction spending, home sales, consumer spending, business investment and exports. And companies in every industry sector announced layoffs this week, including AT&T, the telecommunications company, with 12,000 job cuts; DuPont, the chemical company, 2,500; and Viacom, the media company, 850.

Even retail sales in the Christmas season were off sharply. The International Council of Shopping Centers on Thursday described November sales at stores open at least a year as the weakest in more than 30 years.

With all this in mind, and particularly the shrinking employment rolls, economists are estimating that the gross domestic product is contracting at an annual rate of 4 percent or more in the fourth quarter, after a decline of 0.3 percent in the third quarter.

“Our G.D.P. forecast for 2009 is now minus 1.8 percent, rather than minus 1 percent,” HIS Global Insight, a forecasting and data gathering service, informed its clients in an e-mail message this week, explaining that all the latest bad news left it no choice but to issue a sharp downward revision.

“We see the unemployment rate at 8.6 percent by the end of 2009,” Global Insight said.

John E. Silvia, chief economist at Wachovia, said the new unemployment data suggested that economic growth was falling at a rate of 5 percent in the fourth quarter. “There’s no quick fix here,” he said. “There’s no quick rebound.”

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By LOUIS UCHITELLE NYtimes

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