Nonfarm payrolls were reported to be down 63,000 in February following a 22,000 decline in January. Those two consecutive monthly declines follow increases in nonfarm payrolls that averaged 80,000 in the fourth quarter of 2007 and 71,000 in the third quarter of 2007. Those recent monthly payroll data are depicted by the orange line to the right in the accompanying chart.
A review of the historical record (red line, green line, blue line) shows consecutive declines in nonfarm payrolls being characteristic of the past three recessions. Recession months are in bold.
The red line in the attached chart show the monthly changes in nonfarm payrolls during the economic slowdown that included the recession which officially started in 1981.
The green line depicts the behavior of the monthly change in payrolls during the slowdown that lead to the 1990 recession, and the blue line depicts the behavior of payrolls prior to and during the 2001 recession.
To date, the cumulative loss of 85,000 jobs is much less than what is typically seen during a recession, but will be seen by many observers as setting the stage for more severe and sustained declines in the future.
The start of things to come or a two month event, you decide.
Mark Serlin is the Chief Economist at Economic Strategies Inc. Prior to joining Economic Strategies, Mr. Serlin authored the widely distributed SERLINON economic indicator analysis service for Bridge Information Services. Mr. Serlin has also worked in the research departments of Bear Stearns, Ried Thunberg, and Manufacturers Hanover.
Comments
OIL PRICES CAUSE THIS HOLE MESS , MORE FUEL GOES UP THE MORE PEOPLE DEFAULTING ON THERE LOANS WILL HAPPEN, OPEC WANT $100 DOLLAR OIL AND THE CBOT IS HELPING THEM DO IT , THEY ARE TERRORIST OF THE ECONOMY
Joe,
As the chart in my original entry shows, the labor force has increased, not decreased.
But your point about the employment-to-population ratio and labor force participation rate (see this chart) is correct.
Mark,
Your comment: "the cumulative loss of 85,000 jobs is much less than what is typically seen during a recession", completely ignores the contraction in the national labor force since 2001, which both the 'National Labor Participation Rate' and the 'Civilian Employment-to-Population Ratio' clearly indicate. As can be seen in the following chart of the 'Civilian Employment-to-Population Ratio', there has been negative job growth for the past seven years, with fewer workers in the national labor force now than there were in 2000. That's a massive amount of jobless workers, given that even if the growth had been flat, it would mean the loss of the 150,000 to 185,000 jobs monthly required just to keep up with the population growth, over seven years.
http://tinyurl.com/2rktnz
The current job losses look better than in past years but it may still take 8 to 9 months of job losses before growth returns. Because the job losses are increasing over time I don't think this is an isolated event but the beginning of a mild recession in 2008.
The current job numbers may be less than seen in prior pre-recession times, but here in California the change in the economic climate has been dramatic. Many of our friends are having to renegotiate their home mortgages, some have already lost their homes. Unfortunately, I do not believe the situation will "go away" in a couple of months. As the economy begins to slide it will become a huge snowball before it reaches the bottom of the hill.