“Shockingly awful” and “spectacularly grim”

UPDATED JANUARY 9
“This is a terrible time to be a parent of young adult children,” my friend told me at lunch a few weeks ago. “You tell them to study hard and work hard to get ahead — and then when they graduate, there’s nothing.” A reader writing to the New York Times echoed her feelings: “We have GOT to get the twenty somethings jobs. The kids around here are getting really desperate, and they can’t even get into the classes they need at colleges right now with the budget cuts to universities.”

Friday morning update: Today’s report from the Bureau of Labor Statistics shows unemployment in December running at 7.2%, and notes that, “Since the start of the recession in December 2007, the number of unemployed persons has grown by 3.6 million, and the unemployment rate has risen by 2.3 percentage points.” BBC notes that total job loss numbers for October and November have also been revised upward.

All of the latest jobs figures confirm their concerns, with the bleakest jobs picture seen by anyone now under retirement age — more than 2.4 million jobs lost last year, unemployment continuing at 8-9 percent through 2010, and no prospect for even the beginning of a recovery for more than a year.

President-elect Obama spoke on the economy on January 8
“We start 2009 in the midst of a crisis unlike any we have seen in our lifetime, a crisis that has only deepened over the last few weeks. Nearly 2 million jobs have been now lost, and on Friday we’re likely to learn that we lost more jobs last year than at any time since World War II. Just in the past year, another 2.8 million Americans who want and need full-time work have had to settle for part-time jobs. Manufacturing has hit a 28-year low. Many businesses cannot borrow or make payroll. Many families cannot pay their bills or their mortgage. Many workers are watching their life savings disappear. And many, many Americans are both anxious and uncertain of what the future will hold.

“Now, I don’t believe it’s too late to change course, but it will be if we don’t take dramatic action as soon as possible. If nothing is done, this recession could linger for years. The unemployment rate could reach double digits. Our economy could fall $1 trillion short of its full capacity, which translates into more than $12,000 in lost income for a family of four. We could lose a generation of potential and promise, as more young Americans are forced to forgo dreams of college or the chance to train for the jobs of the future. And our nation could lose the competitive edge that has served as a foundation for our strength and our standing in the world.”

Click here for full text of President-elect Obama’s January 8 speech on the economy

The Labor Department released the December national unemployment figures on January 9, and they are not pretty. (Minnesota’s December numbers will be out on January 22.) NPR’s Planet Money blog quotes one expert who calls the prospects “shockingly awful,” and points to the ADP employment report dated January 7, which estimates that the nation lost 693,000 jobs in December. That’s the biggest drop in 59 years. ADP bases its reports on its experience as the payroll service provider for 400,000 employers with about 24 million employees.

Minnesota’s unemployment rate was 6.4 percent (seasonally adjusted) in November, according to the Minnesota Department of Employment and Economic Development. “This was the result of an increase of 14,400 unemployed people,” said the DEED website “which raised the total to 188,925, the highest number since early 1983.” Every sector except government lost jobs, and the increase in government jobs was “almost entirely due to election judges.” Statewide, initial unemployment claims in November “increased by 12,800 or 43.0 percent from one year ago to 42,600.”

Another one of the economic markers that the Bureau of Labor Statistics (BLS) tracks is the number of mass lay-offs, defined as more than 50 unemployment claimants in a single month from a single company. November and December are typically high months for mass lay-offs, but the 60 reported in Minnesota in November 2008 were a significant increase from 41 reported in 2007. November’s 60 mass lay-offs yielded 5,442 new unemployment claimants in November (compared to 4,315 in November 2007), in addition to all those unfortunate workers laid off in smaller increments.

Nationwide, the BLS reported 2,574 mass lay-offs in November 2008, compared to 1,799 in November 2007. The Congressional Budget Office just issued its annual report,, which paints a grim picture that includes 2009 unemployment averaging 8.3 percent, increasing to 9 percent in 2010:

The sharp downturn in housing markets across the country, which undermined the solvency of major financial institutions and severely disrupted the functioning of financial markets, has led the United States into a recession that will probably be the longest and the deepest since World War II. The Congressional Budget Office (CBO) anticipates that the recession—which began about a year ago—will last well into 2009.

Under an assumption that current laws and policies regarding federal spending and taxation remain the same, CBO forecasts the following:

• A marked contraction in the U.S. economy in calendar year 2009, with real (inflation-adjusted) gross domestic product (GDP) falling by 2.2 percent.

• A slow recovery in 2010, with real GDP growing by only 1.5 percent.

• An unemployment rate that will exceed 9 percent early in 2010.

Nobel-prize-winning economist Paul Krugman warns that the CBO estimates may be over-optimistic. He calls the jobs picture “spectacularly grim,” and says that the Obama plan is not enough, especially with “a significant share going to ineffective tax cuts.”

According to MSNBC:

Obama plans to propose $310 billion in tax cuts for the middle class and businesses as part of the $775 billion stimulus plan. Some U.S. governors and economists are pushing for a larger package—around $1 trillion. Many Republicans want a more modest bill, possibly in the range of $500 billion.

1 Comment

Filed under Uncategorized

One response to ““Shockingly awful” and “spectacularly grim”

  1. Pingback: News Day - January 9 « Mary Turck

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s