Saturday March 07, 2009

U.S. jobless rate hits 8.1%, a 25-year high, U-6 unemployment rate hits 16%

news.yahoo.com :

The U.S. unemployment rate rose to a 25-year high of 8.1% in Feb 2009 as employers, buckling under the strain of a severe recession, axed 651,000 jobs. Since the recession started in December 2007, the economy has shed 4.4 million jobs. A total of 12.5 million people were unemployed in February. The Feb 2009 jobless rate was the highest since December 1983 and was a half percentage point above Jan 2009's 7.6%. Losses in February were broad based, with only government, education and health services hiring. Companies struggling with falling revenues and tight profit margins are axing jobs in huge numbers, forcing households to further scale back spending, creating a vicious cycle.

- Note that the job market typically has a 6-month lag effect after the stock markets give their take on the state of the economy, whether on the upside or downside. What we are seeing right now is the lag effect of say 6 months ago when the S&P 500 came down from 1400 to 1200. And now with the S&P 500 hitting fresh new lows below 700 and with the Dow below 7000, you can well imagine what the job market would look like 6 months down the road, let's say, in Sep-Oct 2009.

The dreaded double-digit unemployment rate of 10% or higher looks more and more like a foregone conclusion at this point. This is yet another race to the bottom - a race to determine whether the unemployment rate hits 10% first or whether GDP contracts by 10%. Either way, once either or both hit, we can pretty much wrap it up and call it the Second Great Depression. If you look at the U-6 unemployment rate of 16% on the BLS page which is the most comprehensive non-seasonally-adjusted figure, one could argue that we are already there. Now all we have to do is to wait for the headline U-3 figure to hit the big 10 as well.

See also :

1. Wave of job cuts across corporate America, mass layoffs well beyond Wall Street
2. Baltic Dry Index falls 93% as shipping rates plunge, signalling global economic collapse
3. Happy New Year 2009 : The Year of Collapse
4. American unemployment rate U-6 hits 15.4%, figures fit for Second Great Depression

(2009-03-07 19:53:07 SGT) [Biz] Permalink

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