Loss of US jobs is slowing, but hasn't stopped
"There is light at the end of the tunnel, and it is getting brighter," says one economist.
The US employment outlook has been down so long that any moderation in job losses may look like up to American workers.
Consider it this way: the economy shed 539,000 jobs in April, according to Labor Department figures released May 8. A year ago economists would have considered that a horrendous decline. But in the context of the recent downturn, that figure may not seem so bad. In March, employers eliminated 699,000 jobs. In February they cut 681,000.
Overall, the labor market is still deteriorating, in the sense that more workers will lose more jobs in months to come, and the unemployment rate will continue to rise. But the deceleration in losses means the bottom of the current horrendous recession may be near, or even past.
President Obama echoed this point of view on May 8 in short remarks on the economy and job creation. While the unemployment figures represent a sobering toll, said Obama, the gears of the economy appear to be turning again. “Step by step we are making progress,” he said.
It’s undeniable that the last six months have been grim for US employees, particularly blue collar ones. The unemployment rate is now 8.9 percent, the highest it has been since 1983. The total number of unemployed is now 13.7 million, up from 13.2 million in March.
“Almost every sector has had job loss, with the exception of healthcare and education,” said Mr. Hall. Job gains showed up in another sector: government. State, local, and federal employment rose by 72,000 positions for the month.
That bump helped moderate continued losses in the private sector, and may portend a trend to come, as money from the economic stimulus package begins coursing through the economy.
Government will have to hire people to handle and distribute that money. And in coming months, some sectors of the economy where the money will first appear, such as construction, may see job additions.
In Missouri, Loch Sand and Construction recently brought back 15 workers laid off last year, due to receipt of a contract for interstate highway reconstruction. In Minnesota, Adolfson & Peterson Construction has begun hiring new workers after winning a contract to build a new lab in northern Minnesota with US Department of Energy stimulus funds.
“Early reports indicate that the infrastructure piece of [the] stimulus is beginning to do exactly what was intended, put construction workers back on the job,” said Mr. Simonson.
Still, many economists expect that the overall unemployment rate will keep rising, and it could bump up towards ten percent by late summer.
Bankruptcy at Chrysler and restructuring at GM will undoubtedly produce some job losses, though the scale of the cuts remains to be seen. Plus, the pace of government spending may be less than many anticipate, according to a report from the Wachovia Economics Group.
Federal outlays actually fell by 4 percent in the first quarter, notes the study, due in part to a 6.4 percent drop in defense spending. The unwinding of the Iraq War may have led to cutbacks in equipment and supply purchases that are not being matched by the buildup for fighting in Afghanistan.
Meanwhile, state and local government outlays also fell 3.9 percent in the first quarter, notes Wachovia. Many states and localities have been hit hard by the recession. Unearmarked stimulus spending may go for day-to-day expenses, as opposed to new investment.
For the overall economy, “being on the road to recovery is not the same thing as being in recovery,” says the Wachovia report.