Job Prospects Look Bleak

With the economy in a recession and most indicators signaling even more difficult times ahead, economists say job losses will likely deepen and continue through at least the first half of 2009. The U.S. economy shed jobs in November at the fastest rate in 34 years, and experts predict that December could be even worse. Bernard Baumohl, the chief economist at the Economic Outlook Group has stated,  “The economy is now deteriorating with frightening speed and ferocity and it’s truly horrific,” …. “We’ll see significant declines going forward.” Baumohl expects December’s job loss total to exceed November’s 533,000 announced by the US government recently, but will probably remain in the 550,000 to 600,000 range. He predicts the economy will have lost 3million to 4million jobs for the two years ending 31st December 2009. (In 2008, the economy lost more than 1.9 million jobs, two thirds of which have come within the past three months). He went on to say “Companies are reluctant in the beginning of a recession to lay off workers, but we’ve seen a sudden, dramatic acceleration in job losses in the last three months, because companies are now in survival mode; they’re reducing their most expensive cost, which is labor.”

Citing weak economic conditions, a slew of large scale job cut announcements came this week. On Thursday alone, AT&T (T, Fortune 500), DuPont (DD, Fortune 500), Viacom (VIA), Credit Suisse (CS) and Avis (CAR, Fortune 500) all issued retrenchment notices that totaled nearly 23,000 jobs lost, (most of which will take place over the next several months).

According to a report by outsourcing agency “Challenger, Gray & Christmas,” planned job cut announcements by U.S. employers soared to 181,671 last month, (the second highest total on record). Temporary employment, including workers employed by temp agencies, fell by 100,700 jobs last month, according to the USA Labor Department report, and it was the highest level on their records, which go back to 1985. That could mean even more fulltime payroll reductions to come, as employers often cut temporary workers before they begin cutting their permanent staff.

“CEOs are trying to get their businesses better positioned for the start of the year so they’re not constantly chasing the slowdown,” said Tag Gilliam, the chief executive of the placement agency Adecco, which is America’s third largest employment agency. “December will be another very tough month.”

A government report in America states that the unemployment rate will be likely rise throughout 2009 and that the unemployment rate rose to 6.7% from 6.5% in October. It was the highest unemployment rate since October 1993. US experts call the rate of unemployment a “lagging indicator,” meaning it reflects the status of the labor market from many months in the past, because the Labor Department only calculates the percentage of people that are unemployed and who are actively looking for work. Dan Sevier, a finance professor at San Diego State University, stated,  “The economy is really sick, and when times are bad, people quit looking for work, but when times are better, it will pull some of those people back into the search, and it would be hard to believe the rate won’t rise to at least 8% or more.”

Some economists look to the so called underemployment rate to give a more accurate portrayal of the job market, and this rate counts part time workers who are unable to find fulltime work, plus those without jobs who have stopped looking for work. That figure recently went to 12.5% from 11.8%, thus setting an all time high for this particular statistic since calculations began in January 1994. Furthermore, some economists see the headline unemployment rate rising to the double digit levels of the early 1980s, as this year is on a pace to become the worst year for jobs ever, based on records that date way back to 1939.  Some in the United States see even higher losses next year, but don’t expect this recession to bring job loss levels to anywhere near the Great Depression of the 1930’s, when the unemployment rate rose to 25%. Bernard Baumohl, the chief economist at the Economic Outlook Group has stated “This recession will last through 2009 and into early 2010, and it will probably be the worst period for jobs since the Great Depression,” he predicted,  “But by a larger magnitude the Great Depression was so much worse, and we will never approach those levels.”