Current Job Losses Versus Other Recessions

We had a busy week for economic reports last week, and the news was mostly bad. The big news of the week was the national employment report released Friday, and the results there remained quite weak. (See our related video for more analysis.)

Labor market conditions deteriorated at an accelerating pace in January. Nonfarm payroll employment fell by 598,000 jobs, the largest monthly number lost in the current recession, which began in December 2007. The January employment report also included the annual benchmark revisions, which adjust sample survey data to more complete "universe" head counts, and these revisions show a rougher onset of recessionary job losses in the first half of 2008 than originally reported.

For the three months ended in January 2009, the rate of job loss in the payroll survey came in at an annualized pace of 5.1%, the highest rate of job loss for a three-month interval since February 1975. That February 1975 result was near the end of the 1973-1975 recession, and on the bright side--to the extent there is one--job losses have tended to accelerate near the end of all of our post-World War II recessions.

From the separate household survey, the unemployment rate spiked from 7.2% in December to 7.6% in January, reaching its highest level in the current recession. The magnitude of the increase in the unemployment rate since December 2007 has been at least the equal of any of our post-World War II recessions. The household survey also produces an estimate for total employment. This number is more volatile on a monthly basis than the payroll data, but it showed a massive 1 million-plus job losses in January.

Other Reports
The Institute for Supply Management released both its manufacturing and non-manufacturing survey indexes for January. They showed conditions still contracting, although at a slower pace than late in 2008.

Light vehicle sales fell to a 9.5 million-unit seasonally adjusted rate in January (from a 10.3 million rate in December), the lowest level since the early 1980s. Excluding fleet sales, however, the sales pace may well have improved from December to January.

Perhaps the best news of the week came from the National Association of Realtors, whose Pending Home Sales Index improved significantly in December.

The Week Ahead
We've got a relatively light week for formal economic reports. Noteworthy releases include the Mortgage Bankers Association's weekly report on mortgage applications (Wednesday), the Commerce Department's report on retail sales for January (Thursday), and the University of Michigan's report on consumer sentiment (Friday).