US Employment Levels Analysis

After publishing my previous post yesterday, I decided to take a closer look at the numbers.

My first thought was, while comparing the current recession to the previous two downturns makes sense, I didn't know how this recession compared to the others before 1990-91, such as the big recession in 1981-82 (a vivid memory for myself). Were there any recessions that were worse than either 1981-82 or 2007-09? (For my analysis, I'm using November 2007 as the start of the current recession.)

What I did was to download the US employment levels data, seasonally adjusted, from the Bureau of Labor Statistics (BLS) for the period of January 1948 to the present. From this data, I found nine downturns in which employment sank on a significant basis, followed by a recovery period. I then took percentages from the nine downturns in which the highest level of employment prior to the downturn (the peak month) is equal to 100%. Following months, through to the point where the employment level once more reached the level of the peak month, were then compared as a percentage to the peak month.

What I found is that the 2007-09 recession is already the eighth worst downturn of the nine. Through January 2009, the employment level is at 96.89% of the peak month's level, a drop of 3.11%. Only the 1953-54 recession is worse (-3.82%). And, of course, there is no bottom in sight yet for the 2007-09 data; if current trends continue, 1953-54's record will be broken in either February or March at the latest.

Adding to the distress is the fact that 2007-09 is already in its fourteenth month past the peak. Only two other downturns took longer: 1953-54, which lasted sixteen months, and 1981-82, which lasted twenty months.

Eventually, of course, previous recessions reached a bottom and then began a period of economic recovery. Of the eight previous recoveries, the average length of time was 12.38 months from the trough month through to the level where employment reached the previous peak. (It should be noted, though, that the previous two recoveries, 1991-93 and 2002-03, took twenty-one and seventeen months respectively, which were by far the two longest recoveries since 1948.)

If the 1953-54 recession is any guide to what may be in store for this recession, any recovery back to November 2007 employment levels will not occur prior to March 2010 at the earliest, and quite possibly not until August-December 2010.

Let's hope I'm wrong, and that we reach the trough and the recovery months more quickly.

3,600,000 and Counting

Here's a graph to make you wet your pants a little. As The Gavel points out, the current recession is much, much more serious in terms of job losses to date (3.6 million and counting) than the previous two. And there's no bottom in sight.

This chart compares the job loss so far in this recession to job losses in the 1990-1991 recession and the 2001 recession – showing how dramatic and unprecedented the job loss over the last 13 months has been. Over the last 13 months, our economy has lost a total of 3.6 million jobs – and continuing job losses in the next few months are predicted.

By comparison, we lost a total of 1.6 million jobs in the 1990-1991 recession, before the economy began turning around and jobs began increasing; and we lost a total of 2.7 million jobs in the 2001 recession, before the economy began turning around and jobs began increasing.

US Unemployment Rates - December 2008

The December US regional and state unemployment figures were released in late January. The figures, overall, continue to get worse. Here are some of the highlights:

• Overall, the "official" national unemployment rate (U-3) increased by 0.4%, from 6.8% to 7.2%, over November's number. (November's percentage was revised upward by 0.1%.) For the past twelve months, the national rate has increased 2.3%.
  
• For the most inclusive unemployment rate measured (U-6), the increase was 0.9%, from 12.6% to 13.5%. For the past twelve months, U-6 has increased by 4.8%.
  
• In terms of monthly change, the states with the largest increases were Indiana and South Carolina, both with a 1.1% increase; six states had a 1.0% increase: Massachusetts, Michigan, Nevada, New Jersey, New York and Oregon.
  
• On an annual basis, the state with the largest increase continues to be Rhode Island with an increase of 4.8%. North Carolina remains in second place with an increase of 4.0%, and Nevada has jumped into third with an increase of 3.9%.
  
• The states with the lowest annual increases are North Dakota at 0.3%, Arkansas at 0.7%, and Iowa and Oklahoma at 0.8% each.
  
• The state with the highest unemployment rate is Michigan, which increased 1.0% to 10.6%; Rhode Island remains in second place, with a rate of 10.0% (up 0.7%). South Carolina comes in third at 9.5% (up 1.1%).
  
• The states with the lowest unemployment rates continue to be Wyoming (3.4%, up 0.2%), North Dakota (3.5%, up 0.2%), and South Dakota (3.9%, up 0.5%).
  
• In terms of non-farm payroll employment (i.e., number of jobs), the states with the biggest decreases since November were California (-78,200), Michigan (-59,000), and New York (-54,000).
  
• For annual changes in non-farm payroll employment, the states with the biggest decreases are California (-257,400), Florida (-255,200), and Michigan (-173,000). Texas continues to be the nation's bright spot, with an annual increase of 153,700, down 67,500 from November.

The PDF version of the Bureau of Labor Statistics press release can be found here.