The latest employment figures were released this morning and the number reported by the Labor Department was not encouraging. Non-farm payrolls fell -240,000, greater than the -200K that was expected. In addition, last month’s figure of -159,000 jobs was revised down to -284,000. The unemployment rate spiked up to 6.5%. This is the highest unemployment rate since 1994. Over the first 10 months of 2008, 1.2 million jobs have been lost, with over half of those losses occurring in just the past three months.
This is just the latest in a string of poor economic numbers that have been coming out in the last few weeks. Recent events however (financial crisis, credit crunch, election, etc.) have overshadowed the numbers until this week. Last week, the advanced estimate of the U.S. Gross Domestic Product (GDP) came in a -.3%. If you’re unfamiliar, GDP is the sum total of all the goods and services produced in the country annually. For 2007, the amount was $13.8 trillion and it shrank for the 3rd quarter. Contrary to my prior blog post, a recession is defined as two or more consecutive quarters of negative GDP.
The list goes on, too. Consumers (you and me) aren’t spending as much as we were. Consumer spending accounts for as much as 70% of GDP. I’m hearing anecdotal reports from all over about businesses that are putting capital projects on hold as well.
Although it’s not necessarily official by definition, it’s pretty safe to assume that the U.S., as well as most other countries are in or will be in a recessionary environment very shortly. I think this was inevitable, as business cycles always peak and valley, but recent events certainly have accelerated it. It now is just a matter of how deep and how long the slowdown will be.
