Unemployment in September was 6.1%. That is higher than the 5% or so where it was late last year. But it is not a recession level. During the downturn that began in 1973, the number was closer to 9%.
It is clear that the pace of lay-offs is accelerating. Xerox (NYSE: XRX) laid off 5% of its staff. Rumors are that Goldman Sachs (NYSE: GS) will cut 10%. Given that these companies are at different ends of the spectrum of the U.S. economy, the news speaks volumes.
According to Reuters, "As companies look at their prospects for the final quarter of the year and begin to see increasingly grim outlooks for 2009, they are cutting jobs from many different parts of their businesses."
Total employment in the U.S. is about 144 million people. That means if unemployment rise another 3%, another 4.5 million people could be out of work.
Leaving aside the human suffering, the amount of money the government would have to pay to support these people would be incredible. That number of people out of work would also increase foreclosures, credit card and auto defaults.
Looked at through the prism of the work force the recession is going to be very deep and very long.
Douglas A. McIntyre is an editor at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
10-24-2008 @ 9:46AM
JCH said...
In The Great Depression unemployment hit 25%. It hit a wall that no longer exists - agricultural employment.
People die if they don't eat. They could only lay off so many agricultural workers.
Nobody needs paper to be pushed.
10-24-2008 @ 10:36AM
Virgil Bierschwale said...
Excellent article.
One area that receives no attention is the temp worker or contractor.
These people by virtue of their work, are ineligible for unemployment benefits, so they are not counted on the unemployment reports.
Problem is that I don't think a lot of people understand is that a good majority of our people working in the last 20 years are temp or contractors, so my suspicion is that the unemployment numbers are actually a lot higher already and because these people typically were paid more then an employee, my suspicion is that a lot of the housing market problems comes from these type of workers being unable to find work.
Virgil
http://www.KeepAmericaAtWork.com
10-24-2008 @ 11:30AM
BHarrison said...
Let us NEVER FORGET that President Bush and Congress were the "GATE KEEPERS" who were responsible for maintaining the integrity and stability of our national economy . . . and they FAILED to handle their fiduciary responsibilities; and sold out to the special interests groups.
If THEY had reasonably diligently performed their duties, virtually NONE of this DEBACLE would have occurred. Congress (suck as the likes of Barney "Google" Frank (D-MA), Mel Martinez (R-FL), Andrew Cuomo, Ms Pelosi, etc.) LITERALLY ENABLED the CORRUPT CEOs, CFOs, and management to BLATANTLY COMMIT THOSE FRAUDS . . . the pyramid and Ponzi schemes, etc. This whole debalce is a political based disaster by politicians who GREEDILY served the special interests in lieu of the "best interests of the nation".
Nothing will change as long as these corrupt politicians remain in office.
10-24-2008 @ 5:03PM
Senga said...
Unfortunately, for our country, we do not have anyone either in the White House or soon to be in the White House who can help us to get out of this terrible "tsunami" (Greenspan, yesterday).
We need a strong leader to create jobs, which in turn, will help the economy, which in turn will calm the fears of the Market. Instead of laying off "main street" and increasing taxes, we should be "keeping 'main street' working and reducing taxes to them.
As Roosevelt's famous quote pronounced, "We have nothing to fear but fear itself." But, where are you Roosevelt or someone like you, right now?
10-25-2008 @ 5:22AM
Worker X said...
We are in for a long and deep recession.
Securities and Investment firms have contributed over 53 million to Congress in '08, the top recipient - Barack Obama, the Real Estate industry contributed over 51 million in '08, the top recipient - John McCain.
When Washington Mutual was purchased by Morgan Stanley, the hardworking average folks that worked at WAMU lost their jobs and their pensions. The "bailout/rescue by Morgan Stanley didn't require them to cover WAMU pension plans, etc. Morgan Stanley posted over 581million dollars in profit.
What kind of jobs will we have? Who is looking out for the average, "Joe the Plumber" in this story? Where was Congress?
Is it wise to count on any politician to "help" us out?