The ugly November jobs report

Let's just call a spade a spade:
-
The Great Recession is upon us.

Justin:
.
Ala Update 2: The media is not putting things in perspective because bad news sells. It's not in their interest to look at things objectively.
.
@Brian: The great recession... I like that.
.
-MBirchmeier

Justin, what geograqphic regions are hit the most and what employment sectors are affected? Do you think there are pockets of the country that have not been affected by this?

I find it really bizaare that none of the media reports I've seen on the job numbers cite the percentage job loss. It's all about the 533,000, which is "the largest monthly drop in more than three decades," as the FT reports. Well, in December 1974...
.
uh, doesn't the FT reporting that its the "largest monthly drop in more than three decades" suggest that they are concerned with more than the number itself?
.
it all depends on what percentages you consider important. For instance, in 1994 the decline in (seasonal adjusted) labor force participation was only 0.1% between November and December -- and that rate (61.2%) was only 0.2% off the all time high of 61.4% until that time.
.
But this year, the decline in (seasonal adjusted) labor force participation was 0.3% (from 66.1% to 65.8%) -- and that is 1.5% off the all time high of 67.3% achieved in 2000.
.
(see http://www.bls.gov/webapps/legacy/cpsatab1.htm to create the relevant table.)
.
one other important point -- in 1974, the recession was the result of the OPEC Oil Embargo, and the quadrupling of oil prices even after the embargo ended in March 1974. At the time, economists weren't panicked because they "understood" the causes.... and the fundamentals of the US economy were in far better shape than they are today.

People are panicking now because economic 'growth' over the last eight years was based on smoke and mirrors -- and (to mix metaphors) the whole house of cards is collapsing now. Our "wealth" was an illusion based on massive federal deficits and inflated asset values -- and now we are well and truly screwed.

OMG DEPRESSIONS BREADLINES UR GONNA BE POOOOOORRR!!!
-
Sells a lot more TV time than "The unemployment rate increased by 0.41% today." That pretty much explains the media reaction and focus on 533,000 (raw number).
-
Ok, crap, like three other people beat me to it. The other point I wanted to make is that doesn't the whole Detroit bailout/people ranting against it really scarily remind of the financial bailout? People were opposed to that too until congress threw a hissy fit and refused to pass it. Then the market fell by about 30% and everybody freaked the hell out - for good reason. I get the scary feeling Detroit's going to do the same thing. Except it'll be worse, because Detroit isn't the "fake" financial economy, it's the "real" jobs and building stuff economy.

@pluk,
-
Good points. And I concur in part with your last paragraph on "panic" but I think it (panic) is unjustified.
-
Economists, now, do understand the causes of the 'Great Recession.' It is what happens when you permit monetary policy to remain accomodative for too long a period of time. Eventually, people, companies, and yes, even governments get drunk on the punch when the punch bowl should have been taken away before the party got out of hand.
-
Our current situation is the result of too much leverage. So, we know what has happened, but we are just unsure it can be fixed gracefully. Just as an airplane will stall when you have too little airspeed...economies behave likewise. The question then is only whether you land the plane and walk away or crash and die.

@Sean: The problem with what the Detroit Three CEOs (and union) are doing is that they are in effect holding a gun to the head of Congress. They need it now, and two weeks later that amount they need goes up by 40 percent. Congress doesn't react well without having time to ponder and posture (in fairness, that's probably true of many of us).
-
I think that the effect of a Detroit bailout should be to be able to wind down these companies (at least one or two of them) in a gradual and orderly fashion. That might be worth the investment, in terms of managing the economic fallout, but it is disingenuous to act like these loans can result in a return to greatness. The day that might have been possible has long since passed.

While this is a terrible time and I am scared, I'm distressed by the arm flailing by the press. Watching the evening news, (which I and most of my age group never do as evidenced by the commercials - Depends, Centrum Silver, Alzheimers' medication) the big three talking heads seem to be fanning the flames of hysteria. Very irresponsible. I believe this collective hand wringing doesn't do anything to inspire people to shop or even just live their ordinary lives. Don't get me wrong. I too am appalled by these dismal job numbers. But to call this a Depression is wrong and suspect. Unemployment reached 25% during that time. I don't know what Reich's angle is, but I find it fishy.

Lets put it this way.
If you still have your job. It's a recession. If your currently unemnployed. Its a depression.
Your results may vary.

It comes as no surprise. The November 2008 employment report says with more than half a million jobs lost in the month, the unemployment rate has gone up by 0.2% to 6.7%. Indeed, even without the current financial eclipse, many jobs could have been redundant.

Inflating unnecessarily to expand the base of employees and growth of infrastructure so as to bloat the image of corporate during the so called ‘good times' in past decades, a good number of companies are over-employing. Now, in bad times, superfluous staff would certainly have to go first. And compulsory reduction of work force will follow gradually.

Things can only get worse, at least for the year 2009. There is no need to pretend to be optimistic. Reality is both ugly and cruel. Just face it with calm and dignity.
(Tan Boon Tee)